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While the old quiz show might have been called, \u201cWho wants to be a millionaire?\u201d, the question arguably would have been better posed as, \u201cWho doesn\u2019t want to be a millionaire?\u201d Because \u2013 aside from a handful of people such as billionaires, monastics or those who don\u2019t care one iota about material wealth \u2013 you\u2019d be hard-pressed to find someone who doesn\u2019t want to be well-off financially.<\/p>\n
However, the road to becoming a millionaire may seem more daunting \u2013 especially if you\u2019re earning a standard salary. Yet, becoming a millionaire has never been about earning an extraordinary salary.<\/p>\n
In fact, some of the highest earners I\u2019ve seen have never built significant wealth, while others have become millionaires on salaries that would hardly turn heads.<\/p>\n
It is possible to become a millionaire on a salary, but that it requires patience, consistency and a clear understanding of what being a \u2018millionaire\u2019 means.<\/p>\n
Read: Is it possible to become a millionaire on an average SA salary?<\/p>\n
The millionaire mindset<\/p>\n
If there is one misconception that continues to trip people up, it is the belief that wealth is primarily determined by income. While earning more certainly helps, someone can earn a substantial income and still have very little net wealth if most of it is spent servicing debt or funding an increasingly expensive lifestyle.<\/p>\n
Real wealth is determined by what one retains, invests and owns after subtracting what they owe. To be considered a millionaire, your assets \u2013\u00a0 such as your investments, retirement savings and property equity \u2013 should exceed your liabilities by at least R1 million.<\/p>\n
Another common trap? Believing that obtaining wealth requires finding the next cryptocurrency boom, buying the perfect investment at exactly the right time, or earning spectacular returns.<\/p>\n
In reality, sustainable wealth is far less exciting. It is normally created through many relatively ordinary decisions repeated over a long period.<\/p>\n
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A real millionaire mindset has less to do with extraordinary investments,\u00a0 \u2018manifesting\u2019 or any other social media buzz talk, and more to do with understanding what real wealth is \u2013 and that there are seldom shortcuts to achieving it.<\/p>\n
Read: The \u2018Millionaire Baby\u2019 strategy: A simple plan for lifelong wealth<\/p>\n
The small habits that make the biggest difference<\/p>\n
The difference between those who build wealth and those who don\u2019t often comes down to a handful of financial habits repeated month after month. One of the simplest is paying yourself first.<\/p>\n
Rather than waiting to see what is left at the end of the month, automate savings or investments as soon as your salary lands.<\/p>\n
Even better, commit to increasing those contributions whenever your income increases, allowing future salary increases or bonuses to strengthen your financial position instead of disappearing into lifestyle upgrades.<\/p>\n
It\u2019s important to remember that R1 million today will not have the same purchasing power in 10 or 20 years, so the goal should be to not only reach a certain figure, but to build wealth that continues to grow ahead of inflation.<\/p>\n
At the same time, building wealth is also about avoiding costly setbacks. Paying off expensive unsecured debt, maintaining an emergency fund to avoid dipping into long-term investments when unexpected expenses arise, preserving retirement savings when changing jobs, and investing in a diversified, cost-effective portfolio can all have a significant impact over time.<\/p>\n
Time is on your side<\/p>\n
Perhaps the greatest advantage available to ordinary salaried earners, however, is something money cannot buy: time. Compound growth means investors earn returns not only on the money they contribute, but also on the returns those investments have already generated.<\/p>\n
While the impact can seem modest during the early years, the effect ramps up over time. For example, investing R1 500\/month could grow to approximately R1 million in around 22 years, while R3 000\/month could get you there in roughly 15 years.<\/p>\n
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Read: Financial behaviour \u2013 Part 18: Self-control bias \u2013 Why knowing what to do is often not enough<\/p>\n
Trying to shorten the journey by chasing returns can expose an investor to excessive risk. For most investors, a diversified portfolio, appropriate risk exposure, reasonable fees and a long investment period are more reliable than repeatedly trying to identify the best-performing investment.<\/p>\n
Don\u2019t wait for the \u2018ideal\u2019 salary<\/p>\n
\u2026because the goalposts will keep shifting \u2013 even when you reach your target amount. If you wait until you reach a specific income level to start saving, you will never start, because people\u2019s lifestyle usually adjusts to match their income level.<\/p>\n
In other words, if you don\u2019t save when you are earning R10 000 a month, you likely won\u2019t be saving when you\u2019re raking in R100 000 a month.<\/p>\n
Start with a percentage of your income. Even if small, establishing the habit early and increasing contributions over time will prove far more valuable than delaying until a higher salary arrives.<\/p>\n
Ultimately, becoming a millionaire on a salary is unlikely to happen through one extraordinary investment or a dramatic jump in income.<\/p>\n
More often, it is the cumulative result of disciplined decisions repeated consistently over many years.<\/p>\n
\u00a0Juan Gebhardt is a financial advisor at Consult by Momentum.<\/p>\n
#millionaire #salary<\/p>\n","protected":false},"excerpt":{"rendered":"
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