The Surprising Ways Most Millionaires Actually Made Their Money
You might assume that millionaires inherit their wealth or strike it rich with a game-changing business idea, but the truth is far different. Research shows that most millionaires are self-made. That means they worked hard, made smart choices, and built their wealth through savvy habits. So how did they do it? Let’s break it down.
Diversifying Investments and Creating Multiple Income Streams
Image via Getty Images/William Potter
One of the most effective strategies employed by self-made millionaires is diversification. Rather than putting all their money into one type of investment, they spread it across various assets, including stocks, bonds, mutual funds, and real estate. This approach helps reduce risk and provides a safety net if one area of their portfolio takes a hit.
Millionaires also rely on multiple income streams. They often earn from salaries, dividends, rental properties, and even side businesses. This ensures that if one stream slows, others can help keep the money flowing. Passive income from investments or properties also provides financial stability.
Saving and Cutting Costs
One trait that many self-made millionaires share is their ability to cut costs and live below their means. Before they built significant wealth, they kept their expenses low and evaluated every financial decision. This habit persisted even as their incomes increased. Instead of upgrading gadgets or buying luxury items, they focused on saving and investing their earnings to make them work harder over time.
Saving is a top priority for many millionaires. A common rule is to save at least 20% of income, which is put toward investments, retirement accounts, and emergency funds. By focusing on saving first, they allow their money to grow and compound, increasing their wealth over the long term.
Avoiding Debt and Building Financial Security
Image via Getty Images/Doucefleur
Debt can hinder wealth-building, and self-made millionaires know how to avoid it. While most have mortgages, they strive to keep other forms of debt, such as credit cards and car loans, to a minimum. When they do take on debt, they pay it off quickly to avoid paying high interest that can drain resources.
Instead of using debt to fund purchases, millionaires focus on using their income to pay for investments that grow over time, like stocks or real estate. Many even avoid buying depreciating assets like new cars.
Seeking Guidance and Continuous Learning
Self-made millionaires aren’t afraid to seek expert advice. They understand the value of learning from others who have more experience. These advisors help them make smarter financial decisions and avoid costly mistakes.
Additionally, millionaires understand that failure is part of the journey. They take calculated risks while learning from their failures and adjusting their strategies. The willingness to adapt, combined with ongoing feedback and self-improvement, enables them to stay on the path to financial success.