Do you want to achieve financial freedom and live the life that comes with it? Achieving success and becoming wealthy is not easy. However, there’s hope – even if your salary isn’t astronomical. With hard work, smart investments, and savvy goal-setting, anyone can become a millionaire while maintaining an average job.
The route to success and becoming wealthy doesn’t always have to be risky. With the right strategies in place, you can start planning your path toward financial freedom with just your regular job or paycheck.
In this article, we’ll look at how to get rich with a normal job. You can use intelligent investments and smart budgeting choices to set yourself up for long-term financial security, even on a moderate salary.
How to Get Rich with a Normal Job
Thankfully, the plan isn’t complicated. It’s simple (easy to understand), but it requires financial discipline and patience. You’ll need to have a long-term focus.
Here are the steps we’ll cover:
- Set your goals
- Establish a budget
- Spend less than you make
- Pay off high-interest debt
- Invest and build wealth
What is Considered a “Normal” Job?
Before we go any further, it’s helpful to clarify what we’re talking about when we refer to a “normal” or “regular” job. Here are some quick stats about salaries and income in the United States (source):
- The average personal income in the U.S. is $63,214.
- The median income in the U.S. is $44,225.
- The average U.S. household income is $87,864.
- The median U.S. household income is $61,937.
Based on these numbers, an income of $40,000 – $99,000 seems normal or typical. That’s a wide range, but keep in mind this includes single people and families, and it includes the entire U.S. The cost of living varies drastically depending on your location, so average salaries and incomes also vary.
A normal job or average salary puts you well above the poverty limit, but we’re not talking about the top 10% earners either.
This is Not a Get Rich Quick Scheme
It’s important to emphasize that becoming wealthy on an average salary is not a get-rich-quick scheme. It takes time, patience, and discipline – but it can be done.
You’ll need long-term focus. If you’re looking for instant results, you will likely be disappointed. However, the steady approach presented in this article is safe (does not involve high-risk investments) and has proven to work.
The Key: Save Money Each Month and Invest It
We’ll get into the specific steps in just a minute, but first, it’s important to understand what makes this plan work. The key is to save money each month and invest it for long-term growth. It’s a simple concept, but there are a few steps you need to take to make it happen.
Step 1: Set Goals
The first step is to set personal goals. It’s important to have a clear understanding of what success looks like for you. How much money are you looking to save?
Do you want to have a $500,000 nest egg? Or do you want to save $2 million?
Everyone has their own definition of “rich,” so it’s important to know what you’re after.
Take the time to set goals. Start with your ultimate long-term goal and then work backward with short-term goals to ensure you’re on the right track.
Your goals should be specific and have a deadline. For example, you could set the goal of building a $1 million investment portfolio by the time you’re 65 years old. This is a good goal because you can track your progress, and you can clearly determine if you reach the goal or not.
Step 2: Establish a Budget
The second step is to set up a budget. This involves tracking your income and expenses each month and making necessary adjustments so you spend less than you make.
I like to start with tracking expenses for a month first because this shows exactly how you’re spending your money now. With that data, you can create a more realistic budget.
Look at all your sources of income – jobs, investments, side hustles – and list out all of your monthly expenses. Track where your money goes each month – food, housing, entertainment, etc.
Your budget should take into account both fixed expenses (rent/mortgage payments) as well as variable expenses (food costs). And don’t forget to account for annual expenses or other bills that may not be paid every single month.
Be sure to include a line item in your budget for saving. For example, you may want to budget to save 10-20% of your income so you can invest and make progress toward your goals.
If you don’t put savings in your budget, you’re likely to spend all of your money and have nothing left to save. But if you put it into your budget and treat it like a bill, you’ll be more likely to save consistently.
After you create the budget, you need to continually track your expenses to ensure that you’re sticking to the budget. Without this financial accountability, you’re likely to overspend.
Remember that your budget can be changed and adjusted as you go. As you find ways to reduce expenses, you can increase the amount you save every month.
If you need help, see How to Create a Budget That Works.
Create an Emergency Fund
An emergency fund is money you set aside for unexpected expenses. You would use this money in case of a sudden job loss, medical issue, family emergency, or another large, unexpected expense.
Most financial advisors recommend having an emergency fund equal to 3-6 months of your living expenses. That way, if something happens and your income is disrupted, you’ll have enough funds to cover your basic needs for a while.
An emergency fund helps prevent one bad situation from turning into another. For example, if you’re laid off from work and don’t have any savings to fall back on, then you may end up taking out high-interest loans or racking up credit card debt just to get by until you find another job.
By having an emergency fund, you can put these worries aside and focus on finding a new job instead of struggling with financial issues.
If you don’t already have an emergency fund, or if yours isn’t sufficient, this should be a priority.
Step 3: Spend Less Than You Make
The key to saving money is spending less than you make. It sounds basic, but many people fail in this area. With an effective budget, you’ll be well on your way to excelling.
The key is to identify areas where you can cut back on expenses and free up more money for savings. For example, look at your budget and see if any areas could use improvement – such as eating out less, cutting down on entertainment costs, or finding cheaper insurance.
Focus on the Biggest Budget Line Items
While there are plenty of ways to save money, you’ll get the biggest impact by focusing on the areas where you spend the most. For example, housing, food, transportation, and insurance are some of the bigger line items in most budgets. If you’re able to reduce expenses in these areas, you can have significantly more money to save and invest.
Unfortunately, these changes aren’t always easy. To reduce your housing costs, you might need to move. This may or may not be something you’re willing to do.
Other options might include going from two cars to one car or selling an expensive car and buying something more affordable.
Most families can save money on food, so this is worth exploring. How often do you eat at restaurants or get takeout? You can save a lot of money by making your own meals at home. And you may also be able to save a lot on groceries by buying generic brands, shopping at discount stores, or using coupons.
Take Advantage of Easy Wins
Although the biggest line items in your budget offer the highest potential for savings, you may be able to save in other ways with very little effort.
Two options that work for many people are canceling cable TV and switching to a discount wireless provider. Many free TV apps can serve as a replacement for cable. And discount wireless providers offer basically the same service for much less money.
Take some time to look at your monthly expenses and scrutinize them. See which ones truly are necessary and try to find some areas where you can save without having a major impact on your standard of living.
Step 4: Pay Off High-Interest Debt
High-interest debt is a major roadblock to achieving financial freedom. Credit card debt and other consumer debt can take years to pay off. The interest payments can significantly reduce your ability to save for the future.
If you have high-interest debt, you should focus on paying this off as quickly as possible. Your debt may seem insurmountable, but it’s very realistic when you take a systematic approach. Two common and effective debt payoff methods are the debt snowball and debt avalanche. See our article Debt Snowball vs. Debt Avalanche to determine which is right for you.
Once your debt is paid off, you’ll be able to save and invest more money each month. For example, if you currently pay $500 per month on your debt, that would be an extra $6,000 per year that you can save and invest after the debt is paid off. That will have a huge impact over a long period.
Step 5: Invest Your Money and Build Wealth
Once you have your monthly spending under control and you’ve paid off any high-interest debt, the next step is to start investing your money.
Investing is essential for building wealth. Many people are hesitant to invest because they don’t feel like they know enough about the stock market or finances. The truth is, simple investing can be very effective.
Index funds are a great way to invest for the long term with minimal effort. These mutual funds track major stock market indexes, such as the S&P 500. They offer an easy way to get exposure to the stock market without picking individual stocks. Another option is to invest in a long-term ETF, which is very similar to an index fund.
While the value of these investments will fluctuate in the short term, historically, they have generated positive returns over the long term. If you invest consistently over time, your wealth will compound and grow.
Investing in index funds or ETFs isn’t all that exciting or sexy, but it’s a tried and true way to build wealth with minimal effort.
You could also use the three-fund portfolio approach, a simple way to maintain a diversified portfolio.
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You may be interested in adding alternative assets to your portfolio. This isn’t necessary, but it does offer the potential for improved diversification.
Alternative investments include real estate, precious metals, cryptocurrency, and more (see our list of alternative investments for ideas). Each has potential benefits and risks, so it’s important to understand what you’re investing in before you commit your money.
Real estate is a great way to invest passively and build long-term wealth. You can invest in REITs or through real estate crowdfunding platforms if you don’t want to be a landlord. Fundrise allows you to start with as little as $10, and it doesn’t require any of your time. You’ll be investing in a large portfolio of income-generating properties.
Stick With It!
Building wealth with an average salary is possible, but it takes commitment and consistency. You can’t expect to become rich overnight. You need to be patient and stick with your plan for the long term.
If you follow the steps outlined above and remain focused on building wealth, there’s no telling how far you can go! You may even exceed your goal.
How Much Do I Have to Save to Become a Millionaire?
If your goal is to grow your investment portfolio to $1 million, it’s helpful to know exactly how much you need to save each month.
Of course, several factors come into play, including your age, the amount of time you have to save, and the rate you expect your investments to return.
Let’s use the example of a 30-year-old with the goal of growing a million-dollar portfolio by the age of 65 (35 years from now).
We’ll assume no previous savings or investments, so the investor in this example starts with $0.
Here’s how much you need to save each month to reach $1,000,000 at various average rates of return:
|Average Rate of Return
|Amount to Save Each Month
As you can see, the return on investment has a huge impact over a long span like 35 years. That’s why starting early is important and why the investments you choose are important.
Of course, your situation is likely to be different. You can use the Savings Goal Calculator from NerdWallet to see how much you need to save each month.
What Happens If I Can Increase My Income?
The plan laid out in this article involves living within your means so you can save and invest enough to reach your goals. But you can also speed up the process or improve the end result by increasing your income. (This assumes that your living expenses remain the same and you invest the extra income.)
Of course, you could find a higher-paying job, get a promotion, or get a raise to increase your income. But if that’s not possible, you could start a side hustle. There are countless ways to make extra money (see our list of side hustle ideas).
If you want to make an extra $1,000 a month to invest, you could try side hustles like:
Those are just a few examples, and the possibilities are endless.
The more you invest, the faster you’ll build wealth.
Final Thoughts on How to Get Rich with a Normal Job
Building wealth with an average salary is possible. It just requires discipline, focus, and dedication to the process. You don’t need to make a ton of money or start a business to become wealthy.
By living within your means and investing what you can each month, you’ll be able to reach your goal of becoming a millionaire (or beyond). Just keep at it, stay disciplined and focused, and you’ll be well on your way! Good luck!