How to Become a Millionaire By Age 40: Steps and Examples

Most people never achieve a net worth of $1 million, but it’s possible to reach that wealth goal at the relatively early age of 40 even from humble beginnings. Many who become millionaires by 40 start investing while still quite young, are willing to take calculated financial risks and prioritize acquiring assets that can grow in value over time. Youthful millionaires often demonstrate consistent traits, including disciplined saving, smart investing, entrepreneurship and living below one’s means. Maximizing income, restraining spending and making sound investment decisions can compound powerfully over years and make millionaire status an achievable goal.

A financial advisor can help you make a plan to grow your wealth and help you reach your long-term financial goals.

Start Early, Save Consistently and Max Out Retirement Accounts

Time is a key ally in the pursuit of wealth accumulation. Starting to save while young provides more time for investments to grow through compounding returns. And the more you save, the better compounding works. For example, boosting contributions after salary increases or bonuses helps accelerate growth. Someone who raises their monthly savings from $500 to $1,000 by age 30 could see their investments approach $800,000 by 40, depending on returns.

Maximizing contributions to tax-advantaged retirement accounts can significantly speed up the journey to millionaire status. In 2025, the maximum 401(k) contribution limit is $23,500 for individuals under 50. At that rate, someone who maxes out their 401(k) every year from 22 to 40 at a 7% average return would accumulate nearly $800,000 by 40, not including employer matches.

Adding a Roth IRA for after-tax growth or investing additional savings in a taxable brokerage account can increase flexibility for accessing funds before retirement age.

Maximize Income Opportunities

The more money you earn, the better. Higher income levels increase the amount available for saving and investing. Advancing within a career, negotiating raises or building a successful side hustle can significantly accelerate wealth-building.

For example, someone who starts at $80,000 at 25 and achieves 5% annual raises could be earning approximately $166,000 by 40. Adding a side hustle generating $10,000 a year and investing it can build a separate nest egg worth over $250,000 by 40 if invested at a 7% annual return.

Invest Aggressively and Consistently

Investing consistently in growth-oriented assets like stocks typically offers higher long-term returns compared to savings accounts or bonds. A portfolio heavily weighted toward stocks from ages 22 to 40 can capture decades of market growth.

Investing $1,000 monthly in an S&P 500 index fund with a 10% average annual return would result in about $600,000 after 18 years. Gradually shifting to a slightly more conservative allocation in the late 30s can help preserve gains while allowing continued growth.

Take Calculated Risks

Calculated risks can lead to higher returns, especially when taken early, so there is more time to recover from setbacks. Starting a business, investing in real estate or buying shares in high-growth companies can provide opportunities for outsized gains.

Someone who purchases a duplex at 28, lives in one unit and rents the other could generate enough rental income to cover most of the mortgage. Over a decade, rising property values and rental income growth could turn a modest real estate investment into six-figure equity.

Avoid Lifestyle Inflation

Increasing income is one way to provide more money for saving and investing. Keeping expenses modest relative to income also enables a growing surplus for investments. Choosing a smaller home, driving reliable used vehicles and limiting luxury spending can dramatically widen the gap between earnings and expenses.

Increasing income without proportionally increasing expenses strengthens the ability to save and invest. A person earning $60,000 at 25 who receives raises boosting income to $100,000 by 35, but maintains the same modest lifestyle, could save an additional $40,000 per year. Over five years, investing that difference at a 7% return would add roughly $230,000 to their portfolio, independent of their original savings.

Pay Off High-Interest Debt Early

High-interest debt, such as credit card balances or payday loans, reduces available investment capital and compounds losses. Eliminating a $10,000 credit card balance with a 20% interest rate saves about $2,000 annually in unnecessary interest charges. Those funds can then be redirected into investment accounts. Someone who reallocated $2,000 per year into an investment earning a 7% return could build an extra $49,000 in 15 years.

Invest in Yourself

Spending time and money to build new skills, earn certifications, or pursue advanced education can pay off substantially over time. For example, someone who invests two years into an MBA program might double their salary afterward, shifting from $75,000 to $150,000. Even after accounting for the cost of education, the increased lifetime earnings potential can significantly accelerate wealth accumulation, offering more savings opportunities during peak earning years.

Build Multiple Income Streams

Relying solely on a salary can leave wealth accumulation vulnerable to job loss or income plateaus. Building passive income through rental properties, dividend-paying stocks, small businesses or online ventures adds financial resilience to your wealth-creating strategy.

Starting with one rental property purchased at 30, could generate $1,000 a month in net rental income. Over 10 years, that would add $120,000 in cash flow, not including property appreciation or tax benefits.

Stay Invested During Market Volatility

Financial markets experience periodic downturns, but history shows that patient investors often see strong recoveries. For example, someone who remained invested through the 2008-2009 financial crisis would have seen their portfolio double or triple in value over the next decade.

Selling investments during market drops locks in losses and often misses subsequent recoveries, while steady contributions during volatile times can purchase assets at lower prices, leading to larger future gains.

Bottom Line

Building significant wealth by 40 often reflects a series of consistent choices rather than one-time decisions. Saving early, growing income steadily, investing with a long-term view and keeping spending in check can create real momentum over time. Adding education, strategic risks and disciplined debt management further strengthens the foundation. Small adjustments, compounded year after year, can turn modest beginnings into substantial financial achievements.

Tips for Building Wealth

Building wealth takes dedication and knowledge. A financial advisor has the experience to help you reach your long-term financial goals and the time to devote to your investment portfolio, making adjustments as you need. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
One of the best things you can do to build wealth is to make sure you know what investments will work for you. Consider using an investment calculator to see how your choices might grow over time.