The pandemic gave Americans a reason to reevaluate their relationship to money. With stock market swings, soaring home prices, and the job market shaky, lots of people are looking for ways to establish their financial futures, and they want to grow their income in a major way.
Google searches for "How to become a millionaire" jumped 22% during the Covid crisis compared to previous years, according to data from PlayUSA. The website used Google Ads to analyze search volume for the phrase in all 50 U.S. states and the 50 most populous cities.
The top city where residents are most eager to make $1 million is Miami, followed by Atlanta, Tampa, Las Vegas, and Minneapolis.
And across the country, lots of people are achieving that goal. A whopping 1.7 million Americans became new millionaires in 2020, the latest Credit Suisse Global Wealth Report shows. There are now 56.1 million people globally with assets of at least $1 million USD, and U.S. adults make up 39.1% of that.
Overall, almost 1 in 10 Americans, 8.8%, are millionaires.
1. Make the most of tax-advantaged retirement accounts. Invest about 15% of each paycheck into a 401(k), IRA, or Roth IRA, including your own contributions and any your employer makes on your behalf, experts suggest. "At least contribute enough to get the workplace match," says Melissa Sotudeh, a certified financial planner, wealth advisor, and director of advisory services at Halpern Financial. "It's literally getting free money."
Every time you get a raise, she adds, "contribute more than half, or all of it, to your 401(k). This combats the natural tendency to increase spending when income increases." You can also consider interest-earning options, like a health savings account.
In the first quarter of 2021, the number of 401(k) and IRA millionaires reached an all-time high, according to Fidelity, more than double from the previous year.
2. "Save first, spend second." Automating your savings can help you achieve your goal, Sotudeh says, in part because "the best way not to miss your money is to forget it was even there to begin with. Always save first, spend second. You should know, each month, the minimum amount you will be contributing to each of your accounts. If you happen to have saved excess by the end of the month, you should have an idea about where that will be saved, as well."
3. Focus on growing your net worth and financial assets. Aside from saving as much as you can, key in on accumulating income from sources beyond wages, like garnering equity in real estate or investing in the stock market. When you make progress on expanding your net worth, according to Sotudeh, which is the sum of all your assets minus the total debts you owe, "you can see the big picture more clearly and work toward making your first million faster."
Video by Courtney Stith
Other money experts suggest similar routes. For his book "Rich Habits, Poor Habits," author Tom Corley examined the habits of 233 wealthy individuals, 177 of them self-made millionaires. Half got rich with the saver-investor plan, where you live within your means and invest as much of your income as is practical. The typical saver accumulated an average $3.2 million in 32 years.
Building wealth won't happen overnight. "It's going to take time," Jorge Padilla, a certified financial planner and senior client advisor at The Lubitz Financial Group, previously told Grow. The hard part is having the "patience and discipline to invest regularly and increase income."
There's no effortless way to earn $1 million. Growing your wealth takes work, says Erika Safran, a certified financial planner and principal at Safran Wealth Advisors.
Luck can play a role, too: You could cash in an inheritance or hit the lottery, or you could simply be fortunate enough not to be bankrupted by health-care bills, for example.
And speaking of health-care bills, don't neglect essentials like health care in order to save money more quickly, advisors warn, as it could put you in a bind later on. Pay attention to your expenses and try to eliminate as much of your student debt, credit card debt, and other amounts owed as you can, too.
Remember to be patient: "Growing your career, developing meaningful relationships, and creating wealth all take time," Safran says.
More from Grow:
- I want to join the FIRE movement, become a supersaver, and retire early: How I plan to start
- 1.7 million Americans became millionaires in 2020: Millionaires now make up 8.8% of the population
- Here's how much money Americans want to have saved to feel 'comfortable'