The REAL Way to Become a Millionaire (on a 9-5 Salary)

Everybody wants to be a millionaire. But most people think it's only possible if you start a business, invest early, or win the lottery. But what if I told you becoming a millionaire on a regular 9-to-five salary is actually possible, and it happens all the time. And the truth is, it doesn't take luck or a huge paycheck. It takes strategy.

We've seen countless clients build 7 figure wealth just by making consistent smart moves while working their day job. So today we're breaking down what those moves look like. From how you work to how you save to how you invest. You don't have to quit your job or risk it all to do it. We're going to give you seven power moves to turn that ordinary income into extraordinary results. Welcome to We're Talking Money.

Number one of our seven power moves is work at one place. You know what, Spell, that one's probably a little misunderstood today.

I think so.

Because we live in an age where people bounce from job to job to job and stability seems to be something that has long since been forgotten. But I think it should become popular again because staying with the right employer, the right employer, moving up the ladder is a great way to gain a lot of ground and it's a great first step to becoming a millionaire.

It definitely is. And Phil, used to be that jumping from one employer to the next or to another employer meant a pretty sizable increase in pay, but statistics particularly of late show us that that's not necessarily the case anymore.

Well, during COVID and shortly thereafter, yes, it was survival of the fittest employer.

Yep.

Not the employee. On the other hand, the employee probably ran out of breath all the time trying to figure out which job they wanted to take because everyone wanted them.

Yep.

Those tables turned a little bit and now we're back to people keeping their job longer. We don't see the jumps happening near as much. It's a little bit different today. And years and years ago, decades ago, staying at one employer was sort of a badge of honor. It was a cool thing to say, "I've been at this company for 30 years." That lost its way and probably rightfully so because there came a time where moving around could get you much better compensation.

Sure.

You could negotiate better. We've reversed all of that because today statistics show us that you're actually better off to stay.

Yeah. Yeah. For sure. And one of the things that people don't think about, actually a few things that people don't think about are what the cost of moving from one employer to another are. For example, how long do you have to wait when you move to a new employer to become part of their 401k plan or 403b or whatever plan they have available? Is it a year? How long does that take?

Such a great point because if you have to wait a year, most plans are a year.

Right.

We manage so many 401k plans. We know this not because we're guessing at it. We know it because almost every plan that we manage has a one-year wait.

True.

So if you have to wait a year, that cost could be somewhat consequential. It could have an effect.

Definitely.

So what if I'm putting away $8,000 or $10,000 a year and I'm getting a match on that? What is that worth over the course of the next 20 or 30 years? That one year of missed opportunity could be worth a lot of money.

It's worth significant money. Let's say you make $80,000.

Okay.

And you decide, you know what? I'm going to jump ship. I'm going to go to another employer. And that employer says, "Okay, Phil, when you start working for us, you have to work a year. You have to give us a year of service before we allow you into our 401k plan." With your old employer, you were getting, let's say, a 5% match if you were contributing 5%. You can still save that 5% at your new employer, but for that first year, you won't be able to save it in the 401k plan. You can save it elsewhere, but for that first year, you're going to give up a 5% match, which in dollars is $4,000.

If we grew that $4,000 over 30 years and earned a modest rate of return, you could be leaving upwards of $40,000 on the table. So, it's not it it's when you draw these things out, a year's worth of savings lost over the long term is a lot of money.

And that's just one component. It's one component. So, what if you learn how to negotiate better for a raise? What if you are growing your knowledge in that place where you're staying? Because you're clearly getting better and better and better. The longer you're in the same place, same industry, same kind of work, you can get better. And as long as it's a company that allows you to grow, then build your knowledge, that equals build your income, right? It gives you a huge advantage.

And building those rare skills, which I think is missed so often. In fact, what I've seen throughout my work inside of companies with 401k plans and the things that we do at the corporate level, you get a lot of people in the workplace and all they want to do is get upset because they don't think they're being recognized and they get and they start saying, "Oh, no one's recognizing me. No raise. I'm not getting what I deserve." Well, guess what? You might not be noticed for a reason.

Yeah, maybe it's because you've got an attitude. Maybe it's because you think everybody owes you.

Figure out how to build your skills. Get some knowledge, grow your knowledge, figure out what your great skill is and get really good at it. I promise you, you'll get noticed. And that will then give them the ability to do something like negotiate for much better compensation. You don't want to repeat that constantly. When you keep moving employers, you got to go through all that again. It's hard to get really excited about doing all those things when you're constantly bouncing trying to find an extra nickel of compensation.

That's true. That's true. Okay. So, work at one place. The second power item that we're discussing is understand your benefits. Huge disadvantage to most people out there because they don't know.

Yep.

People go to work at companies and they just don't know what that company offers them. And you made this point in some of our pre- discussion comp large companies, man, they offer some incredible benefits, things that some people don't even think about, whether it's the 401k and employer match. That's sort of a given.

Yeah, people expect that.

Definitely. Things like HSAs, people expect that, and even health insurance, life insurance, disability.

Sure.

But things like tuition reimbursement, huge dollars that can be left on the table. Student loan repayment, getting more and more popular. Employee assistance programs. There's all kind you mentioned one that I never think about and it's help with psychological things, maybe counseling, things that those can turn into real money.

It doesn't cost you anything except for maybe a little bit of time to learn about the benefits that your employer offers. And in that little bit of time you may spend, you could save yourself potentially thousands of dollars a year just by learning. So something as simple as a gym membership reimbursement.

Exactly. Go get healthy and get it done at no charge.

You mentioned something earlier that I didn't necessarily think about. A lot of employers, even small employers, will offer matches to charitable institutions that you feel passionate about giving to. So, if you normally give $1,000 to a charity, you could say or go to your HR person and say, "Do you offer a charitable match?" And then instead of you giving $1,000, you can give $500 and you still get the $1,000 going toward your charity. The charity gets what they expected and you saved $500. That's $500 working for you that's going to help you go towards that million.

Exactly. Right. You can get there, but you have to think strategically and a lot of you listening probably have this.

Yep.

And you don't even know it. If you haven't asked about all of these benefits, get familiar with your HR handbook. And if you don't know, go ask your HR person. Find out what it is that the company's offering and what you're not taking advantage of.

Phil, the third power move that we're talking about. And before I say this, the third is important for the fourth and the fifth. All of these points are literally stepping stones to get you there. Is that right?

That's exactly right. That's where we're headed here. That's where we're going.

So that means that number three might be more important than you're letting on. And that is build an adequate emergency fund.

You shared a statistic on one of our shows recently, Spell, and this stat came out that said the average American cannot survive a $400 emergency.

That's right.

Meaning they don't have $400 in their emergency reserve fund.

Yeah, that to me is almost a travesty. That's hard to believe.

Yeah, people are going to have to replace tires. The HVAC unit is going to go out at some point. The refrigerator might need a repair. The dishwasher might need a repair. The list goes on and on. So, having that emergency fund is critical. And here's why. Because I'm going to go into the fourth power move. Having the emergency fund built adequately makes number four feasible. The fourth power move is pay yourself first.

Yeah.

If you don't have an emergency fund, you're not paying yourself first because now you're going to go right to the place where you've been trying to save and you're going to rob that piggy bank, if you will, to start taking care of that emergency, whatever it is.

We're starting to talk about real discipline here, Spell. And it's discipline to sacrifice lifestyle, those lifestyle desires right now.

Yep.

That probably aren't going to make you happy. No, they're probably going to cause you to be less happy because you're going to have more stuff to deal with. We're talking about almost a humility play a little bit. What's wrong with driving the same car? What's wrong with that? You drive a Toyota. I drive a Ford Fiesta. There's nothing wrong with that. I've got over a 100,000 miles on my car and I know you do on yours and the car that you drove prior to the one that you're in now had double the amount of miles that you have on your car now.

And I was proud to drive that last one.

Yep.

Toyota again. 250,000 miles. I've got 110 on this one.

Yep.

And it runs great. And as long as it does, I'm going to keep driving it because first it's a depreciating asset. It's losing value every day.

Yeah.

So, as long as it gets me where I'm going, then I'm perfectly happy with that. And two, it's paid for.

Yep.

If it needs a repair here or there, I'll do it.

Sure.

I have an emergency fund. So be it. But I'm not going to just blow up my bank account to go buy a new car because my buddies do it or I see people around me who think that's the way to go.

That's right. And Phil, the other thing that I think typically plagues a nine-to-five worker, when they get a salary increase, it turns into, oh, I've got more money to spend. The instinct is, got more money now, I'm going to spend it. The instinct should be, I have more money, let me save more. Why? Why is it that as soon as money hits your pocket, it burns a hole in it?

Well, here's why. Because all of these people that want this path to millionaire status.

Yeah.

And everyone listening to the show already has the path. They might not be on it, but they have access to that path. They don't have a goal. They don't have a game plan. And they lose focus. They lose sight. They just say, "In general, I want to be a millionaire."

Yeah.

Well, you got to go a little deeper than that. But you've got to figure out when do I want to get there. What pace am I willing to run to get there? What am I willing to do to get there? You got to set all of that on the front end.

Yeah.

If you don't, you're going to fall off the track, right? You're gonna be off that path in short order.

In short order. And Phil, the important thing about this fourth power move that we're talking about, you need to know what savings rate is appropriate for you. So, we say pay yourself first. And you, a listener might say, "Okay, guys, well, that's really helpful." The helpful part of that is understanding that if you make $100,000 and you save 30% of your income, you can reach a millionaire status faster than someone making $300,000 saving 5%.

Absolutely. I see people all the time that make 300, 400, 500, a million.

Yeah.

But they don't save. They live a lifestyle that's equal to the income, right? Or beyond, right? So, they have no discretionary dollars. Certainly, they can't pay themselves first.

Spell, we've had people, we've listened to people say, these are people that made five 600,000 a year and they say, we really don't have any money left each month.

Right.

That is shocking to me.

Yeah.

That they make that much money and they have no money left each month. That shocks me.

Yeah. But it is reality.

And so I think you're right. The savings rate's important. And for people that are a little older, if they're over 50 like me and you feel like you're behind, if you've done some analysis and you realize you're behind, you've got this thing called a catchup contribution.

True.

That allows you to put in 2026 another 8,000 can go towards your 401k savings.

Yep.

That's a big possibility for catchup right there. And so people need to take advantage of that. So, any of you that are making over 145,000 a year, know next year that catchup contribution must go into a Roth portion of your 401k plan.

That's a good point. If your employer hasn't implemented that, be sure that they do.

And it leads directly into the fifth power move, which is diversification across the tax environments. If you can diversify across the tax environments early, it is much more powerful and far more effective than if you are trying to do it later in your accumulation years. You really want to develop that muscle memory early.

That's right. So, learning how to use the tax environments. The other thing I want to say about diversifying across the tax environments, a lot of people hear the word diversify and they automatically think investments, right? Yes, that's important.

Yes, it is. Absolutely.

And we're not talking about that right now. We're talking about how do you exploit the tax environments, and there's five of them that we teach our clients all the time. And those five environments are so important because they will determine how much money you keep.

Yep.

As you're earning it and growing it. And they'll determine how much money you keep when you start distributing.

Very good point.

You get those wrong and it is going to cause a real serious ouch when you start pulling the dollars out.

And we're talking about, you mentioned the five environments. There's tax deferred, there's taxable, there's tax-free, there's a few others. There's the personal worst in the, that's the worst. If everything lands there, it's terrible because there's really no benefit there.

That's right. So tax deferred is great. Tax-free is the best. Things like Roth, great. You have tax sheltered, which is good. Tax deductible is another good place. All of them are good.

Yeah, you got to know when to use each one and how much should be allocated to each one. That's the diversification that we're talking about. So, are you saving in a Roth? Are you using 401k, or do you have IRAs? Do you have rental property that gives you depreciation and tremendous opportunity there?

And by the way, for our listeners, if you don't own rental property, if you're just buying traditional investments, that's great. You want that. We're about to talk about it. But from a tax environment standpoint, owning some assets that allow you to depreciate things, that depreciation sort of like phantom income.

Yep.

Right. It really, or rather it's like getting free income because you get to depreciate that asset. And while it's not a real expense, it acts like one. And that phantom expense allows you to see much more take-home, if you will, that allows you to save more.

Isn't it amazing what a little bit of knowledge about the tax system can do for someone used properly? The tax environment is not all that bad. There's plenty of loopholes. If you learn to use them, it can, I see clients who make, we have people that make three, four, 500,000 and their effective tax rate is sometimes below 20%.

Yep.

That tells me that the system is quite fair. You just have to know how to use it.

I agree. I agree. So, that gets us to number six.

Yeah, this is a good one.

We'll get right back to today's show, but first, I'd like to ask you a quick favor. [music] If you're enjoying this episode, hit that like button and make sure that you're subscribed to our channel so you don't miss what's coming next. [music] And hey, if something in today's episode has you wondering about your own financial plan, why not get a second opinion? Visit omnistarfinancial.com to schedule a consultation with one [music] of our team members. It's quick, it's easy, and it could make a huge difference in your financial future. Now, let's get back to the show.

Owning assets that appreciate while you sleep. And I'm not just talking about while you're getting your beauty rest. [laughter] I mean while you're working your 9 to 5.

Yep.

While you're asleep, while you're doing all the things you love to do, vacation, whatever it is, owning assets that allow you to grow your wealth. So that could be stock market or other things. But unless you won the lottery or unless you inherited a lot of money.

That's right.

Wealth accumulation just doesn't occur overnight. It takes time, Spell, which is why you've got to use all of these tools. You need to have investments that are going to grow far beyond what cash is going to do for you. But it's not about timing the market. It's time in the market. So that's specific to traditional investments, stocks, bonds, that kind of thing. But it's important. You need to own assets that work for you.

If you don't and you don't start saving early, again, back to one of the other power moves, automate your savings and make sure the savings rate is appropriate. If you don't do that, you may not live the life that you want to live in retirement. So, the longer you wait to start, the less you will accumulate or the more you will have to save and earn to get to the same place.

That's right. Secondly, you just touched on it, is compounded interest. So time in the market, you can't get the compounding if you're not in there, right? So you got to stay in and you got to continue to add to it. So having those balances inflate like that while you have nothing to do with it. You're doing the nine-to-five, still earning a great salary.

Yep.

Doing your thing, but you're still growing assets. So those things can't be missed. And then of course it's the creation of maintenance of the investment program for your specific goals. I see people miss this all the time. They park a bunch of money in cash. They never get aggressive enough. And Spell, when you're 25 years old or 30 years old, why do you have 50% in bonds? Who in the world advises that, or how does that happen? But I see people who get this weird notion that, well, I've got to be conservative. I don't want to lose this. Well, guess what? You're not going to use it for 30 years. Why are you batting for first base when you have the ability to hit home runs at that point?

The other thing that I think is important for someone, particularly when you're getting started, and even those that are maybe midway through their journey or on the other half of midway, don't drive yourself mad looking at your investment accounts every day. Don't do it. You will lose sleep at night. If you have a well-thought-out plan and you have an allocation that is built specifically for your risk tolerance, there's no reason to look at your account balance every day.

Logging into your account, looking at it, what are you going to do except cause yourself anxiety, and then what you might do is create enough anxiety that says, "I just got to get out and this thing's too volatile." And then you don't know when to get back in, and then you're losing the compound. You're losing the opportunity. So, you'll drive yourself to madness if you do it.

So, I think it's a great point. Stop looking and stop investing like you're going to spend the money in the next three weeks. If it's 20 years from now before you're planning to retire, don't invest like you're going to retire tomorrow.

Right. Invest like you're going to retire in 20 years.

That's right. Good point. And then don't forget, if you want your money to work for you, if you like traditional investing, great. Stock market's awesome for that. But don't forget things like rental property, whether it's residential, whether it's commercial. Don't forget private placement investments, things that can do a lot of similar type things to the stock market, but it gives you more diversification.

Absolutely. Diversification can help you avoid a lot of loss when we go through recessions or market resets, that kind of thing.

Our seventh and final power move. And this one is probably the most important of our seven. We see people living their life on a credit card because they blow up number seven. They spend more than they earn. The power move is spend less than you earn and do so aggressively. The most aggressive thing you ever do is spend less than you earn. Otherwise, you are absolutely going to be living on credit.

Yep.

And when you live on credit, your cost of living just went up because you've got to pay inordinate amounts of interest expense. What a fool's game. And every credit card issuer knows it.

Oh, the credit card companies, Phil, are cashing in.

Yeah.

On, for lack of a better phrase, the ignorance of a consumer. They love it.

Yeah. They want you to spend on credit because they know two things. Number one, the more you do it, the more it becomes a habit because you don't have to say no to yourself. You get the thing that you want. And that's why they continue to give you credit.

That's right. And even raise your credit limit. You don't even have to ask sometimes.

Now, the other thing that the credit card company knows is not only will it create a habit, they know without a doubt you are going to make those payments.

Yep.

And they're going to collect their 18 or 20 or 22 or 25% interest. What an awful game to play. But people do it all the time because they're not willing. What did we say at the beginning? To make the sacrifices. Give up a little bit now so you can live better tomorrow. And that means don't spend more than you earn.

Right. And certainly if you have to, make sure it's for something that is absolutely necessary. If it's not, don't do it.

Yeah, that's right.

Phil, you talk about burn rate all the time with our clients, and so why don't you walk the viewer through burn rate? What is burn rate and why is it so important to our power move number seven?

Everyone has one, and whether you measure it by the year or by the month. I like to measure them by the month. But your burn rate every month tells you, here's what I'm going to have left at the end of each month. Here's how fast my money's going out the door. And if you don't know what that burn rate is, you're certainly not going to control it.

No.

But once you see it and you realize that that money is just flying out the door, now you've got a chance to change it, right? But if you don't, then you're never going to create a consistent surplus of income. And if you don't create surplus, then the conversation about growing your wealth to a million or beyond, it's over. It's done. Why even talk about it if you're not willing to put the credit card down? Live on what you earn or below what you earn, because the ideal target savings rate is 20 to 30%. Now, most people are probably saying, "Wow, that's high." And it is. That's precisely why most people never get to the status of being wealthy.

The personal savings rate in [snorts] the United States since around the 80s has consistently declined. That's interesting, particularly given the state of our social security program. One. Two, the longevity people are experiencing. People are living so much longer than they used to live. I mentioned it earlier. Most people expect to retire and enjoy retirement for 25 or 30 years. The personal savings rate is critical because people are going to outlive their money.

That's for our clients. They're not going to have that issue because we keep them on the straight and narrow. But a lot of people, we hear it particularly when we start an engagement with them. Their fear is, am I going to outlive my money? The top two things that people are most concerned about when it comes to retiring, it's health care, and you put in with that long-term care.

Yeah.

And it's running out of money.

Yeah.

Before they run out of life. If your bank account expires before you do, you got a real problem.

No kidding.

Unless you can quickly change what your lifestyle looks like, because social security, if it's there, right, it's not going to give you what it is that you want. And fortunately, we work with wonderful clients who have been tractable enough that they have accumulated the right amounts, and they listen and they apply the wisdom and the logic that we give them, and their net worth grows even though they live wonderful, productive, very fruitful lives.

Yeah. As it relates to enjoying retirement. And even before, you said a person that's making $100,000 a year, if they're saving 30% of their income, if they get good and realize, hey, I'm going to live on 70 and I'm going to save 30, they're going to get to the million-dollar status or beyond much faster than a person. Now, think about this. You said that's making 300,000 a year, but only saving 5%.

Mhm. And to all of our listeners, that happens a lot more than you realize.

Yes, it does.

Because as people make more and more and more, they get to afford a much different lifestyle and they love it and they get accustomed to it and they're around it, and then all of a sudden it's hard to say no.

Yes, it is.

When it's time to go to the next big party or the next big event, they want to do it. Whatever it is, they want to do it. And all of a sudden, 300,000 is not producing much savings. It's just producing a big lifestyle. It's way beyond what they probably envisioned, but they're in it and it's hard to back up. So, that alone ought to say to all of our listeners,

a person making $100,000 a year, if you're making 300, for example, they're going to outsave you, outpace you, and be wealthier if they've learned how to save.

Set a goal. Yep. That in one year, two years, three years, you're going to get to a point where you can save 20 or 30%. Game changer. Big time. Total. Big time.

So if everybody now, these points, yeah, these are great points, and some of these go a little beyond our basics, but these are things that everybody can do, Spell. Yeah. So regardless if they're making 70, 80,000 a year, 100,000, 300, 500, they can do it. Oh yeah. This is sort of the framework.

If any of these seven power moves made you think, wow, I'd really like to know more about that, or wow, I think I might be missing the mark there, you probably need professional advice. And it doesn't mean that you have to hire a firm and pay them whatever their fee is every year. Lots of firms, including ours, will put together a financial plan for you for a fee, but it's a one-time thing, and then we help you implement. You don't have to work with us. Nope.

But find someone who is just as passionate about your success as you are and who's concerned about your failure. Yeah. And they can help