If You Don’t Win the Birth Lottery, You’ll Have To Earn It Yourself

Every millionaire in America falls into one of two categories: those who are self-made and those who became rich through that oh-so-important original roll of the dice when they were born into money. The latter, of course, is the easier of the two options — but it’s not the most common.

According to the 2021 Wealth-X World Ultra Wealth Report, the vast majority of ultra-high net worth (UHNW) individuals — those worth at least $30 million — are self-made, 72%, to be exact. Granted, that percentage is for the entire world, not just the United States, but America is the land of UHNW individuals.

And of these individuals, 101,240 of them live in the United States. The next closest competitor, China, is home to fewer than 30,000 despite the country’s enormous population advantage. The U.S. hosts three of the world’s top five UHNW cities (New York, Los Angeles and Chicago) and six of the top 10 (add on San Francisco, Washington, D.C. and Dallas).

Be Aware: $1M Is No Longer the Standard Nest Egg – Here’s How Much Most Americans Think You Actually Need To Retire

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How Can I Get Rich With No Money?

Unless you come from a very wealthy family, are expecting to win the lottery, or are on the verge of getting a patent on the next great invention, there's very little chance that you can become rich by doing nothing. You'll need discipline, a plan, and, in some cases, good advice from a registered professional who can help push you in the right direction to reaching your goal of becoming a millionaire.

What other ways can real estate make you a millionaire?

We just discussed how rental properties can make you a millionaire, but there are many other ways to make a lot of money with real estate. I wrote a couple of articles about how to make millions with real estate below.

Besides flipping and being a real estate agent there are more ways to use real estate to make a lot of money.

  • Development: Probably the way to make the most money the fastest in real estate is by developing land into residential or commercial projects. This technique is also extremely risky and takes a lot of money and experience. I know a couple of real estate developers in my area who are worth close to or over 100 million and many of the billionaires who used real estate are developers.
  • Building homes: Building goes hand in hand with developing and is another way to make a lot of money, but can be very risky if the markets turn.
  • Owning raw land: Raw land can be developed, but it also can make you rich without development. Many farmers have become millionaires because they owned large plots of land close to developing areas. The closer the towns get to their land the more it is worth. Mineral rights can also be extremely valuable if oil, natural gas, or other resources are found on your land.

Conclusion

Becoming rich is not easy. Many people who inherit wealth or have money come easily to them lose it. If you want to get ahead of the game and live an awesome life you have to do what most people aren’t willing to do. Otherwise, we would all be rich! Whether you choose real estate or another avenue to make your riches, make sure you choose the path and you do whatever falls in your lap because it is the easiest route. Most people will not follow through with their plans or intentions when things get tough, don’t be most people.

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Perception Versus Reality

Overall, The National Study of Millionaires showed a dramatic difference between how Americans think wealthy people get their money and how they actually earn and spend their money.

The majority of the millionaires in the study said they earned their money through long-term investing. When it comes to spending, millionaires used a common tool for saving money: a shopping list. According to responses, 85% of participants in The National Study of Millionaires rely on a grocery list to some degree.

Don’t Let Lifestyle Debt Prevent You from Becoming a Millionaire

If there’s one roadblock on your way to becoming a millionaire, it’s lifestyle debt. This is debt, often charged to a credit card, to purchase everything from vacations to a night out on the town. A reasonable amount of debt that helps us buy something of lasting value, such as an education or a home, can be a smart choice. Going into high interest debt to buy things with no lasting value works against the goal of becoming a millionaire.

Self-made millionaires all share the same goal

While all the money habits we’ve discussed so far contribute in significant ways to a millionaire’s success, one common behavior stands out above all the others: saving.

All the self-made millionaires in Corley’s study made a habit of saving 10-20% of their income before making their first million dollars. Comparing that to the average American savings rate of about 8% makes it easy to see how saving money results in accumulated wealth.

How Millionaires Invest (and Spend)

According to the survey, 8 out of 10 millionaires invested in their company’s 401(k) plan, and that simple step was a key to their financial success. Not only that, but 3 out of 4 of those surveyed also invested outside of company plans. But they didn’t risk their money on single-s

But they didn’t risk their money on single-stock investments or “an opportunity they couldn’t pass up.” In fact, no millionaire in the study said single-stock investing was a big factor in their financial success. Single stocks didn’t even make the top three list of factors for reaching their net worth.

Three out of four millionaires (75%) said that regular, consistent investing over a long period of time is the reason for their success. So, the story about the young computer genius who developed an app that earned millions overnight is the exception, not the rule. Even when millionaires don’t have to worry a

Even when millionaires don’t have to worry about money anymore, they’re still careful about their spending. Ninety-four percent of the people studied said they live on less than they make, and nearly three-quarters of the millionaires have never carried a credit card balance in their lives!

These milloinaires also said they spend $200 or less each month at restaurants. And 93% of millionaires use coupons all or some of the time when shopping. By staying out of debt and watching expenses, they’re able to build their bank accounts instead of trying to get out of a financial hole every month.

The best way to become a millionaire

Now that you know how others made their millions, you may be wondering what you can do to apply that knowledge to your own financial life.

Here are three touchstones of the millionaire’s approach to money:

Diversify your investments

Investing your money in different places helps ensure that you aren’t too vulnerable to risk. That way, if one sector or company fails, you can always count on your other investments to carry you through.

If you’re unsure how to efficiently manage your investments, hiring a financial advisor can help you develop a successful strategy.

Have multiple streams of income

Self-made millionaires almost all optimize their time by having multiple sources of income. 

These can include their employment salary, income from real estate, and dividends from investments in the stock market.

Save

The most important habit shared by all self-made millionaires is saving a significant portion of their income. You should focus on setting aside 10-20% of your income every month and place it in long-term, safe investments. 

Using a bucket system with several different accounts can be a great way to get started.

The Pros and Cons of a Live-and-Rent Approach

This approach does require moving about every year, however.

But if you’re a 22-year-old just graduating from college, that means you will own 10 pieces of property by your early 30s. If a 15-year mortgage is obtained and paid off early, several could be owned free and clear. That would provide for a significant stream of income for the investor. From that flow of funds, more properties can be purchased, too, continuing into the future if you wanted to.

Related: Buy A House vs. Rent An Apartment – The Math

How much time self-made millionaires devote to new income streams

If you have a consuming 9-to-5 job and/or other sorts of commitments at home and at work, carving out the time to devote to starting another income stream might seem daunting. Based on what I've learned from my research, you can start small:Set aside no more than five hours each week and begin slowly building something new. 

If you're not sure where to start, think about the subjects, skills, and activities you are most passionate about, and explore the ways that you could monetize one of those

In my research, other than consistent saving and investing, passion was by far one of the most important shared attributes of the self-made millionaires in my study. 

VIDEO 2:45 02:45 Barbara Corcoran: How your hobby can become a side hustleEarning

Video by Stephen Parkhurst

The Industries That Make People Rich

If the status of millionaire isn’t a high enough aspiration for you, there’s no better time than now to be a billionaire — the world’s three-comma club now has a record-breaking 2,755 members, according to Forbes.

The 10 industries that produced the greatest proportion of the world’s billionaires, in order from fewest billionaires to most, are:

  • Media and entertainment
  • Energy
  • Diversified
  • Real estate
  • Food and beverage
  • Healthcare
  • Fashion and retail
  • Manufacturing
  • Technology
  • Finance and investments

Read Next: The Richest Celebrity From Every State

Surprisingly Simple Ways to Become a Millionaire

Simple tasks are not always easy tasks. If I were to hand you a spoon and ask that you dig a hole nine feet down into packed soil, that’d be pretty straightforward and simple but it certainly wouldn’t be easy.

Likewise, you’ll find some of these simple ways to be just that – simple but not easy. But come on, you’re tenacious enough for the job, right?

Jaime Tardy, author of Eventual Millionaire who has interviewed hundreds of millionaires has this to add , “One of the main traits of a millionaire is perseverance. The ability to KEEP GOING in the face of adversity even when the finish line is very far away.”

One last thing. Remember that many of these tips are surprisingly simple, don’t underestimate their effectiveness just because you’ve “heard that one before.” Put these babies to good use and watch your millionaire potential soar!

1. Work smarter and harder than your competition

Identify your competition. How hard are they working? What are some differentiators you can bring to your workplace or market?

Start by working smarter. There’s no use in working harder if your work isn’t effective at producing income – you’ll be spinning your wheels.

There’s no sense in selling ice cream cones on your front lawn in the dead of winter. Instead, set up a booth at the park in the sizzling summertime – you get the idea! Simple, commonsense changes can greatly improve your effectiveness.

Work harder than others are willing. We’ve all seen the guy or gal at the office who works harder than anyone else. Maybe they’re a little nerdy or a little too interested in their job – or are they?

Maybe they’re onto something. After all, aren’t they the ones getting the promotions? Aren’t they the ones who become the office linchpins?

I remember when began my career with A.G. Edwards & Sons in 2002, I was in a training class of around 55 people. After completing training a year later, our class was reduced to less than half. My fifth anniversary mark? Only five of us were left.

Most failed. Why? Because they weren’t willing to put in the hard work required.

I beg you to not be afraid of hard work. Not only will your boss feel better about what you’re doing for them – you will too.

I’m not afraid to die on a treadmill. I will not be outworked. You may be more talented than me. You might be smarter than me. And you may be better looking than me. But if we get on a treadmill together, you are going to get off first or I’m going to die. It’s really that simple. I’m not going to be outworked. – Will Smith, Actor

2. Learn from your mistakes and move on

Everyone makes them. I do, you do, we all do.

And believe me, I’ve made some pitiful mistakes.

Would you get suckered into two multi-level companies that go nowhere? Would you throw $8,000 into an online business venture only to lose it all? Those are just a couple of several investment mistakes I’ve made with my money.

Mistakes are difficult to swallow. I think our first gut reaction as human beings to the realization we messed up is to shift blame – to others or to circumstances.

The very best way forward is to admit we fumbled the ball. Are you willing to admit when you make mistakes?

Some people, when faced with their own inadequacies, beat themselves up. And you know what that does? It paralyzes them from making the decisions they need to make to achieve success.

It’s important to remember that . . . .

Only those who are asleep make no mistakes. – Ingvar Kamprad, Founder of IKEA

So, take the simple step to fess up and move on. Yes, it’s simpler than you think – especially once you have practice.  If you are still in the middle of a debt mistake one of the best things you can do is to stop paying interest by transferring your balance over to a 0% APR credit card.  This will free you up to hammer down on that debt instead of paying big interest payments.

Millionaires don’t give up because of a few silly mistakes. They press on toward the goal.

3. Build something new that you would love – and be sure to experiment

You can read book after book about how to research what your customers will love, and by the time you deliver it, they’ll already be bored with it.

If you’re the entrepreneurial type – I know I am – make sure to work on projects you can get excited about!

Chances are, if you create something that you’d use and love, others will too.

Millionaires understand that some of the best ideas don’t come out of costly research, they come out of a passion for making the world a better place.

Also, remember to experiment. Have fun! Some of my best ideas come out of experimentation.

In 1945, Percy Spencer experimented with a new vacuum tube while doing research for the Raytheon Corporation. He popped popcorn and melted a candy bar, and saw the great potential for this process which eventually culminated into the advent of the microwave.

Tim Cook, the CEO of Apple recently explained in an interview with Charlie Rose that it’s more difficult to edit than it is to create something entirely new. But I’ve learned that sometimes creating something new can be the best way forward to becoming a millionaire.

One of the things that I’ve been most excited about building  is my blog.  My financial planning practice was growing at a steady rate but after I launched GoodFinancialCents.com in 2008 my practice and revenue have grown significantly. Some of that is a direct result of getting new clients to my practice while the other more surprising revenue source has been directly from the blog.

A combination of advertising revenue and introduction to new business opportunities (because my name and face are all over the web) have been a huge blessing.

Here’s the thing you have to realize though:  I KNEW NOTHING ABOUT BLOGGING.

That’s right.  The launching of my blog was a total experiment and still is today.  I’m always testing different ways to monetize and build my brand.  Experimenting is the fun part!

You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new. – Steve Jobs, Former CEO of Apple

4. Learn to budget – or at least get help doing so

You know that I hate budgeting. Thankfully, my wife budgets like a pro.

Here’s a tip from one of the financial greats (a millionaire, to say the least):

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. – Warren Buffett, CEO of Berkshire Hathaway

If you don’t budget, I promise you’ll lose money to overspending.

Want to make yourself sick? Count up how much you’re spending on eating out, clothing, gadgets, and other delights and write it down. Then, start budgeting. After a year, look at how much you’re spending and compare with your initial count.

Yikes. Try not to lose your lunch.

A hugely important part of budgeting is ensuring you’re spending less than you’re making. And the only way to do that friends, is to track everything.

If you’re not a spreadsheets-kind-of-person, that’s okay. Just make sure you have some help.

6. Don’t believe discouraging people

As soon as you accept that you’re not going to become a millionaire, you probably won’t – you’ll settle for the ordinary.

Your beliefs about your future matter a whole lot, and will – in part – help determine your future.

After all, your beliefs affect your actions, and your actions affect your outcomes.

When you listen to discouraging people, you’re letting them accomplish their goal – to drag you down and ensure you don’t surpass their success. No good.

Instead, I suggest you prove them wrong – but be humble about it. Your results will speak louder than your words, I promise you.

I just love it when people say I can’t do it, there’s nothing that makes me feel better because all my life, people have said that I wasn’t going to make it. – Ted Turner, Founder of CNN

7. Save some of your income for a rainy day

If you’ve lived on this planet for any considerable number of years, you know that bad stuff happens.

Not only that, sometimes several bad things happen all at the same time. Talk about knockout power!

That’s why I recommend that you save some of your income for a rainy day.

Medical emergencies can last years.

Trees go through roofs.

Jobs can be lost.

Don’t get caught without an emergency fund. You hear?

What does this have to do with becoming a millionaire? I’ll tell you.

If you have an emergency and don’t have some liquid cash saved up in a savings account like one from Capital One 360, you’re likely to either go into debt (bad idea) or borrow from family members (very bad idea).

Don’t be the guy that owes his parents.

Don’t be the couple that drowns in debt.

Think of debt as the polar opposite of investing. Instead of you investing in companies, companies are investing in you – looking to make as much profit as possible by pulling it out of your wallet. It’s bad news people.

According to many experts, you should have around three to six months of expenses in your emergency fund – in bad times, I recommend you shoot for eight months.

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