How to Become a Millionaire Making $40k a Year

Have you ever wondered how much money you need to make in order to become rich one day? The answer might surprise you. Granted, it is easier to build wealth the more money you make, but it’s certainly not impossible to become a millionaire — even if you only make $40k a year.

$40k is obviously less than the average household income in America. However, $40k is still nothing to laugh at (if you make more than $32k a year, that puts you among the top 1 percent of income earners in the world).

However, in America, it’s hard to find anyone who is impressed with $40k a year.

But even then, it’s still possible to retire a millionaire making only $40k a year. Let’s see how.

Investment calculator

Even if you were only able to invest $300 a month, you could still become a millionaire in about 30 years.

A simple investment calculator will help you figure these numbers – I like to use this one.

Now, $300 a month might seem like a lot, but it’s nowhere near the amount you should be saving.

Most financial experts recommend saving 15 percent of your income for retirement – and if you only make $40k a year – that’s about $500 a month.

$500 a month at a 12 percent returns (which is what the market has done historically) will yield $1.7M in 30 years.

If you are able to save more (or able to save longer), that will get you even more!

Use the investment calculator to figure your own numbers; the figures might surprise you.

How to live on $30k a year

In a recent article titled, Become a Millionaire by 50, I talked about living on less than you make. I will tell you that it’s possible to live on less than $30k a year because I’ve been doing it for years.

Does that sound crazy? Here’s how I do it.

  • I pay cash for my cars
  • I carry liability insurance on my cars
  • I don’t pay for cable (I use an antenna like this one)
  • I have no debt except for my mortgage (and even that is less than $900 a month)
  • I have the cheapest cell phone carrier available – Mint Mobile – it’s like $15 a month
  • I take my lunch to work everyday
  • I only eat out every now and then
  • I live on less than I make, and I live on a stick budget

For most people, I imagine this will be difficult to do.  But if you are serious about saving for your future, you will find a way to make it happen – that’s exactly what I did years ago.

I got tired of living paycheck to paycheck and decided to make a change. You can, too.

You might even have to get upset about it!

Dave Ramsey has said that, “You have to get sick and tired of being sick and tired,” and that is absolutely right – that’s what happened to me.

I got tired of living paycheck to paycheck and realized I didn’t know anything about handling money.

It took me a few years to get where I am now – I had to make small changes in order to make that happen.

It may not be feasible for you to jump right into my situation, but it is definitely something worth working towards (if you want to make a change, that is).

When you reach the point where you are able to save 15 percent of your income for retirement, you are most certainly on your way to becoming a millionaire.

If you make $40k a year, that’s roughly $6k a year, so that’s what I would shoot for.

Save $6k a year

If you were to save $6k a year, you would have $1.7M come retirement – that’s roughly $500 a month.

Once again, this is about 15 percent of your income on a $40k salary.

Most financial experts recommend saving 15 percent for retirement, so that’s what I would shoot for – $500 a month is what you’d be looking at.

Maybe you can do it; maybe you can’t, but it’s what I would shoot for if I were making $40k a year. In fact, that’s really close to what I do make a year, and I anticipate having millions come retirement. You can, too.

Pro tip: When you get raises, or get a promotion making more money, the tendency is to spend more – don’t do that!

The more you make, the more you should be saving. At this point, you’re already accustomed to getting by on less, why not keep your cost of living where it is so you can save more?

Need some motivation?

If being sick and tired of being sick and tired is not enough to get you going, perhaps you need additional motivation.

It’s always a good idea to read a book or two that can help.

Two books that I always recommend are The Total Money Makeover and The Millionaire Next Door – these books completely transformed the way I think about money.

What I love about these books is that they tell you what to do and how to do it – they also motivate you to do it.

Simply reading a book can give you the motivation you need. Not to mention, it’s nice to get real life examples of how these principles have worked to help people.

The fact is that most millionaires are first generation rich (they didn’t inherit their wealth) – about 80 percent or more.

That means that they applied simple principles over a long period of time and eventually built their net worth to millions.

To put it simply – they lived on less than they made, avoided debt, and saved as much as they possibly could.


Can you really become a millionaire making $40k a year?  I certainly think so.

But to do that, you have to live on less than you make (live on a budget) and invest as much as you possibly can (hopefully around 15 percent of your income).

If you are able to reduce your cost of living while you’re at – even better!

The cheaper you can make your cost of living, the more you can save and invest.

Shoot for 15 percent!  On $40k a year, that should make you a millionaire in about 30 years.