Everyone dreams of becoming financially independent through becoming a millionaire. With hard work and smart money moves, the idea of holding a value of over $1 million is plausible. But your actual odds are based on a number of socioeconomic factors.
Depending on which route you take, becoming a millionaire is a game of statistics and smart activity. Here’s the real odds of becoming a millionaire in today’s economy.
The Odds of Becoming a Millionaire by Race and Education
Unfortunately, barriers of race and education still exist in America. According to the Federal Reserve Bank of St. Louis, those issues are still relevant today.
According to their data, Asian-Americans and White Americans have the best odds of becoming a millionaire through education alone. The data from the Federal Reserve Bank suggest Asians with at least a Bachelor’s Degree have around a 17 percent chance of reaching that goal. When they achieve a Master’s Degree, those odds increase to just under 30 percent.
White Americans have the best chance to become a millionaire based on their education. With at least an Associate’s Degree, data suggests they have at around an eight percent chance of hitting this lofty financial goal. Those odds increase with their education level: Data shows those with a Bachelor’s Degree have around a 20 percent chance, while those with a Master’s Degree have closer to a 40 percent chance.
Both Hispanic and Black Americans have the highest barriers to becoming a millionaire, according to the data. Both groups have a less than 10 percent chance with a Bachelor’s Degree alone, while the odds increase with a Master’s Degree. Hispanic Americans have around a 10 percent chance, while Black Americans have around a five-percent chance.
Odds of Becoming a Millionaire by Race and Age
As people work and build careers, their wealth can naturally grow over time. This personal financial value comes from a number of factors, including building retirement accounts and owning property. Once again, according to the Federal Reserve Bank, your odds of becoming a millionaire have to do with race and socioeconomics.
As with education, both Asian Americans and White Americans have a significant advantage over Hispanics and Black Americans. According to their data, everyone under 40 have a significantly low chance of achieving millionaire status. Those odds change as they grow beyond 40.
Between 40 and 61, Asian Americans have the best odds of becoming a millionaire. On average, those in that age and race group have around a 16 percent chance of holding over $1 million in wealth. That number increases to 20 percent at 62 and beyond.
White Americans have the second-best chance of becoming a millionaire by age. Between 40 to 61, the average White person has around a 13 percent chance of becoming a millionaire. As they reach 62 and beyond, those odds increase to around 18 percent.
However, the odds of hitting this ultimate goal is significantly low for Hispanic and Black Americans. The data suggests both groups have less than a five percent chance of hitting this financial milestone between 40 and 61, which decreases after they hit 62 and beyond.
The Odds of Becoming a Millionaire by Career Path
Although the data from the Federal Reserve Bank suggest there are significant socioeconomic barriers to becoming a millionaire, there are things anyone can consider if they want to reach this major life goal. The first thing is to consider their career path.
According to data from Crimson Education, STEM-related careers traditionally make more than their peers. For instance: College graduates in Engineering hold a combined $25.8 billion, making them one of the top earners around the world. Degrees in this area include computer engineering, civil engineering, mining engineering, and electrical engineering.
Computer science majors are also among high earners, because they are highly sought-after and bring value to some of the biggest tech companies in the world. In Silicon Valley, the entry level salary is often over $100,000.
Graduates in finance are also among the high earners out of college. Financial advisors, managers, and government officials have the earning potential of $80,000 and beyond once they leave college for the workforce.
How to NOT Become a Millionaire
Becoming a millionaire relies on hard work and smart money moves. Despite this, there are plenty of companies and advertisements that promise an easy pathway to holding over $1 million in the bank. If you want to become a millionaire, avoid these routes:
The Lottery: Lottery ads love to show winners getting tens of thousands of dollars – even millions – after purchasing one ticket. Unfortunately, the odds are often stacked against the players. The odds of winning the Powerball jackpot in the United States are one in over 292 billion, while the odds of winning the Mega Millions is one in over 302 billion. Save the money you would spend on the lottery in a high-yield savings account, until you can convert it to a better financial vehicle.
Multi-Level Marketing: Social media posts and ads often show multi-level marketing mavens making thousands of dollars “selling what they love.” While these companies offer a lot of promise, the odds are much starker. According to Mary Kay, over 83 percent of their “beauty consultants” are ineligible to earn commissions, while those who do earn over $100,000 represent only 0.05% of the total “independent sales force.” Instead of investing in your own business, invest in savings, stocks, and retirement funds.
Day-Trading: Movies and internet seminars make day-trading look easy in foreign currencies and high-risk stocks. However, day-trading is very risky, and comes with a lot of downsides. It’s easy to lose money off one bad sale, and even harder to make it back. When thinking about investing, look at the long-term picture – not a get-rich quick scheme.
While the odds are against becoming a millionaire, it’s possible through smart actions and hard work. With a combination of education and career planning, anyone can improve their chances of joining the millionaire club.