If you want to be a millionaire, you’ve probably wondered what the secrets of self-made millionaires are.
While becoming a millionaire is a difficult endeavor, a look at the average self-made millionaire is proof that just about anyone can join this group of wealthy individuals.
According to Credit Suisse, the amount of millionaires in the U.S. reached an all-time high with 1.7 million Americans becoming millionaires in 2020. Millionaires now make up almost 9% of the entire U.S. population.
A different report published by Wealth-X, found that more than 65% of the world’s richest are self-made.
Not only is more than 8% of the U.S. population millionaires (65% of which are self-made), these individuals also tend to be regular, everyday people that are hard working and have lived below their means. They aren’t the flashy influencers you see on Instagram.
So, what habits can you adopt to become a self-made millionaire? In this post, we’ll discuss their top 10 secrets that will guide you on your journey to becoming one yourself.
What is a Self-Made Millionaire?
There are only two types of millionaires – those who inherited their wealth and those who are self-made.
Simply put, a self-made millionaire is a person who has become super successful and built wealth through their own hard work and did not have money freely handed to them by a parent or anyone else.
In other words, a self-made millionaire is someone who started out in life without any money and wasn’t born into a high social class.
Now that you know what a self-made millionaire is, let’s discuss their top 10 secrets that can help you become one yourself.
10 Secrets of Self-Made Millionaires
- Their mindset and belief in themselves
- The strong work ethic they developed
- Having a financial plan and setting goals
- Creating multiple streams of income
- Focusing on investing rather than spending
- Avoiding debt like it’s the plague
- The frugal lifestyle they live
- Taking calculated and strategic risks
- Who they surround themselves with
- Taking responsibility for their situation
1. Their Mindset
The millionaire mindset is a very real thing. If you want to build wealth, you need to elevate your beliefs about what you think is possible for yourself. Focus on abundance and get rid of any thoughts that promote doubt and scarcity.
As Confucius once said,
The man who says he can, and the man who says he can’t are both right.
Your beliefs about what you think you’re capable of will make or break your financial success.
To become a self-made millionaire, you have to truly believe you can achieve whatever you desire, attain great heights, and succeed beyond your wildest financial dreams.
2. Their Work Ethic
There’s no such thing as “get rich quick.” To become a self-made millionaire, you have to work like one, which involves a lot of sacrifices. This might mean working 60, 70, or even 90 hours per week.
As Elon Musk once said,
If other people are putting in 40-hour workweeks and you’re putting in 100-hour workweeks, you will achieve in 4 months what it takes them a year to achieve.
As a result of working this much, you may have to sacrifice your hobbies, your social life, weekends, or even some of your family time.
Although you need to work hard to become a self-made millionaire, keep in mind that you also have to work smart.
For example, wealthy people know how valuable time is. In fact, they see time as far more valuable than money itself.
Considering this, they hire people to do things that aren’t a good use of their time. They also know what they aren’t good at and hire people to fill those roles.
3. Having a Financial Plan
If you want to be a millionaire, it’s important you have a financial plan. Wealthy people don’t just think about the next few months, they plan 1 year, 5 years, 10 years, and even 20 years into the future.
Considering this, you should make short-term and long-term financial goals. View becoming a millionaire as the big picture and then ask yourself, “What do I need to accomplish in the next 180 days to move closer to becoming a millionaire? What do I need to achieve in the next 5 years?”
After doing so, make a financial plan that details exactly how you’re going to achieve your short-term and long-term goals that will move you closer to becoming a millionaire.
Your short term goals should be small wins that you can achieve every few months to keep you motivated and determined to succeed. Making tangible progress will decrease your likelihood of quitting.
Achieving your long-term goals should come as a result of accomplishing several micro goals over the span of several years.
4. Having Diversified Income
Studies have found that the majority of self-made millionaires have multiple streams of income, rather than just relying on one.
Considering this, if you want to be a millionaire, you should spend your time and energy diversifying your income.
Creating multiple streams of income can come in the form of starting a new business venture, investing in the stock market, buying rental properties, and much more.
Simply put, keep building your investment portfolio until you have very diversified income. Not only will this help you become a millionaire, it will also act as a safety net.
If someone only has one source of income, such as their job, and gets laid off, they can be in quite a bit of trouble. On the other hand, if someone has multiple streams of income and loses one, they can rely on the others.
5. Focusing on Investing
Self-made millionaires don’t focus on spending money, they’re more focused on investing it.
While the average person may buy a luxury car that depreciates, self-made millionaires buy assets that generate income and increase in value over time.
For example, a wealthy person may invest in an apartment complex because it will appreciate, allow for tax write-offs each year, and ultimately, produce cash flow.
Not only should you invest in income generating assets, you should also invest in yourself, which will always be your most valuable asset.
Take time to increase your knowledge and improve your skills as much as possible. In other words, become a lifelong learner.
Read books about personal finance, take courses on investing, listen to podcasts about entrepreneurship, and do anything else that can help you increase your knowledge.
6. Avoiding Debt Like the Plague
Self-made millionaires typically avoid debt like it’s the plague. They understand how crippling it can be to building wealth, so they try to have as little debt as possible.
Debt is a liability and as a result reduces net worth. In addition, the interest you pay on debt, such as credit card debt, is money that’s wasted and gone forever.
Instead of wasting money on interest payments on debt, self-made millionaires save, invest, and even lend money instead. Simply put, they’re the ones receiving interest instead of paying it.
However, keep in mind that not all debt is the same. While you want to avoid credit card debt at all cost, investing in a new business venture and going into debt temporarily as a result is very different and may be worth it in the long-run.
Although, you should always be cautious when going into debt no matter the circumstance. Always be wise and strategic if you do.
7. The Lifestyle They Live
Contrary to what you see on social media, the average self-made millionaire lives a very frugal lifestyle. In other words, they live below their means and spend a lot less than what they make.
Here are a few ways to live a frugal lifestyle:
- Create a budget and sticking with it
- Build an emergency fund
- Cut your expenses as much as possible
- Buy a modest home you can actually afford
- Buy a vehicle with a low monthly payment
- Don’t keep up with the Joneses
- Avoid debt
Keeping in mind, living a frugal lifestyle doesn’t have to mean being cheap. Being cheap means spending as little as possible. For example, going to the store and buying the lowest-priced item without thinking about anything else.
On the other hand, being frugal means being intentional with how you spend your money and choosing to spend less on things that you don’t care about and won’t improve your life.
8. Taking Calculated Risks
Greyson Chance once said, “Bigger the risk, bigger the reward.” This quote is absolutely true and always will be. Self-made millionaires not only take big risks, they know how to make strategic and calculated ones.
Becoming a self-made millionaire will certainly involve willingness to leave your comfort zone and embrace taking risks.
Whether you’re starting a business, climbing the corporate ladder, or just investing in the stock market, there will always be risk present.
It’s not about completely eliminating the risk, it’s all about how you handle and deal with the risk that comes with anything you may do to become a self-made millionaire.
Make calculated risks by measuring your chances of success and determining if the potential rewards will outweigh the cost of failure.
9. Who They Surround Themselves With
If you want to become a millionaire, you need to surround yourself with people who already are.
If you don’t know anyone that’s a millionaire, then surround yourself with people who also have the goal to become wealthy and have adopted a millionaire mindset.
In other words, surround yourself with like-minded people who are also big dreamers and share your vision of financial success and have a strong work ethic.
As Jim Rohn once said, “You become like the 5 people you spend the most time with. Choose carefully.”
Surrounding yourself with successful people may also include finding coaches and mentors. Read their stories, study their strategies, and learn their habits.
When you have mentors and coaches who are where you want to be and have achieved the same goals you want to achieve, the process will go a lot faster.
10. Taking Responsibility
One of the last secrets of self-made millionaires is taking responsibility.
Self-made millionaires take responsibility for every aspect of their lives, including their financial situation. They see themselves as the only person that is responsible for their decisions and outcomes.
They never play the victim and blame others, such as their parents, boss, a teacher, or anyone else for their situation.
When someone blames others for sabotaging their success (even if it’s true), they’re giving power over their life and financial future to others.
In contrast, when someone takes full responsibility for their decisions and outcomes, they end up taking full control of their life as a result. This control allows them to make changes as needed to achieve their financial goals.
Secrets of Self Made Millionaires FAQs
Here are the answers to a few of the most frequently asked questions about self-made Millionaires.
How Do Most Self-Made Millionaires Make Their Money?
According to a 2017 study by Fidelity Investments, the top sources of income for self-made millionaires are through assets such as investments/capital appreciation, compensation, and employee stock options/profit sharing.
This is in stark contrast to millionaires who are not self-made. Individuals who inherited their wealth often claim entrepreneurship, real estate investing, and inheritance itself as sources of income.
What Job Produces the Most Millionaires?
According to a study done my Ramsey Solutions, the top 5 careers that produce the most millionaires are engineer, attorney, accountant, management, and teacher.
The study states that, “The majority of millionaires in this survey didn’t have high-level, high-salary jobs. In fact, only 15% of millionaires were in senior leadership roles, such as vice president or C-suite roles (CEO, CFO, COO, etc.). Ninety-three percent (93%) of millionaires said they got their wealth because they worked hard, not because they had big salaries.”
What Are the Odds of Becoming a Self-Made Millionaire?
According to a 2019 Survey of Consumer Finances by the Federal Reserve, your odds of becoming a millionaire in the U.S. are between 6.4% to 22.3%.
The survey found that Asian Americans have the greatest odds of becoming a millionaire at 22.3%. The study also found that having a college education, among other factors, drastically increases your odds.
Final Thoughts on Self Made Millionaires
Becoming a self-made millionaire is no easy endeavor and takes a lot of hard work, drive, self-discipline, and passion. However, these top 10 habits of self-made millionaires will guide you on your journey to becoming one.
The greatest reward in becoming a millionaire is not the amount of money you earn. It is the kind of person that you have to become to be a millionaire in the first place.– Jim Rohn