Vishesh Raisinghani
5 min read
It’s easy to assume that wealth and income are deeply intertwined. After all, how does anyone become wealthy without a high-income stream?
However, data gathered by Dave Ramsey’s team suggests the link between wealth and income may be weaker than most people assume.
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According to The National Study of Millionaires, conducted by Ramsey Solutions, only 31% of American millionaires earned an average annual income of $100,000 over the course of their careers. Perhaps even more surprising is that one-third of these millionaires never reached the six-figure income milestone throughout their careers.
In other words, it’s completely realistic to reach a seven-figure net worth without earning a six-figure salary. However, this modest income path to millionaire status does require more effort and discipline.
The key to accumulating wealth is managing expenses. Many ultra-high-income individuals struggle to break into the millionaires club because they let lifestyle inflation consume them.
In fact, 36% of Americans earning more than $200,000 a year said they were living paycheck to paycheck, according to a PYMNTS survey from 2024.
By comparison, someone with a modest five-figure income coupled with better savings and investing skills could be more likely to reach millionaire status. However, a high-savings rate isn’t a silver bullet. To break into the millionaires club with a mid-range income, you’ll need to invest wisely and start as early as you can.
The magic fuel that drives the compounding growth effect is time. In a long enough time frame, even modest savings and lacklustre investment returns can turn into serious wealth.
For instance, an 18-year-old would need to save only $250 a month and earn a modest 7% annual return on investment to reach $1 million by the age of 66. Put simply, if you want to accumulate exceptional wealth without an exceptional income, starting as early as possible is essential.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Another essential ingredient in your modest-income-to-millionaire journey is reducing your exposure to debt. After all, a high-interest loan can effectively offset all the positive impacts of a diligent savings and investing strategy.
