Nearly 23 million Americans have a net worth exceeding $1 million, according to the 2023 Global Wealth Report from UBS and Credit Suisse. Most of these millionaires are self-made, Forbes reported, and about one-fifth made their first million in their mid-to-late 30s even though they had middle-class incomes.
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Whether millionaires started out earning $50,000 a year or $500,000, chances are they followed similar habits in terms of how they spent their paychecks. Here are six things millionaires always do with their paychecks.
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Pay Themselves First
This is a common financial habit of millionaires — building a budget based on their savings goals rather than their spending and expenses, CNBC reported.
Also known as “reverse budgeting,” paying yourself first means you automatically allocate money toward savings through direct paycheck deposits or recurring transfers from your checking account. Doing so ensures you are constantly building more wealth with each paycheck.
Max Out Their Retirement Plans
This savings strategy helps ensure that millionaires can continue to enjoy a millionaire lifestyle even in retirement.
Beginning savers might set aside 10% of their paychecks for their 401(k) plans, but wealthy workers contribute the maximum every year. In 2024, you can contribute up to $22,500 to a 401(k) plan. For workers 50 and older, the max is $30,000.
Make sure to take advantage of any matching contributions from your employer to accelerate your retirement savings even faster.
Invest
Millionaires don’t become millionaires by playing it safe with their money. Instead, they put it to work earning even more money. Savings accounts can help, but even those with the best interest rates won’t provide returns as high as investing in stocks, mutual funds, real estate and other assets.
Wealthy individuals set aside a certain percentage of every paycheck for investments and continue to do so regardless of how the markets are doing. Even though there will be peaks and valleys, the stock markets have been on a consistent upward trajectory for decades, and the same is true of many real estate markets.
Hire Professionals
Millionaires know that depending on your expertise and instincts when it comes to money doesn’t always work out. To help ensure the best results, they put part of their paychecks toward hiring financial advisors, tax experts and investment professionals to help them grow and protect their wealth.
Smart tax planning alone can save you thousands of dollars a year. Using those savings to consult with investment experts can help you grow wealth even faster.
Put Money Toward Additional Income Sources
Rather than focusing on long-term payoffs, this investment strategy focuses on earning additional income by putting part of your paycheck toward passive income opportunities.
These typically include rental properties, dividend stocks, startup businesses and other assets that provide regular income you can use to amass more wealth.
Pay Off Revolving Debt
There’s nothing wrong with using credit cards to make certain purchases – it’s almost impossible not to anymore. The “wrong” part comes when you keep carrying a balance beyond the current statement period, which means you end up paying interest on the money you spent.
Millionaires use their paychecks to pay all balances in full for credit cards and other forms of revolving credit.
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This article originally appeared on GOBankingRates.com: 6 Things Millionaires Always Do With Their Paychecks
