How to Become a Millionaire: Strategies for Wealth Building

Are you ready to join that impressive club?

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Key points

• A good 1.3 million Americans became millionaires in 2021.
• A strong stock market and heavy crypto gains largely contributed to that trend.

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Have you ever dreamed of becoming a millionaire? Even if it was something you thought about as a kid, chances are, it's crossed your mind at least once.

It's natural to think of millionaires as an elite group with few members. But actually, as of the end of 2021, there were a good 14.6 million millionaires in the United States, according to wealth research firm the Spectrem Group. Last year, an impressive 1.3 million people joined the millionaires club.

On the one hand, that's surprising given the way the pandemic impacted so many people's finances. On the other hand, it's not a secret that lower earners were more likely to suffer a financial blow during the pandemic than higher earners.

Also, the stock market, despite a brief dip in the spring of 2020, had a solid couple of years. That alone helped a lot of people grow a large amount of wealth in 2021.

Strong returns out of the cryptocurrency market also contributed to a larger number of millionaires last year. As of the end of 2021, the total market cap (meaning, the total value of all mined coins) of crypto assets rose to over $2.3 trillion, representing a $1.5 trillion gain.

If you're interested in becoming a millionaire (because really, who isn't?), you should know it's not just a matter of luck. There are steps you can take to set yourself on the path to a $1 million net worth or higher, like these.

1. Live below your means

To grow wealth, you'll need to spend less money than you earn. It's that simple. The sooner you get into the habit of living below your means, the more likely you are to eventually become a millionaire.

If you struggle to not spend your entire paycheck, it could help to set up an automatic transfer where some money moves out of your checking account and into your savings account every month. Following a budget might also help you keep your spending in check.

2. Stay away from high-interest debt

High-interest debt, like that of the credit card variety, can cost you money in the form of accrued interest. If you're spending money on interest, that's money you're not saving and investing.

It pays to keep your credit card balances to a minimum -- or, better yet, avoid carrying one at all. Building an emergency fund could make it so you're not reliant on credit cards when unplanned bills pop up.

3. Invest money you don't expect to need for a long time

The money you don't spend month after month shouldn't just sit in a bank account earning minimal interest. Instead, you'll need to invest it if your goal is to become a millionaire.

Now to this end, you have different options and account choices. You'll enjoy some tax benefits if you open an IRA and invest money there. Or, for more flexibility, you can put your investment dollars into a regular brokerage account.

As far as choosing the right assets goes, a lot of people have gotten extremely wealthy by putting money into crypto. But there's a lot of risk involved in going that route.

If you don't have the appetite for crypto, a better bet may be to load up on a bunch of different quality stocks or broad market ETFs (exchange-traded funds). While the stock market can be volatile like the crypto market, the fact that stocks have been around for much longer may make you more comfortable putting your money into them.

Most people don't snap their fingers and become millionaires. If that's a goal of yours, with careful planning and some sacrifices, it can be done. But the earlier in life you commit to it, the greater your chances of success.