Money / Wealth
5 min Read
By Karen Doyle
- Millionaires Aren't Rare
- What Makes a Millionaire
- How to Become a Millionaire
filadendron / Getty Images
Who doesn’t dream of being a millionaire? Today, it’s more attainable than ever. The number of millionaires grows every year, and you may be surprised at how many there are in the U.S. today.
The Global Wealth Report from Credit Suisse says there were 21,951,000 millionaires in the U.S. at the end of 2020.
Millionaires Aren’t Rare
You may think that millionaires all live in big mansions behind wrought iron gates and only in the poshest neighborhoods. But there are more of them than you think, and there may be some in your town.
According to the U.S. Census Bureau, there were 258.3 million adults in the U.S. in 2020. Since nearly 22 million of them were millionaires, that means that about one in every 11 adults in the U.S. was a millionaire at that time. There could be one — or more — in your neighborhood.
The number of millionaires in the U.S. can fluctuate on a daily basis as investments and property values go up and down. But over time, the number of millionaires tends to increase.
What Makes a Millionaire?
Being a millionaire means that you have a net worth of $1 million or more. Net worth is your assets less your liabilities, or everything you own minus everything you owe.
Here’s an example. Bob is a 45-year-old software engineer. He owns a home that’s worth $450,000, and he has a $150,000 mortgage on it. He owns a car, worth about $10,000, which is paid off. He has a 401(k) that he’s been maxing out since he started working, so it is worth $400,000. He also has some stock he got when his company went public, and that’s worth $190,000. And he inherited some stocks and bonds when his parents died — that account is worth $200,000.
Make Your Money Work Better for You
Add it all together, and Bob owns $1,250,000 worth of assets. He has a mortgage of $150,000, so after we subtract that, Bob’s net worth is $1,100,000. Bob is a millionaire.
On the other hand, Susan has a home worth $750,000 with a $600,000 mortgage She has a 401(k) worth $400,000 and $100,000 in other investments. Like Bob, she has $1,250,000 in assets but she owes $600,000 on her house. Her net worth is $650,000, so Susan is not a millionaire.
How to Become a Millionaire
Becoming a millionaire may be more common than you think, but that doesn’t mean it’s easy. It’s also not guaranteed, but there are certainly ways to increase the likelihood that you’ll acquire significant wealth over your lifetime. Here are some tips to help you on your journey to becoming a millionaire.
8 Steps To Become a Millionaire
- Start early. Saving money for the future is a habit, and the sooner you can make that habit a part of your lifestyle, the better off you’ll be. You can start small if you need to but start today.
- Always live beneath your means. Put another way, savings should be a part of your budget. Don’t fall into the trap of paying all your bills and then saving whatever is “left.” Pay yourself first.
- When you get a raise, increase your savings first. Then you can think about using part of the raise for other things.
- Always max out your retirement plan contributions. Ideally, you should save the maximum amount you can pre-tax. If you can’t do that yet, make sure you are at least saving enough to get the company match. The company match is free money — don’t leave it on the table.
- Consider a side hustle. Bringing in more money is a great way to be able to save more money. If you can, take an extra job or start a business on the side, and put that money right into savings.
- Consider the big picture when changing jobs. When you are thinking about changing jobs, consider the salary offer but also the benefits as well. And negotiate everything — a company that can’t offer a higher salary may be able to provide stock options.
- Invest. It’s a lot harder to become a millionaire if you’re getting 0.01% APY at the bank. Invest your money with the amount of risk you are comfortable with, and then leave it there. Don’t try to time the market, and don’t panic and pull your money out if the market drops. Wait it out.
- Choose your real estate carefully. Millionaires may have a significant portion of their wealth in their homes. When deciding where to buy, consider the neighborhood and the town with an eye toward the potential increase in the value of the property.
Make Your Money Work Better for You
Final Take
Becoming a millionaire isn’t easy, and it takes some sacrifice. But by starting early, planning ahead and sticking to your plan, you too could be a millionaire someday.
FAQ
- What percentage of Americans have a net worth of over $1,000,000?
- About 9% of Americans had a net worth of over $1,000,000 at the end of 2020. The number is likely somewhat less today since the stock market has declined since then and many people with a net worth of $1 million or more have investments in the stock market. But once the market recovers, the number of millionaires will rise again.
- What percentage of the U.S. population has $3 million dollars?
- According to The Kickass Entrepreneur, there are about 5,671,000 households in the U.S. that have a net worth of $3 million or more. This represents 4.41% of all U.S. households.
- What percentage of the U.S. population has $4 million dollars?
- There are about 4,474,000 households in the US that have a total net worth of $4 million or more, according to The Kickass Entrepreneur.
- How many Americans are millionaires by net worth?
- As of the end of 2020, there were nearly 22 million people in the US who had a net worth of $2 million or more.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- The Kickass Entrepreneur. 2022. "How Many Millionaires Are in the U.S.?"
- United States Census Bureau. 2021. "U.S. Adult Population Grew Faster Than Nation’s Total Population From 2010 to 2020."
