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The No. 1 Way for Average Americans to Become Millionaires

Being a millionaire has been synonymous with being rich for decades. It doesn’t quite mean what it used to, thanks to inflation. But it’s still an ambitious financial goal, and one that may seem out of reach if you don’t earn a higher salary.

But a net worth of $1 million is more realistic than many people realize. While it’s not easy, one study has found there’s a reliable path that average Americans can follow to become millionaires.

Tom Corley interviewed 233 millionaires for his appropriately named Rich Habits study. He found that there were four common paths followed by self-made millionaires.

Three of those paths won’t be an option for everyone. There are virtuosos who become rich because of incredible talents — great if you’re LeBron James, not so great for anyone who doesn’t have near that level of talent. There are entrepreneurs who work long hours in hopes of building successful businesses. And there are company climbers who work their way up the corporate ladder.

Then, there’s the fourth path: Saver-investors. They aren’t born rich, and they don’t make big bucks. What they do is consistently save 20% or more of each paycheck.

Yes, that’s it. It’s simple, but highly effective. It’s also the most popular millionaire path that Corley found, with 49% of self-made millionaires building wealth this way.

Following the saver-investor path to $1 million

The saver-investor path may be simple, but that doesn’t make it easy. It’s one thing to save 20% of your income for a month or two. The saver-investors that Corley studied did it much longer. It took them an average of 32 years to accumulate their wealth, which came out to an average of $3.3 million.

If you can consistently save 20% of your income, you could get incredible results over time. Let’s say your household makes $75,000, around the median U.S. income. Some of that will go to taxes, although you can contribute to retirement accounts with pre-tax income. We’ll assume you save 20% of your take-home pay, and it amounts to $12,000 per year.

Here’s how that money would grow if you invested it and got an 8% annual return. That’s in line with the stock market’s average growth.

Time Amount Invested Total Balance
10 years $120,000 $187,746
20 years $240,000 $593,075
30 years $360,000 $1,468,150

Data source: Author’s calculations

Consistent investing pays off. After 30 years of investing in the stock market with an average income, you’d have nearly $1.5 million.

Habits of successful saver-investors

When you have an average or below-average income, it’s more challenging to set aside 20%. Corley found quite a few things that saver-investors do to maintain their high savings rates.

They follow an important rule: “Same house, same spouse, same car,” as Corley defined it. New homes and new cars are expensive. So are divorces. The average cost of a divorce is $11,300 and the median is $7,000 — that’s a lot of money not being invested!

Here are a few of the key habits of saver-investors:

  • They live frugally. Saver-investors are careful about how much they spend, and they don’t fall into the trap of spending money to impress other people.
  • They purchase high-quality products. Even though they’re frugal, they’re willing to spend on products that will last, such as reliable cars and well-made furniture.
  • They stay out of credit card debt. While many saver-investors use credit cards, they pay the bill in full every month to avoid interest charges.
  • They hang out with other saver-investors. Being around people with the same goals helps saver-investors stay on the right track.
  • They’re not afraid to ask for help. Many of them have CPAs, tax preparers, and/or financial advisors they speak to regularly.

Only a small percentage of people start successful companies or earn a huge salary because of their special talents. Most follow a more accessible path to wealth. It takes time and hard work, but if you’re willing to put in that work, saving and investing could turn you into a millionaire.

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