How To Become a Millionaire in 5 Years or Less?
Want to become a millionaire in just five years? It’s more realistic than you might think — if you build multiple income streams and make smart financial moves. From strategic investing to disciplined saving, here’s how to become a millionaire in nine steps.
1. Create a Wealth-Building Plan
A wealth-building plan lays out liabilities and assets. It’s continually modified as you pass through various life stages. However, a plan should take more than just your budget into consideration.
It should also factor in your:
- Investments
- Insurance
- Taxes
- Education
- Retirement
Most experts recommend making a quantifiable financial plan — the kind that’s got concrete numbers and specific dates to measure your success. The sooner you start building a plan, the quicker you’ll start building wealth.
2. Maximize Employer Contributions
Taking advantage of your employer’s retirement contributions makes it easier for you to become a millionaire.
Many of the country’s largest companies match 50 cents for every $1 contributed by an employee into a retirement account.
While the contributions are typically capped at 6% of your salary, these benefits can add up to $200 a month to your retirement accounts.
Keep In Mind
Contributing $450 a month to retirement accounts on a $50,000 salary could make you a millionaire in 40 years.
But if your employer matches 6% of your pay — an additional $250 a month — you could hit a million in just 34 years.
3. Ask for a Raise or Promotion
Boosting your income is a fast-track method if you’re serious about how to become a millionaire in five years or less.
Research salary benchmarks in your field and ask for a raise or look for roles with higher earning potential.
4. Save a Large Percentage of Your Income
You need to save a large portion of your income to accumulate wealth in a short period. Here are some tips to start saving more:
- Trim down your budget and live well below your means.
- Try to avoid taking on extra debt.
- Don’t worry about the luxury items other people are buying.
- Build a strict savings plan.
How Much You Need To Save To Reach $1 Million
Here’s how much you need to save each month to reach millionaire status on different timelines:
- In 5 years: Save around $16,600 per month.
- In 10 years: Save around $8,300 per month.
- In 20 years: Save around $4,100 per month.
5. Build Multiple Streams of Income
Supplementing your full-time pay by developing multiple income streams is another way to become a millionaire in five years or less.
Starting a side hustle, picking up a part-time job or creating a home-based business are just a few ways to generate more money.
Keep in mind that this income isn’t fun money. To grow it, you need to invest it.
6. Eliminate High-Interest Debt
Debt is one of the biggest deterrents to becoming a millionaire. This is because it reduces the amount of money you can save from your paycheck.
Focus on paying down your student loans and eliminating other consumer debt such as credit cards, personal loans and auto loans.
Did You Know?
The biggest obstacle to building wealth for most young people is student loan debt.
The average student graduates with more than $35,000 in loans, and those with advanced degrees can leave school with much more debt than that.
7. Invest In Proven, Long-Term Assets
You may think that most individuals become millionaires by making technical, complicated investments. However, most self-made millionaires take risks with their careers but have conservative investment portfolios.
Here are some strategies to keep in mind:
- Every investment portfolio should contain stocks. Investing in simple, affordable index funds is the best strategy for most people.
- Resist the temptation to invest in trendy financial products such as cryptocurrency. These investments are heavily influenced by market factors and can result in drastic losses.
- If you want to try something other than index funds, look into real estate investment trusts. These funds invest in commercial real estate properties and large residential apartment buildings.
- Adding a REIT to an otherwise index-heavy portfolio adds the diversification you need to start making financial gains.
8. Increase Your Earning Power
No matter your industry or chosen career, honing your skills can lead to higher pay and bigger savings.
Invest in your career strategically:
- Need an advanced degree for a promotion? Research affordable programs and create a payment plan.
- Avoid student loans if possible — look for tuition assistance from your employer or schools with monthly payment plans.
- Consider professional certifications. If you work in finance, for example, you might want to become a certified public accountant to increase your earning potential.
9. Spend Less Than You Earn
Living well beneath your means is essential if you want to become a millionaire in five years or less.
Besides making a realistic budget, you need to find ways to control impulse spending. Avoid visiting your favorite online shopping sites and stick to a list when going to the grocery store.
Also, look for alternatives before purchasing something new. If you have a broken computer, see if you can have it repaired before buying a new one. Maybe a family or friend has a used computer you can buy.
Good To Know
There are three core steps to follow to reach millionaire status in five years:
- Budget and cut back on your expenses.
- Save and invest as much of your income as possible.
- Surround yourself with people who push you to grow.
Final Take
If you want to learn how to become a millionaire in five years or less, you’ll need to adopt an aggressive investment and savings strategy. Build a financial plan, invest early and grow your income as much as you can. Millionaire status is achievable — but only if you start now. The next five years could change your life.
FAQ
Here are the answers to some of the most frequently asked questions about becoming a millionaire.
- How much do you need to be a millionaire in 10 years?
- You need to save around $8,400 per month to become a millionaire in 10 years.
- Can I become a millionaire with a regular job?
- Yes, if you manage your money well. Live below your means, save aggressively and invest wisely.
- How much money should I save monthly to hit $1 million in 5 years?
- You need to save about $16,600 per month to reach millionaire status in 5 years.
- What are the best investments for fast wealth growth?
- For long-term growth, stick with low-cost ETFs and REITs. If you’re comfortable with more risk, investing in real estate or individual stocks can offer higher returns.
- Is it realistic to become a millionaire in your 30s?
- Yes, especially if you start early in your 20s, stay focused and follow wealth-building strategies.
Elizabeth Constantineau contributed to the reporting for this article.
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