10 Things You Must Know About Becoming a Millionaire
10 Things You Must Know About Becoming a Millionaire
By: the editors of Kiplinger's Personal Finance, Dan Burrows April 26, 2021
Think you are a millionaire in the making? Read on to see what it takes to be truly destined for wealth.
Being a millionaire isn't a ticket to mansions, yachts and caviar like it once was, but the goal is more reachable than ever. According to 2020 data from Phoenix Marketing International, a firm that tracks the affluent market, 6.71% of U.S. households (or 8,386,508 out of 125,018,808 total U.S. households) have investable assets of $1 million or more.
Note well that to be considered a millionaire by the standards of wealth research, a household must have investable assets of $1 million or more, excluding the value of real estate, employer-sponsored retirement plans and business partnerships, among other select assets.
That's only one way to measure if someone's a millionaire, of course. A net worth of $1 million also qualifies; subtract liabilities, including mortgages and car loans, from assets, including home equity and retirement savings, to determine your net worth. (Use our Net Worth Calculator to get your number.) Either way, hitting the million-dollar mark is no small feat.
Keep reading to see if you have what it takes to become a millionaire.
1 of 10 Most Millionaires Are Made, Not Born
Some folks figure that if they didn't summer in Martha's Vineyard or attend boarding school as a child, they have no chance of becoming a millionaire. But you don't need rich parents to become a millionaire yourself.
Just like Oprah Winfrey and the protagonists of virtually every Horatio Alger novel, the vast majority of Americans with a net worth of at least $1 million were not born rich. In fact, just 1 in 5 millionaires received money from a trust fund or an estate, according to The Millionaire Next Door by Thomas J. Stanley and William D. Danko. During his 30 years researching the wealthy, Stanley says he consistently found that between 80% and 85% of all millionaires are self-made. More recently, a 2017 Fidelity Investments survey indicated that 88% of millionaires built their wealth themselves.
Among our favorite rags-to-riches millionaires: Radio One founder Catherine Hughes, a teenage mom and college drop-out; Tastefully Simple CEO Jill Blashack Strahan, who grew up on a farm; and entrepreneur Ali Brown, who had less than $20 in her bank account when she launched her first marketing company in 1998.
2 of 10 You Don't Need a High-Powered Graduate Degree
With condolences to those with grad school debt, an advanced degree does improve your chances of higher lifetime income, but it doesn't necessarily improve your chances of joining the millionaires' club. Only 18% of those with a net worth of $1 million or more hold a master's degree, while 8% have law degrees and 6% went to medical school, according to The Millionaire Next Door.
Seventy-four percent of millionaires do have an undergraduate degree, even if they didn't stick around for their master's or PhD, according to Spectrem Group, a consulting firm that specializes in wealth research and management. (Spectrem defines a millionaire as someone with a net worth of $1 million excluding the value of a primary residence.) That number is 70.1% among the billionaire set, according to a 2015 Wealth-X census.
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