17 Realistic Ways to Make Your First $1 Million – Here’s how to make $1 million with the appropriate actions and self-discipline.

At first, sight, accumulating a $1 million net worth may appear impossible, but it’s more feasible than you think. To join this exclusive society, you don’t even need a winning lottery ticket or a trust fund.

Your annual income is important, but how you use your cash is much more important than your wage. A robust work ethic, reasonable spending habits, and intelligent investing, when properly planned, may expand your fortune to $1 million – and far beyond.

You will have to make some sacrifices to achieve this objective, but the feeling of financial security will be priceless. It’s time to start making huge moves if you’re serious about becoming a millionaire. Make a good game plan by adopting some — or all — of these 12 recommendations into your daily routine, and you’ll be well on your way to earning your first million dollars.

1. Boost Your Profit Margin

A profit margin isn’t strictly reserved for businesses; it also applies to you. “By increasing the gap between what you earn and what you spend, you end up with a profit in exactly the same way a business earns a profit,” said J.D. Roth, founder of Get Rich Slowly. “This profit can then be used to pursue your long-term financial goals.”

To specifically reach a million bucks, you’ll need to boost your savings rate substantially more than the normal 5 percent to 15 percent, said Roth. He suggested saving half of your income, and noted that you’ll have to make hard choices of deferring present spending in exchange for future financial success. For two-income families, he suggested choosing to live on one income, and saving and investing the other salary.

 

2. Start With $10 Million

“Start with $10 million” is actually a joke, and it reflects how our brains tend to trick us into doing the wrong thing when investing. The best way to circumvent our “inferior mental angels” is to learn about investing, create a plan and stick with it.

Our psychology often works against us, said Kirk Chisholm, principal at Innovative Advisory Group. It’s not difficult to make a million with investing — if you start young enough and avoid psychological pitfalls, such as following the crowd.

Avoid trading in and out of your investments. Create a sound investing plan, invest through thick and thin, and over time you can become a millionaire. Those who buy and sell more frequently tend to underperform compared to those who buy and hold, according to Vanguard Research.

 

3. Turn Your Passion Into a Business

Passion alone won’t make your first million. There’s no substitute for luck and flexibility. “Find something you are truly passionate about, become the authority and make a business out of it,” said Joseph Carbone, wealth advisor at Focus Planning Group. “Not only will you be happy, but you probably will be very successful.”

The Chipotle story illustrates this. After finishing culinary school in 1993, Chipotle founder Steve Ells was excited about starting a fine-dining restaurant. Lacking funds for the upscale place, he took a small loan from his father and opened his first Chipotle, to raise money for his exclusive restaurant. After selling 1,000 burritos in the first month, his passion for cooking veered from a high-end restaurant into a successful path to wealth, with the popular Chipotle Mexican Grill restaurant chain.

 

Furthermore, expect to fail along the way. Don’t be surprised if there are some bumps along the way before hitting that million-dollar idea.

 

4. Invest Early

Getting rich can be a matter of mathematics. It’s well documented that investing in the stock market over many years, reinvesting your dividends and letting that money grow and compound can make you a millionaire. But it’s also a matter of knowing how much to invest, in what types of mutual funds and for how long.

You can find out how much you need to invest, for how long and at what return with a simple calculator. Todd Tresidder, former hedge fund manager and owner of wealth-building website Financial Mentor, developed a calculator to help with this. For example, you can calculate that if you invest $500 per month in a diversified stock market index fund — such as the Fidelity Total Market Index Fund — and earn an average 7 percent return — assuming a 2 percent inflation rate — you will be a millionaire in 36 years.

 

If Henry starts at age 25, by age 61, he’ll be a millionaire. If he starts later, he’ll need to save and invest more. If Henry chooses lower-return investments, such as money market funds or certificates of deposit (CD), he’ll have to save thousands of dollars more to compensate for those investments’ lower annual rates of return.

 

5. Be Patient

Regardless of the path you choose to get rich, it will take time. Investing in the stock market takes years for your money to grow and compound. Starting a business and nursing it to success doesn’t happen overnight. When it comes to the math of compounding returns, the greatest financial growth occurs in the later years.

“Making your first million will often take longer than making your second,” said Daniel Zajac, certified financial planner and partner at the Zajac Group. “Whether it’s through building a business, or years and years of saving, the first million is often the hardest. Stay committed, stay patient and keep your eyes focused on the goal.”

Don’t let the initial slow growth through compounding or the pitfalls of starting your own business thwart your long-term wealth aspirations. Fear and impatience can be your worst enemies when trying to make $1 million.

6. Invest in Real Estate

Investing in real estate has long been a path to wealth. However, it’s much easier to initially invest in real estate in lower-cost-of-living areas. If you live in San Francisco or New York City, you might want to invest in an up-and-coming area.

Paula Pant, owner of personal finance blog Afford Anything is building wealth with a real estate portfolio. Save enough to make a down payment on a rental property with a strong positive cash flow, she said. This means that after you pay the bills, there’s money left over to go into your bank account.

Over time, as you pay off the mortgage, you’ll ultimately own the property outright. Pant suggested starting with one property and repeating until you reach $1 million.

 

10. Avoid a Self-Defeating Mindset

Wealth-building is as much a mindset as anything else, so it’s important to make sure you eliminate beliefs that will work against you. If you want to make your first $1 million:

• Don’t think anyone owes you a living.
• Don’t expect something for nothing.
• Don’t take on any consumer debt. If you don’t have the cash to buy something, then you don’t need it.
• Don’t get distracted. If getting rich is your goal, persist through obstacles.
• Don’t avoid education. Learn the skills to excel in your chosen pursuits.
• Don’t be afraid to take on an extra side hustle.
• Don’t keep up with the Joneses. They’re neck-deep in debt.
• Don’t forget others. Giving seems to beget reciprocity.

If you want to learn how to make your first $1 million, it’s preferable to start when you’re younger and be patient. It’s also crucial to have fun along the way — because, ideally, that’s the point.

12. Grow Your Inheritance

13.  Start a Business

Maggie Cook, 37, had no business experience when she founded Maggie’s Salsa in 2004. Born in Mexico to American parents who ran an orphanage, she had developed a knack for making salsa. “The only thing I knew how to do was chop salsa ingredients into a bowl,” says Cook. But friends at the University of Charleston, in Charleston, W.Va., raved about her recipe, so she decided to enter it in a contest at Charleston’s Capitol Market, a year-round farmer’s market. She won.

At the time, Cook was working full-time at an interior-design firm. With an $800 investment, she started making salsa in her kitchen. Her first two customers were stores in the Capitol Market; as her business grew, she rented commercial kitchens in Charleston and nearby Huntington, W.Va. Her big break came in 2007, when she cold-called Whole Foods. After a store representative expressed interest in her product, she loaded up her Honda Civic with salsa and drove 360 miles to Hyattsville, Md. The meeting led to a contract for 10,000 pounds of salsa a week, which enabled Cook to quit her interior-design job and focus on her business. She expanded her product line to include several kinds of dips and salsas and landed contracts with Kroger and Walmart. In 2014, Cook sold her business to Garden Fresh Gourmet, a national salsa manufacturer. (Cook declined to disclose the terms of the deal, but at the time, she was bringing in revenues of more than $1 million a year.) In 2015, Campbell Soup bought Garden Fresh for $231 million.

Starting a successful business can make you a millionaire (or even a billionaire, if you create the next Facebook), but the risks are high. About half of all new businesses fail within the first five years. Your chances of success are greater if you start with a well-thought-out business plan that outlines your competitive strategies and your goals. You should also have a plan in place to scale up—which usually means being bought out by a larger company, selling franchises or licensing your product. Keep good records, create an operations manual and develop a diverse group of customers. Not only will your business be more likely to succeed, you’ll also make your business more attractive to deep-pocketed buyers. You can get free advice from more than 11,000 small-business volunteers through Score, a nonprofit organization supported by the Small Business Administration.

Cook, who briefly lived in her car because she couldn’t afford rent, credits her success to her willingness to ride out the difficult times. “The biggest thing I’ve had is perseverance,” she says.

Self-starters who want a template for their business can purchase a franchise. A franchisee typically acquires the right to use a franchise’s name and business system for a specified period of time. Franchisors may also provide training, advertising and help finding a location. Start-up costs typically range from $50,000 to $200,000, depending on the franchise; fees are much higher for well-known chains.

For example, the minimum start-up fee for a Visiting Angels franchise, which provides home care for seniors, is about $69,000; franchisees must also have between $40,950 and $48,950 in cash and a net worth of at least $100,000. In addition, you’ll probably have to fork over a percentage of your monthly gross revenue. Successful franchisees often have more than one store. Several websites rate franchises, including Franchise Business Review.

14. Don’t Overspend

Even people who live in modest homes, drive used cars and go camping on their vacations can undermine their thriftiness by committing money missteps. Overspending on children, for example, can be a big temptation, and it’s particularly strong when it’s time to send your kids to college. If you reduce or eliminate contributions to your savings plans to pay for college, you’ll be hard-pressed to make up for those lost years of compounding. A better strategy: Select a college your family can afford without racking up debt—or encourage your children to take out federal student loans (as long as you keep a lid on the amount).

Paying more than you owe to the IRS is another mistake that could leave you short of your goal. About two-thirds of taxpayers claim the standard deduction, but millions would pay a lower tax bill if they itemized deductions, according to H&R Block’s Tax Institute. Homeowners typically benefit most from itemizing, but renters who pay high state income taxes and make large charitable contributions could also save money if they itemized. And those savings could help to grow your million-dollar kitty.

Taxes may also hobble your investment returns, particularly in your taxable accounts. Tax-free municipal bonds are a good choice for these accounts, as are stock index funds and other investments that qualify for lower long-term capital-gains rates.

15. Protect Your Wealth

Okay, arming yourself with insurance won’t make you rich, but it can prevent your fortune from being wiped out if, say, you’re found liable for a car accident or you need care in a nursing home.

Umbrella liability insurance will protect your assets and future income, as well as legal fees, if you’re sued and are required to pay damages. The policies typically pick up after you’ve exhausted liability coverage from your home and car insurance. Most insurers require you to have at least $300,000 in liability coverage on both your home and auto before you can buy umbrella insurance. Premiums generally cost $150 to $200 a year for $1 million in coverage. Increasing that amount to $2 million costs an additional $75 to $100.

Health care costs represent another threat to your wealth, particularly as you get older. A stay in a nursing home can run from $70,000 to $100,000 a year—and twice that much in higher-cost areas. You can protect your assets by purchasing long-term-care insurance, but these policies are pricey. One strategy to keep premiums in check is to estimate how much you could cover from savings and buy a lower-cost policy to fill the gap. Married couples can lower premiums by purchasing a shared-benefit policy that provides a pool of benefits both spouses can use.

If you get a policy, most financial advisers recommend buying it in your fifties or early sixties, before you develop medical conditions that will make you ineligible for preferred health discounts. Look for a policy that covers home care, an assisted-living facility and a nursing home. For a 60-year-old couple, annual premiums for a policy with a three-year benefit period and a 90-day deductible range from $2,985 to $4,190, according to the American Association for Long-Term Care Insurance

16. Own a Home

Derek and Lauren Ross didn’t buy their home in Oak Park, Calif., because they thought it would make them rich. They bought it because the community of 14,000, about 40 miles from Los Angeles, has some of the best schools in California, plus lots of parks and open space. Nonetheless, their investment has paid off. They bought their two-story home in 2002 for about $542,000. Today it’s worth more than $800,000, Derek estimates.

Home prices don’t always rise, of course, and the housing bust wiped out the equity of plenty of homeowners. But over the long term, you’re more likely to reach your $1 million goal if you own a home than if you rent. When you buy a home with a fixed-rate mortgage, you basically lock in your monthly housing payment. If your income rises, you’ll pay an increasingly smaller share of it on housing, which means you’ll have more to save and invest.

17. Earn Income on the Side

A part-time job or side gig courtesy of the sharing economy could be the ticket to generating some extra cash. If you invest the money or use it to, say, help you buy a house, you’ll get closer to your $1 million goal.

Danielle and Joe Haymes of Houston found a side gig they love two years ago after searching for a place to board their two dachshunds. Danielle is a technology instructor for a local school district and Joe is a sales manager, but they decided to become dog sitters on the side after learning about DogVacay, which matches pet sitters with dog owners. The Haymeses usually take in three to four dogs at a time, depending on their schedules. In 2015, they earned about $13,000; the year before, they earned about $12,000. (Sitters set their own rates and pay 20% to DogVacay.) That income alone might not make them millionaires, but they’re planning to use it as leverage to reach a larger goal: They have saved most of the money as a down payment on their dream house in a neighborhood with a great school district.

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