While the classic quiz show might have asked, “Who wants to be a millionaire?”, it would have been more fitting to ask, “Who doesn’t aspire to be a millionaire?” Aside from a few individuals like billionaires, monks, or those indifferent to material wealth, it’s tough to find anyone who doesn’t seek financial comfort.
However, the path to millionaire status can seem daunting, especially for those with a regular salary. Still, achieving millionaire status has never depended solely on earning a hefty income.
In fact, some of the top earners I’ve met haven’t built significant wealth, whereas others have attained millionaire status on salaries that barely turn heads.
Becoming a millionaire on a salary is certainly possible, but it demands patience, consistency, and a clear understanding of what being a ‘millionaire’ truly signifies.
Read: Is it possible to become a millionaire on an average South African salary?
The millionaire mindset
A common misconception that often misguides individuals is the belief that wealth is predominantly determined by income. While earning more certainly helps, one can make a substantial income yet still have minimal net wealth if a large portion goes to repaying debts or maintaining an increasingly extravagant lifestyle.
True wealth is measured by what one keeps, invests, and owns after settling liabilities. To be deemed a millionaire, your assets—comprising your investments, retirement savings, and property equity—must surpass your liabilities by at least R1 million.
Another frequent error? Believing that wealth accumulation relies on striking it rich with the next cryptocurrency boom, timing the market perfectly, or achieving remarkable returns.
In reality, sustainable wealth is often less glamorous. It’s typically built through a sequence of relatively ordinary decisions made consistently over time.
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A true millionaire mindset concentrates less on extraordinary investments, ‘manifesting’, or trendy social media phrases, and more on grasping the essence of actual wealth—recognizing that there are seldom shortcuts to attaining it.
Read: The ‘Millionaire Baby’ strategy: A simplified plan for enduring wealth
The small habits that yield major results
The difference between those who build wealth and those who don’t often rests on a few financial habits practiced month after month. One of the simplest yet most effective is prioritizing savings.
Rather than waiting to see what’s left at the month’s end, automate savings or investments as soon as your salary is deposited.
Additionally, commit to increasing these contributions whenever your income rises, allowing future salary increases or bonuses to bolster your financial stability instead of disappearing into lifestyle enhancements.
It’s vital to understand that R1 million today will not have the same purchasing power in 10 or 20 years; the goal should extend beyond reaching a certain figure to cultivating wealth that consistently outpaces inflation.
Simultaneously, wealth building involves avoiding costly mistakes. Paying off high-interest unsecured debt, maintaining an emergency fund to prevent dipping into long-term investments for unforeseen expenses, preserving retirement savings during job transitions, and investing in a diversified, cost-effective portfolio can greatly impact your financial path over time.
Time is an ally
Perhaps the most significant advantage available to typical salaried individuals is something that money can’t buy: time. Compound growth allows investors to earn returns not only on the money they contribute but also on the returns their investments have already generated.
While the effect may seem minimal in the early years, it accelerates over time. For instance, investing R1,500 per month could grow to around R1 million in approximately 22 years, while R3,000 per month could achieve the same in about 15 years.
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Read: Financial behavior – Part 18: Self-control bias – Why understanding what to do is often insufficient
Trying to hasten the process by chasing returns can expose an investor to unnecessary risks. For most, a diversified portfolio, appropriate risk exposure, reasonable fees, and a long-term investment horizon are more reliable than repeatedly attempting to identify the top-performing investment.
Don’t wait for the ‘perfect’ salary
…because benchmarks will continually shift—even once you reach your target. If you delay saving until reaching a specific income level, you may never start, as people’s lifestyles typically adjust to their income levels.
In essence, if you don’t save when earning R10,000 a month, you’re unlikely to save when you earn R100,000 a month.
Begin with a percentage of your income. Even a modest amount, when established as a habit early on and gradually increased, will prove far more beneficial than waiting for a higher salary to materialize.
Ultimately, attaining millionaire status on a salary is unlikely to stem from one extraordinary investment or a sudden income increase.
More often, it results from the cumulative effect of disciplined choices made consistently over many years.
Juan Gebhardt is a financial advisor at Consult by Momentum.
