How Can I Be a Millionaire in 10 Years – How to become a millionaire in 10 years is one of the best questions someone can ask. For most people, becoming a millionaire isn’t just about how much money you make. It’s also about the lifestyle and freedom you earn by raking in a certain income. However, simply making a million dollars doesn’t mean you’re going to become rich. Ultimately, it’s your investments and savings that determine whether you can retire early or not.
Becoming a millionaire in 10 years isn’t as impossible as it may seem. It just takes understanding the right mindsets, habits, and strategies for wealth building to get there. I’ll give you all that information right now.
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Can you become a millionaire in 10 years?
It is possible to become a millionaire in 10 years. It is more likely for you to become a millionaire if you have a high savings rate and are frugal. High-income earners have an advantage, but high-income earners often spend more money than necessary.
Having a high savings rate is one of the most important factors to becoming a millionaire. Savings rate is the ratio of your income to money spent. Your goal is to have as much income as possible without spending any of it.
People who are naturally frugal do better with savings and stand a better chance of building wealth. Too many high-income earners fall into the trap of buying things simply because they can afford it.
For example, a high-income earner might earn $100,000, but only save $10,000 of it. However, a $50,000 earner might save $25,000.
The high-income earner is too busy spending their money to build wealth. A person saving $25,000 on a $50k salary is already investing 2.5 times as much.
So yes, high-income helps, but only if you are smart with your money. The easiest way to become a millionaire is to have a high-income and be frugal.Click to Tweet! Please Share!Click To Tweet
How much money would it take to be a millionaire in 10 years?
At a 10% return on investment, investing $5,000 per month would make you a millionaire in 10 years. Your total contribution would be $600,000 with an estimated growth of $400,000. However, you can find higher return on investments and invest less money or invest more money with less return on investment.
Finding $5,000 per month to invest can be very difficult. The most likely scenario is having a couple who both have high-income jobs. For example, having a couple engineers who both make $100k per year.
Alternatively, you can start a side hustle to help make up the difference. Some side hustles are easier to start than others, but some have the potential to make 5K per month.
Regardless, you will somehow need to find the cash if you want to become a millionaire in 10 years.
How can I become a millionaire in 10 years?
To become a millionaire in 10 years, you must have a high savings rate or income to spending. Find a way to keep your expenses low while increasing your income through whatever means possible. Invest as much money as possible at the highest rate of return you can find.
Focus on reducing expenses and living frugal
The first step of becoming a millionaire is to take control of your expenses. You need every single penny to go towards investments, not stuff.
You should have a method of budgeting or tracking your expenses. There are many different ways of managing finances, but it’s simply important that you start. The goal is to identify areas where you are spending unnecessarily.https://a83bfa25918750f0aec1a53e6a597260.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
Most people have certain areas where they overspend. It’s really easy to overspend when you aren’t tracking your finances. Usually, it’s the small expenses that add up over time which keeps you poor.
Increase your income
You are also going to need to find a way to increase your income. The idea is that we are making enough money to invest. Once your money is invested, it keeps on growing without your assistance.
The more money you can make, the more money you can invest. The more money invested, the more money that is gained passively.
Look, life is hard. There is no doubt about that. Life is going to take money.
You are going to earn an income. The IRS is going to want a portion of that income. You are also going to need a place to stay, food to eat, hot water, and electricity.
Everyone is going to get a portion of your money. The only way to keep more of that money is to make more of it.
Therefore, you need to find a way to increase your income at work and outside of work. You should always be looking around for better job opportunities. Ideally, you are trying to create an income source outside of your 9 to 5 job.
The best thing you can do is find a way to make money based on results and not time. Your time is limited, but your results are not. For example, you could make more money selling 10 houses as a realtor than you might working a desk job for a year.
Invest $5k per month (10% ROI)
As we previously discussed, you can hit one million dollars in 10 years by investing $5,000 per month at 10% ROI. However, that is just one of the many examples of how to save $1,000,000. Investing simply relies on how much money you invest and what your rate of return will be.
For example, let’s assume you are able to get a 20% return on investment. In this case, you would only have to invest $2,700 every month.For most people, investing $2,700 it’s much easier than $5,000.
The question is, where are you going to find a 20% ROI?
Alternatively, you can find a way to invest more money at a lower rate of return. At a 6% return on investment, you would have to invest $6,200 per month.
What you need to do is find an investment strategy that works for you. You need to come up with a plan which specifies the amount of money you are going to invest at what percent ROI.
Consider leveraged investments
One of the more risky strategies is to consider a leveraged investment. A leveraged investment borrows money in order to make more money. So technically, you are taking on debt by choosing a leveraged investment.
As you’ve seen, it is very difficult to find $5,000 per month to invest. A leveraged investment makes it easier because you are borrowing the money to invest.
Real estate is an example of a leveraged investment. You come up with a down payment and borrow the rest of the money from a bank. Tenants pay you back in the form of rent which is then used to pay back your mortgage.
You are taking on the liability of borrowing the money. You are still responsible should a tenant not pay the monthly rent. However, you can build wealth really quickly by borrowing money.
10 steps to lay the right financial foundation
Whether your goal is to become a millionaire in five, 10, or 15 years, there are some basics you need to get a handle on first. Reaching millionaire status requires a solid financial foundation. These 10 steps will move you in the right direction:
1. Create a financial plan
Financial freedom starts with financial planning. Your plan should include where you’re at today, what your goal is, and how you’ll get there. Your financial plan should be written down with clear milestones of how much you want to have saved and by what date.
At each milestone, you’ll be able to assess your progress and make choices depending on whether you’re ahead of or behind the plan. You can adjust any of these factors:
- The deadline to reach your goal
- Your goal amount
- How much you’re saving each month
- The risk level of your investment portfolio
If you’re ahead of plan, you might scale back how much you save and enjoy life a little more today. If you’re behind, it could be time to buckle down and learn some ways to make money while while also reducing your expenses.
2. Increase your income
It tends to be easier to increase your income than reduce your expenses. You can only cut your expenses so much without drastically adjusting your lifestyle. Yet, there are many opportunities to boost your income.
If you are employed, talk to your boss about a raise. Sometimes, it just requires a conversation about the value you bring to the organization. When you discuss your career with your boss, you’ll know where you stand and come away with a game plan to boost your paycheck. If there aren’t opportunities at your current job, start searching for a new one that offers a higher wage or the opportunity for promotions.
Your job isn’t the only way to increase your income. Side hustles are a great way to supplement your income in your spare time. Many side hustles, like driving for a rideshare company or making grocery deliveries, don’t require a huge time commitment. You can even learn how to make $1,000 a day if you strategically stack your side hustles.
Building passive income is the best way to boost your income in the long term. Passive income is money you earn that isn’t tied to the number of hours you work. Passive income strategies include:
- Selling an eBook or a course on a topic that you are an expert in
- Purchasing rental properties and hiring a property manager
- Investing in stocks, bonds, and mutual funds
- Affiliate marketing through your website or social media
There are a lot of ways to earn passive income. Although some can take time to ramp up, once they’re in motion, you’ll make money even when you’re not working.
3. Live below your means
Living below your means is when your take-home pay is higher than your monthly expenses and you have money left over. The more you live below your means, the more money you have to put toward your financial goals. Review where you’re spending your money each month right now, and decide whether those expenses are worth more to you than your goal of becoming a millionaire.
If your spending and financial goals aren’t in alignment, you can quickly cut expenses with these two strategies:
- Lower your housing expenses. Get a roommate, move someplace less expensive, or return home to live with your parents.
- Negotiate your bills. There are a lot of ways to lower your bills. Call your current providers and ask for discounts, shop around to find even lower prices, or use a service like Truebill to get your bills lowered for you.
4. Pay off your debt
Becoming a millionaire isn’t just about having a portfolio with $1 million in it. It is also about boosting your net worth. Net worth is the amount left over when you subtract what you owe from what you own.
Every dollar of debt that you pay off not only increases your net worth, but it also saves you from paying interest to a lender. That savings can then be invested toward your goal of becoming a millionaire. So work toward eliminating things like student loans and credit card debt.
5. Understand the power of compound interest
Albert Einstein once called compound interest the eighth wonder of the world. When interest is compounded, the amount of interest you earned during a given time period is added to your balance, and that new total (original balance + interest) becomes your new interest-earning balance.
For example, this is what it would look like if you started with $1,000 and earned 10% interest per year (which is the average stock market return for the past 90 years), compounded annually:
| Balance | Interest earned that year | Total interest earned | |
| Starting balance | $1,000 | – | – |
| After one year | $1,100 | $100 | $100 |
| After two years | $1,210 | $110 | $210 |
| After three years | $1,331 | $121 | $331 |
| After four years | $1,464 | $133 | $464 |
| After five years | $1,611 | $146 | $611 |
At the end of five years, you’ll have earned $611 in interest. As you can see, the interest that you earn continues to grow because the interest you’ve earned in prior years is now also earning interest.
6. Max out your retirement contributions each year
The government encourages people to invest for their retirement by giving valuable tax breaks on retirement accounts. The best way to take advantage of these programs is by maxing them out each and every year. This ensures that as much of your money as possible is receiving these tax advantages.
Because the tax advantages are so powerful, there are limits to how much you can invest in your retirement accounts each year. In 2020, Traditional and Roth IRA limits are $6,000 per year ($7,000 if over the age of 50), and company retirement plans are $19,500 ($26,000 if over 50).
7. Choose the right investing brokerage
After you’ve maxed out your retirement accounts, you’ll want to choose a brokerage account. This will allow you to continue investing your way to having $1 million by buying stocks, bonds, mutual funds, and ETFs.
When selecting a brokerage account, look for one that offers reduced maintenance and trading fees. Many companies have eliminated fees for online trading. If you’re unsure of where to begin investing, consider starting with an online service. Companies like Acorns, M1 Finance, and Stash offer simple investing platforms that make it easy for beginners to get started in the stock market.
8. Open a high-yield savings account
In addition to retirement and brokerage accounts, it helps to have an emergency fund in a savings account. High-yield savings accounts offer better interest rates than a traditional bank while offering quick access in case you need the money to cover an unexpected bill.
9. Automate your savings and investing
Once your accounts are established, automate your saving and investing. This way you never forget to put that money aside and you can focus your mental energy on finding more ways to save and make money instead.
10. Network with millionaires
Motivational speaker Jim Rohn says we are the average of the five people we spend the most time with. We’re not saying you need to ditch your current friends, but you do need to spend time with successful people.
One good way to connect with wealthy people is to join the board of a charitable organization. Charities always need volunteers, and while you’re there, you may also pick up some new skills. By donating your time, you could meet current and retired executives who are also on the board. Or you might get a chance to rub elbows with wealthy donors who would love to share stories of their success.
If you’re having trouble networking with millionaires, the next best thing is to read about them. Buying a book or borrowing one from the library is the least expensive way to gain the best information a millionaire has to share.
Whether it’s networking with successful people or reading about them in a book, the important thing is to continue to invest in yourself by upgrading your knowledge and learning from those you admire.
How to become a millionaire in 10 years
Becoming a millionaire in 10 years is much easier than doing it in five, but it still takes sacrifice and dedication to make it happen. With an 8% average annual return, you’d need to invest $63,916 each year for 10 years to reach your millionaire goal:
| Account balance | Cumulative amount invested | Earnings per year | Total earnings | |
| Starting balance | $63,916 | |||
| After one year | $69,029 | $63,916 | $5,113 | $5,113 |
| After two years | $143,581 | $127,832 | $10,636 | $15,749 |
| After three years | $224,097 | $191,749 | $16,600 | $32,349 |
| After four years | $311,055 | $255,665 | $23,041 | $55,390 |
| After five years | $404,968 | $319,581 | $29,998 | $85,387 |
| After six years | $506,395 | $383,497 | $37,511 | $122,898 |
| After seven years | $615,937 | $447,413 | $45,625 | $168,523 |
| After eight years | $734,241 | $511,330 | $54,388 | $222,911 |
| After nine years | $862,010 | $575,246 | $63,853 | $286,764 |
| After ten years | $1,000,000 | $639,162 | $74,074 | $360,838 |
It would be hard for most households to put aside approximately $64,000 each year. The majority of people would need to supplement their income with a side hustle to contribute that much to their investments.
People in the FIRE movement (financial independence, retire early) set lofty savings goals in their pursuit of financial freedom. Some families choose to save one spouse’s entire income and live off the other paycheck, and others focus on saving 50% of their household income.
Assume you’re an average family making a combined $78,500. If you’re able to save half of that income, you’re putting away a little over $39,000 each year. To reach the target of roughly $64,000 per year, you’d need to earn an additional $25,000 after taxes. For a monthly goal, that’s about $2,000 each month.
Earning $2,000 a month from side hustles is something a lot of people could do. Potential side hustles that could earn you that extra money include:
- Driving for Uber Eats or Lyft
- Making deliveries for Postmates or GrubHub
- Freelance writing
- Private tutoring
- Teaching community college classes
- Handyman work
- Selling on Etsy or eBay
- Wholesaling real estate
Conclusion
It is not that hard to become a millionaire in 10 years. Of course it all depends on different factors such as getting a good education and a good job etc. But the fact is, if you really work hard and save a lot of money, you can actually do it! Becoming a millionaire is not as hard as some people make it seem – plus – it’s pretty fun too! Most people I know who have become millionaires worked really hard to become one – most of them got advanced degrees and got very high paying jobs. In order to be a millionaire in 10 years you need to save 50-60% of your income per year. It also helps if you live way below your means.