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9 strategies to become a millionaire, from everyday people who have done it

by Kathleen Elkins on Oct 2, 2015, 11:00 AM

Not all millionaires have a Hollywood tale of how they grew to be rich.

In fact, many millionaires out there are just like you, living modest lives in average homes, and looking for ways to optimize savings.

Farnoosh Torabi spoke with several of these "millionaires next door" on her personal finance podcast, "So Money," and asked them how they got to where they are today: with a net worth of $1 million or more before age 50.

Here's what the millionaires had to say:

Track expenses diligently.

"Write out all of your spending and analyze it," Jeremy Jacobson and Winnie Tseng, who retired in their 30s with multi-millions in the bank, tell Torabi. "Track your dollars. I guarantee you'll find something that either you didn't know you were spending your money on, or you felt was unnecessary."

Jeff Johnson, who reached $1 million with his wife Amanda when they were just 34, offers up similar advice: "We know exactly how much we spend on certain categories over periods of time ... Unless you have that data, and unless you're able to figure out how much you're spending on these categories, it's very hard to figure out where you are and where you want to be [financially]."

Establish clear goals.

"One day Jeremy just came home and said, 'Winnie, do you want to go travel around the world forever?'" Tseng tells Torabi. "And then we started to plan on this. There was a specific goal that we wanted to achieve."

"We didn't have some sort of vague 'Let's retire 40 years from now' sort of goal," Jacobson continues. "We had a 'How do we get there as soon as possible?' idea driving this."

They changed their lifestyle immediately, started saving 70% of their income, and accelerated their retirement track to the point where they could retire in their 30s.

Live simply and use less.

Accumulating wealth oftentimes boils down to diligent saving and conscious spending. The millionaires next door simply choose to live modestly.

"The really big items that sink a lot of people are houses and cars," Darrow Kirkpatrick, who retired at age 50 with a net worth of $1 million, tells Torabi. He and his family live in a medium-priced home, which they paid off in 10 years.

Julie Rains, who achieved millionaire status by age 40, relayed a similar belief: "For me, living modestly — having a small house and not having a luxury car — really helped a lot. Keep those fixed costs low."

"Live below your means and invest the difference wisely," Kirkpatrick says. "Optimize the few things in life that really are important to you. Spend there by all means, but don't follow the crowd and spend on everything, because you can't optimize everything."

See the rest of the story at Business Insider

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