The Easiest Way to Become a Millionaire if you are 20
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So, you’re 20 years old, dreaming of becoming a millionaire? That’s awesome! And here’s the thing—it’s not some far-fetched fantasy. With a mix of smart planning, patience, and a little hustle, you can totally set yourself up to hit that millionaire status. Becoming a millionaire doesn’t happen overnight, but starting young gives you a massive advantage. Let’s break down how you can make it happen, step-by-step.
How to Get Started:
- Open a Roth IRA: This is a retirement account where your investments grow tax-free. Since you’re young, you’ll benefit the most from this. Platforms like Vanguard, Fidelity, or Charles Schwab make it easy to start with as little as $50.
- Invest in Low-Cost Index Funds: These are like a bundle of stocks that track the overall market, meaning you’re not betting on just one company but spreading out your risk. Popular choices include funds that track the S&P 500.
- Automate Your Investments: Set up automatic contributions to your investment account. Even if it’s just $100 a month, over time, that can grow to serious money.
Pro Tip: If you invest $500 a month in an index fund with a 7% return, you could have over a million dollars by your 50s—earlier if you increase your contributions or earn higher returns.
How to Get Started:
- Create a Budget: Track your income and expenses. See where you can cut back (like eating out less or canceling that unused subscription). Apps like YNAB or Mint can help you stay on track.
- Save at Least 20% of Your Income: If you’re serious about building wealth, aim to save and invest at least 20% of what you earn. If that feels impossible, start smaller and gradually increase the amount.
- Avoid Debt: Credit card debt is a killer when it comes to building wealth. Try to pay off your credit card balance every month to avoid those high-interest charges.
Pro Tip: Every dollar you save in your 20s is worth more than saving in your 30s or 40s because of compounding growth. So even small sacrifices now can lead to big rewards later.
How to Get Started:
- Ask for a Raise or Promotion: If you have a job, don’t be afraid to negotiate for higher pay, especially if you’ve been performing well. Do some research on what your role is worth and build a case for why you deserve more.
- Start a Side Hustle: Whether it’s freelancing, starting an online store, or flipping items on eBay, a side hustle can significantly increase your income. Platforms like Shopify, Upwork, Fiverr, and Etsy make it easier than ever to start making extra money on the side. You can use this link to create your online store for just $1.
- Invest in Yourself: Sometimes, spending money on skills or education can pay off big time. Whether it’s learning to code, getting a certification, or starting a business, investing in your skillset can help you command a higher income.
Pro Tip: Focus on building skills that are in demand and can lead to higher-paying jobs, like tech, marketing, or finance. The more specialized you are, the more you can charge for your time and expertise.
How to Get Started:
- Identify a Need in the Market: Look for problems that people need solving, and figure out how you can be the one to solve them. It could be anything from an online store selling niche products to a local service business like lawn care or pet sitting.
- Keep Costs Low: When starting, keep your overhead costs as low as possible. This could mean working from home, using free or cheap marketing strategies, and avoiding big expenses like office space or employees until you’re ready.
- Reinvest in Your Business: As your business starts making money, reinvest those profits into growing it further. This could mean upgrading your website, buying better tools, or hiring help.
Pro Tip: Don’t get discouraged if your first business doesn’t take off immediately. Many successful entrepreneurs fail before they hit it big. The key is persistence and learning from your mistakes.
How to Get Started:
- Set Clear Financial Goals: Having a goal like “I want to be a millionaire by 40” gives you something concrete to work towards. Break that goal down into smaller milestones (like saving your first $10,000) and celebrate your progress along the way.
- Keep Learning About Money: Read books, listen to podcasts, and follow personal finance blogs to keep learning. The more you know, the better decisions you’ll make with your money.
- Ignore the Noise: There will be times when the market drops, or you feel like giving up, but sticking to your plan is crucial. Don’t let fear or short-term setbacks derail you.
Pro Tip: When investing, remember that the stock market has ups and downs. Stay focused on the long term, and resist the urge to make emotional decisions when things get rocky.
1. Start Investing Early (Like, Now)
When you’re 20, time is your biggest asset. The earlier you start investing, the more time your money has to grow. That’s the magic of compound interest—your money makes more money, and over time, the growth can be exponential.How to Get Started:
- Open a Roth IRA: This is a retirement account where your investments grow tax-free. Since you’re young, you’ll benefit the most from this. Platforms like Vanguard, Fidelity, or Charles Schwab make it easy to start with as little as $50.
- Invest in Low-Cost Index Funds: These are like a bundle of stocks that track the overall market, meaning you’re not betting on just one company but spreading out your risk. Popular choices include funds that track the S&P 500.
- Automate Your Investments: Set up automatic contributions to your investment account. Even if it’s just $100 a month, over time, that can grow to serious money.
Pro Tip: If you invest $500 a month in an index fund with a 7% return, you could have over a million dollars by your 50s—earlier if you increase your contributions or earn higher returns.
2. Live Below Your Means
It’s tempting to spend your money on new gadgets, clothes, or nights out when you’re young, but the more you can save now, the faster you’ll hit your financial goals. Living below your means is all about finding balance. You don’t need to deprive yourself but try to make thoughtful choices that help you build wealth.How to Get Started:
- Create a Budget: Track your income and expenses. See where you can cut back (like eating out less or canceling that unused subscription). Apps like YNAB or Mint can help you stay on track.
- Save at Least 20% of Your Income: If you’re serious about building wealth, aim to save and invest at least 20% of what you earn. If that feels impossible, start smaller and gradually increase the amount.
- Avoid Debt: Credit card debt is a killer when it comes to building wealth. Try to pay off your credit card balance every month to avoid those high-interest charges.
Pro Tip: Every dollar you save in your 20s is worth more than saving in your 30s or 40s because of compounding growth. So even small sacrifices now can lead to big rewards later.
3. Increase Your Income
To reach millionaire status, you’ll need to focus not just on saving but also on growing your income. The good news is, being 20 means you have time to hustle and try out different ways to boost your earnings.How to Get Started:
- Ask for a Raise or Promotion: If you have a job, don’t be afraid to negotiate for higher pay, especially if you’ve been performing well. Do some research on what your role is worth and build a case for why you deserve more.
- Start a Side Hustle: Whether it’s freelancing, starting an online store, or flipping items on eBay, a side hustle can significantly increase your income. Platforms like Shopify, Upwork, Fiverr, and Etsy make it easier than ever to start making extra money on the side. You can use this link to create your online store for just $1.
- Invest in Yourself: Sometimes, spending money on skills or education can pay off big time. Whether it’s learning to code, getting a certification, or starting a business, investing in your skillset can help you command a higher income.
Pro Tip: Focus on building skills that are in demand and can lead to higher-paying jobs, like tech, marketing, or finance. The more specialized you are, the more you can charge for your time and expertise.
4. Start a Business
If you’re ambitious and willing to take some risks, starting a business can be one of the fastest ways to build wealth. Yes, it’s risky, but the potential rewards can be massive. The key is to start small and learn as you go.How to Get Started:
- Identify a Need in the Market: Look for problems that people need solving, and figure out how you can be the one to solve them. It could be anything from an online store selling niche products to a local service business like lawn care or pet sitting.
- Keep Costs Low: When starting, keep your overhead costs as low as possible. This could mean working from home, using free or cheap marketing strategies, and avoiding big expenses like office space or employees until you’re ready.
- Reinvest in Your Business: As your business starts making money, reinvest those profits into growing it further. This could mean upgrading your website, buying better tools, or hiring help.
Pro Tip: Don’t get discouraged if your first business doesn’t take off immediately. Many successful entrepreneurs fail before they hit it big. The key is persistence and learning from your mistakes.
5. Stay Consistent and Patient
Building wealth takes time, and there will be ups and downs along the way. But the biggest key to becoming a millionaire is consistency. Stay committed to your goals, keep learning, and don’t get distracted by short-term setbacks.How to Get Started:
- Set Clear Financial Goals: Having a goal like “I want to be a millionaire by 40” gives you something concrete to work towards. Break that goal down into smaller milestones (like saving your first $10,000) and celebrate your progress along the way.
- Keep Learning About Money: Read books, listen to podcasts, and follow personal finance blogs to keep learning. The more you know, the better decisions you’ll make with your money.
- Ignore the Noise: There will be times when the market drops, or you feel like giving up, but sticking to your plan is crucial. Don’t let fear or short-term setbacks derail you.
Pro Tip: When investing, remember that the stock market has ups and downs. Stay focused on the long term, and resist the urge to make emotional decisions when things get rocky.