How To Become a Millionaire If You Make Less Than $40,000

Watching the Masters last week reminded me that when I started my new company, one of the things I wanted to do was track clients’ net worth. Why? There are many reasons, but the most important reason is because what you put your mind on grows. Everyone I know would like to add a couple hundred thousand to their net worth. By tracking net worth, we learn that making smart financial decisions can grow our wealth faster than if we follow herd consumerism mentality. Albert Einstein said that insanity was “doing the same thing over and over again and expecting different results” If our net worth is not growing as we would like, we need to change our financial habits.

Tracking net worth is not new. Many millionaires already do it without realizing it. T. Harv Ekert, author of Secrets of the Millionaire Mind says you would never hear someone at (Augusta) say “Did you hear Rory’s making $150,000? He sure is doing well.” More than likely they’ll say something like “Whoa! Did you hear? Rory is worth $8 million now”

Knowingly or not, millionaires benefit from the principle that what you put your mind on grows. They also benefit from having an uncanny ability to take smart calculated risks and avoid unnecessary risks. Some of the millionaire wealth building habits we can learn are:

1. Live Below Your Means

In other words, if you make $100,000, you should live off $85,000. This includes your expenses AND taxes. Did you know that according to Thomas J. Stanley, author of The Millionaire Next Door, most millionaires are either meticulous budgeters, or they marry one? In Robert Kiyosaki’s book Rich Kid, Poor Kid, he says that the Rockefeller families made their kids account for every penny of their allowance, hence instilling in them the budgeting habits millionaires are so intimate with. It may not be in us to follow a budget. If that is the case the next best thing is to make sure that you pay yourself first.

2. Pay Yourself First

Why pay the government before you get paid? The government is smart in that they automatically get their cut before you get yours unless you put money in a retirement plan or IRA. Regardless as to how you do it, you can become a millionaire by paying yourself first every time you receive a paycheck. The most successful people automate this process and pay themselves monthly. While volunteering for the NAPFA/Kiplinger’s Retirement Hotline I once spoke with a janitor who made less than $40,000 per year for his entire life that had accumulated $2.5 million by age 72 using the principle of paying himself first.

3. Manage Debt

If you really want to get ahead in life, do not become a debtor. Debt can single handedly keep you in poverty. Some say that Albert Einstein said the most powerful force in the universe was compound interest. Compound interest is when your interest makes interest for you, and your money starts to “work for you.” Think of interest you pay on debt as the opposite of compound interest. You pay interest on interest and all of a sudden a car worth $26,500 financed at 4.99% over 60 months actually costs you (500X60) $30,000. Now $3,500 interest may not seem like much, but if you invested $500 a month and earned 8%, you would pay for the car in less than 4 years.* In 5 years you would have $36,707.

This simple choice would result in a difference in net worth of ($36,707-$26,500) $10,207. Not to mention once they own the car, most millionaires drive them for 15+ years. This principle works exponentially for a house. Dave Ramsey, author of The Total Money Makeover suggest financing houses for 15 years or less and paying them off as soon as possible. This allows you to take a negative return (interest) and exchange it for a positive return (investments) sooner. Just ask anyone without a house payment. With no house payment, you can really grow your net worth.

Regardless as to how you do it, by thinking in terms of net worth and not following conventional herd mentality, you can grow your net worth faster.

*There is no guarantee when investing in the stock market.

About the author

Richard T. Feight, CFP®

Among independent financial advisors, Mr. Feight is one of the most well known and highly respected “Fee-Only” financial planners. Since 1997, Rich has dedicated his career to offering low cost “Fee-Only” comprehensive financial planning and investment advice. Rich assists his clients in organizing their finances so that they can retire on time.Rich is a graduate of Michigan State University where he received his degree in Finance. Rich has earned the Certificate of Financial Planning from The College for Financial Planning in Denver , Colorado that was comprised of intense graduate level classes grounding him in the various foundations of financial planning. He is a CFP® (Certified Financial Planner®) since 2001, meeting the experience, education requirements and passing the two-day, 10 hour exam, making him one of the few in the country who hold the designation. Since 2003, Rich has subscribed to the stringent and mandatory annual educational hours, experience, and code of ethics to meet the requirements to be a NAPFA Registered Financial Advisor. Out of the 800,000 individuals in the country who claim they are financial advisors/planners, fewer than 1,300 in the country qualify for the membership; Rich is one of them.

Rich is the President of the Financial Planning Association (FPA) of Michigan . The FPA of Michigan is one of largest and influential chapter in the country. Rich was recently named President for Transportation Toastmasters Club 4776 downtown Lansing . He has been quoted in both local and national media from Noise Magazine to CNBC, and Bloomberg, and industry news publications such as Investment News and Financial Advisor Magazine. Rich enjoys public speaking and has spoke at industry educational meeting, high schools, and executive investment clubs, AARP conferences, and business educational seminars for companies looking to educate their employees. Rich views his role as a Fiduciary for his clients as the single biggest key to any planning relationship and strives to provide the most competent, unbiased and objective advice in the financial planning profession today.


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  • Good questions. My wife’s 403b plan administrators just changed because the 403b rules are becoming more strict. I believe it is because they are required to be Fiduciaries to you; however, that being said it is always good to get a second opinion.

    I’d suggest Fee-Only versus Fee-Based. Fee-Only are planners that work strictly for, and are only paid by you. Fee-Based planners can earn a commission too, which can introduce conflicts of interest.

    Besides, a good Fee-Only advisor will combine your 403b management AND your other investments to create a well run, tax optimized portfolio. I’m going to blog about that soon.

  • Hi Francine,

    Congratulations! You are about to become what many only dream of… debt-free. I suggest you pick up a book called Automatic Millionare by David Bach. He helps explain how to set up your new excess cash flow so that you begin accumulating wealth. As as far as investing goes, you could go a couple different way.

    1. You can search for an hourly advisor to help put together an asset allocation (collection of investments) at or

    2. You could DIY (do-it-yourself) using books and online resources. The problem here is most of the time it isn’t kindergarten. The Bogleheads guide to investing and The Little Book of Common Sense Investing. Both are good and will point you in the right direction.

    I keep a list on my blog at

    Good luck! Rich

  • My husband and I just turned fifty and are about to get ourselves fully out of debt.

    I’m OVERHWHELMED about what to do next. I’d like to invest but I know nothing about it.

    What do you recommend I read about how to start investing. I’m especially interested in investing overseas, like India.

    I need a book that’s the kindergarten of direction.

    Ahhhhhhhhhhhh, help!

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