November 25, 2024

How to Make 1 Million Dollars: 9 Tips for Getting Rich

You might think the only way to become a millionaire is to win the lottery or luck into generational wealth. But that’s not the case for most people with more than a million in their accounts. According to Ramsey Solutions’ National Study of Millionaires, 79% of them didn’t even receive an inheritance. Smart investing plays a way bigger role.

Ready to improve your net worth and learn how to make one million dollars without relying on luck? It starts with understanding the fundamentals of budgeting, investing, and compound interest. Here’s everything you need to know.

9 realistic tips for making a million dollars

Sure, the easiest way to make a million dollars is a financial windfall, like winning big at the casino or getting a surprise inheritance from a great-great-aunt you didn’t even know existed. But with a strategic approach and consistent effort, becoming a millionaire is actually an achievable goal.

Here's a breakdown of realistic steps you can take to build your wealth and reach that coveted million-dollar milestone:

1. Control your expenses

You can’t build wealth if you spend more than you earn. Take a close look at your spending habits. Are you living below your means? Or are you burning through a significant chunk of your income on dining out, entertainment, or impulse purchases?

Identify and eliminate unnecessary expenses. Then, create a budget that prioritizes saving and allocates funds for needs, wants, and financial goals — and stick to it.

2. Start retirement contributions early

When it comes to investing, time is just as important as money. The earlier you start contributing to retirement accounts like a 401(k) or Roth IRA, the more time your money has to grow.

Why? Two words: compound interest. Your initial investment earns interest, which your account reinvests automatically, earning even more interest. This creates a snowball effect that can lead to massive growth over the long term, which is why investing early is such a powerful strategy.

3. Become tax savvy

Optimizing your taxes helps you keep more of your hard-earned money. Remember that 401(k) or IRA? With a retirement fund in place, you reduce your taxable income or give yourself the option for tax-free withdrawals from a Roth IRA once you retire.

Of course, taxes are complicated. If you’re really serious about becoming a millionaire or just learning more about tax breaks, consult with a financial advisor or tax professional to take advantage of every available tax benefit.

4. Invest in real estate

It might not be the fastest way to make a million dollars, but real estate is one of the most reliable wealth-building tools. That goes for your own housing, too — with the right purchase price and interest rate, paying off a mortgage is often a better move than giving your money to a landlord. Plus, EarnIn’s Mortgage Calculator helps you buy a house you can actually afford.

But if it’s financial abundance you seek, you need to think bigger. Consider working these options into your real estate plans.

Rental properties

A rental property generates passive income through your tenants’ monthly rent payments. And in the meantime, that property will likely appreciate in value, building equity that you can tap into later. Just be sure you’re prepared for the responsibilities of being a landlord. Tasks like finding tenants, managing (and paying for) maintenance, and handling vacancies take a lot of time and energy.

House flipping

For many wealthy people, learning how to make a million dollars in a year or less was as simple as buying houses nobody else wanted, putting in the work to fix them up (also known as sweat equity), and selling them for a profit. But be realistic — flipping houses requires capital, time, and knowledge about both real estate and renovations.

Real Estate Investment Trusts (REITs)

Investing in a Real Estate Investment Trust (REIT) can give you exposure to the real estate market without directly owning properties. REITs own and operate income-producing real estate like shopping malls, apartments, and hotels. When you invest in an REIT, you essentially buy shares of that company and participate in the income generated from their real estate holdings. REITs often provide dividends, making them a great potential source of passive income.

5. Drive smart, not flashy

When your income increases, it’s natural to want to hit the dealership for a nicer set of wheels. But a new car will lose a big portion of its value the second you drive it off the lot. Instead, look for something reliable and affordable to free up more cash flow for investments.

Remember, a car is a liability, not an asset. A vehicle costs you money to own and operate without adding to your wealth.

6. Negotiate your worth

Many people undervalue their own skills and experience. When you’re getting a new job or walking into your next performance review, don’t be afraid to negotiate your salary or fees.

Research industry standards and salary ranges for your position and location, and highlight your accomplishments and unique skills during the negotiation process. Even a small salary increase can significantly impact your long-term earnings.

7. Diversify your income

Explore opportunities to increase your earning potential beyond your primary job. That doesn’t mean you have to become a TikTok star. It could be as easy as:

Freelancing. If you have skills people will pay for, put them to work as a freelancer. Writing, data entry, and editing are all great options.
Consulting. Do you have a lot of expertise in a niche area? Become a part-time (or even full-time) consultant.
Side hustles. The more money you make, the more you can save and invest. Doing extra work on the side now pays off big down the line.

8. Cultivate a positive money mindset

Your beliefs and attitudes about money play a major role in your financial success. Practice positive money affirmations, visualize your financial goals, and cultivate an abundance mindset. Replace negative thoughts like "I’ll always be stressed about money" with empowering statements like "I am attracting wealth and abundance into my life."

9. Be persistent

Building wealth takes time and dedication. Be persistent and seize every opportunity to boost your income, save, and invest. You’ll face challenges along the way, but don't get discouraged. Consistency and patience are the keys to long-term success.

FAQs

Still not sure how to fill your wallet? Here are some frequently asked questions.

Where can I learn how to make a million from nothing?

Building a million-dollar net worth from scrtch isn’t easy. But it’s totally doable with the right knowledge and a solid plan. Here are some resources to guide you:

The EarnIn blog. Just by reading this article, you’re off to a good start. Bookmark the EarnIn blog for more content that can help you grow your wealth.
Reputable financial websites. Seek out reliable sources that offer comprehensive guides, articles, and resources to nurture your financial literacy.
Books and podcasts. Dive deeper into specific areas of interest with books by renowned financial experts, or learn on the go with an engaging financial podcast.
Financial advisors. A qualified financial advisor can help you create a customized financial plan, navigate investment options, and stay on track to reach your goals.

How does home equity grow over time?

Home equity is the difference between your home’s current market value and the amount you owe on your mortgage. It can grow in a number of ways:

Mortgage principal payments. A portion of every mortgage payment you make goes toward reducing your loan principal, which increases your equity.
Property value appreciation. Over time, real estate tends to appreciate (grow) in value. As your home's market value increases, so does your equity.
Home improvements. Making strategic renovations or upgrades to your home can increase its value and, in turn, your equity.

Strengthen your financial future with EarnIn

Getting paid as you work with EarnIn can’t help you become a millionaire in three months. But it can help you stay on top of your finances today to build a stronger financial picture for tomorrow.

EarnIn’s Tip Yourself tool rewards you for small achievements, like turning saving money into a more positive, motivating experience. And free Credit Monitoring lets you keep a close eye on your credit score at any time, for free.

Download EarnIn to get the tools you need to make moves toward your goals.

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