The subtitle of my book, “MILLENNIAL MILLIONAIRE – A Guide to Become a Millionaire by 30”, generated a lot of buzz on how to make quick money. While this was a totally unintended consequence of a cute tagline, there is nothing wrong with young ambition. For full disclosure, I personally am a Certified Financial Planner™ committed to long-term wealth accumulation, achieved by patience and adherence to a sound set of strategies. So, how do you become a millionaire not just by 30, but by 25!? Here’s my advice. Reader beware, this may serve as a cautionary tale.
Let’s first examine the facts and then see what’s feasible. Most college graduates today are finishing their bachelor’s degree at 22 years old, give or take a year. The average starting salary for the graduating class of 2018 is $50,390. So, if we take the average income and subtract taxes (we’ll just use 20% effective tax rate for simplicity) that leaves $40,312 of take-home pay. Notwithstanding all the usual expenses for a young professional (i.e. student loan repayments, car payments, cell phone bill, hitting the bar, etc.), even if the average graduate was able to bank all of this money for the next 3 years leading up to his or her 25th birthday, that would total $120,939 of savings. Still a far cry from $1 million buckaroos.
Consequently, why even title this article “How to Become a Millionaire by 25”, or entertain the idea? We already know that the average income won’t get you there. One cannot realistically invest their $120k of accumulated savings into $1 million within three years unless they’re literally gambling and coming up a winner almost every time.
Rather than buying lottery tickets every week and crossing your fingers, you must first realize that extremely high income and/or access to assets is a prerequisite. What are the highest paying jobs in America today? Anesthesiologists top the list with a mean income of $269,600 followed by Surgeons, OBGYNs, Oral and Maxillofacial Surgeons, and Orthodontists. As you can see, the medical space dominates this realm. Considering any of these occupations requires an additional 4 years of Medical School beyond undergrad, followed by three to seven years of residency and fellowship training, these folks don’t rake in the dough until after 30. The first job on the list that is not in the medical space is a Petroleum Engineer coming in at #12 with a mean income of $147,030.
That pretty much eliminates the traditional income track. However, there are millionaires under the age of 25. Without further ado, here’s how they’re doing it …
- Start a business. Per above, the normal route won’t cut it. Even a high-paying sales won’t ramp up fast enough.
- Start said business super early, not at age 21 after 4 years of frat parties. Most millionaires under 25 started a business in college or even in high school.
- Discover the repeatable. It’s ok if your business makes only $1 per transaction, as long as 1 million people want to buy it.
- Think tech. The bulk of today’s young mega rich are taking their idea on the web to an international audience and selling out to large companies (i.e. Instagram to Facebook for $1 billion in 2012.)
- Network. A great idea is just that, an idea. It takes a network of professionals to make it a reality.
As you can see by now, there is no easy route into this elite club. Investment strategies are disconnected to such a lofty goal. Unless you’re an incredibly talented athlete signing a sick pro contract, or so good looking that Hollywood caught your profile picture, the odds are not in your favor. Consider the strategies above on your quest towards a $1 million, and if blowing out 25 candles comes and goes, don’t be deterred as you’re certainly not alone. There is one last way to reach this objective though, go make your money the old fashion way, inherit it!
Bryan M. Kuderna is a Certified Financial Planner, Life Underwriter Training Council Fellow, and Investment Adviser Representative with Kuderna Financial Team. He is also the author of the best-selling book, “MILLENNIAL MILLIONAIRE – A Guide to Become a Millionaire by 30”.
- “Average Starting Salary for Class of 2018 Tops $50k”. USA Today. Maurie Backman. 06/15/2018
- U.S. News and World Reports- 2018 Best Jobs.