Have you ever dreamed of becoming a millionaire? For most people, those seven figures symbolize a certain level of financial status and freedom. It’s one thing to live and look like a millionaire, but it’s another thing to actually become a millionaire. Especially to become a millionaire by 30.
Financial coach Lisa Schader is an everyday millionaire and the creator of Money Fit Moms. She joined Andy recently to talk about the smart financial decisions her family made that allowed her to become a millionaire in her 30's. They also review steps families can make to build wealth, enjoy life, and make a difference in the world.
Lisa’s Millionaire Journey
Lisa grew up with an accountant for a Dad. He tried to convince his children that numbers and finances were as interesting as video games. So, naturally, Lisa wanted to avoid becoming an accountant at all costs. She pursued a different path in college, but an elective accounting class confirmed that Lisa was a numbers girl through and through.
She met a guy in college who became her husband halfway through their pursuit for Master’s degrees. While pursuing different career fields, they found an elective personal finance course they could take together. One of the key lessons they learned is that anyone could learn to save, invest, and build wealth, not just experts.
They graduated and were the typical broke college graduates in their twenties. Still, through a series of smart financial decisions listed below, Lisa and her husband were able to become millionaires and pursue a life they only dreamed about before.
Just like Lisa Schader did, here are seven steps you can take to become a millionaire by 30:
1. Start Investing Early
Despite living in the high-cost San Francisco Bay area, Lisa and her husband were able to purchase a house while the market was down. Although finances weren’t completely in order yet, it was a deal they couldn’t pass up.
During their college personal finance class, the professor stressed the importance of jumping into investing as early as possible. Investing is intimidating, and news about market changes make people nervous, but it doesn’t have to be complicated.
Lisa finds this to be an issue with the women she meets. Her advice to them is simple: “Don’t worry about trying to time your investments. Worry about whether you have money left over to invest.”
Lisa says that budgeting and investing are the two keys, but budgeting alone isn’t enough if you want to reach financial independence. She and her husband learned early on that they didn’t have to become investment professionals to get started. That’s the same advice Lisa says everyone should follow now.
2. Keep Investing Simple
Recently, Lisa worked her way through Dave Ramsey’s course, Financial Peace University. One of his claims is that the majority of millionaires use company-sponsored retirement accounts to get there. Others rely on outside investment accounts like IRAs.
And that’s exactly what Lisa and her husband focused on. Eventually, they toyed with some of the allocations and ventured out with other investments. But they thought the bulk of their investments should be simple.
(Note from Andy: I'd recommend blooom to help you with portfolio allocations and rebalancing. It's a great tool!)
3. Use Tax-Advantaged Investment Vehicles
Following this simple strategy, both Lisa and her husband maxed out their work-related 401(k) accounts to take advantage of employer matching. Plus, these are tax-advantaged accounts, meaning you aren’t taxed on these accounts every year. The tax is deferred until retirement when you withdraw from the account.
Another step they took was they each opened an Individual Retirement Account (IRA). They worked to contribute to their IRAs immediately. As they increased their net worth, other investment opportunities, like real estate, became available, but Lisa says the 401(k) and IRAs did the heavy lifting.
Lisa realizes there’s a misconception about women and finances, especially online. She says there’s more to being a financially savvy mom than couponing. Basic investing makes a bigger impact on your finances than couponing will ever achieve.
That first house that they purchased when the market was down helped too. When they went to sell it 9 years later, its value had doubled.
Lisa says the best thing to do is work with what you have and get into the market now.
Lisa recommends the book “Simple Path to Wealth” by JL Collins to anyone who wants to learn more about investing, but doesn’t want to feel like they are trying to earn a finance degree. Her take away from JL Collins is that it really is a simple path to wealth. Her family can attest to the truths shared in the book.
(Note from Andy: Check out my interview with JL Collins below!)
4. Live on a Budget
One way that Lisa and her husband created their path to wealth was through implementing a budget.
They started using Mint, a free budget tracking app. Lisa says that in the beginning they didn't have a lot of money to spend but were still excited to link their accounts and see their budget in action. Since then, they’ve tried other budgeting software, like Quicken, and have settled on You Need A Budget (YNAB).
What’s the right budgeting method, according to Lisa? Whatever works for you. If you have something that works for you, keep using it. There’s no sense in changing just to change.
Lisa views budgets as a tool for communication for families. Budgets help couples get on the same page with their finances and plan goals together. Lisa is a saver by nature, while her husband enjoys spending money more frequently. Having a budget acts almost like a digital coach that helps them find a happy medium that still works toward shared goals.
The Key to Wealth Building
A lot of people think the key to building wealth is making a lot of money. Lisa suggests that’s the wrong thing to look at — it’s about the margin. You need to look at the difference between your income and expenses. That’s where the growth lies.
When Lisa was younger, she helped her dad visit clients. Many of them that seemed wealthy dealt with tons of financial issues (more money, more problems). She also found out that other clients were millionaires, but you couldn’t tell by how they lived or their modest homes.
There are plenty of people making a significant income, but spend all of their money or are in debt. Having that margin is what can help you become a millionaire.
5. Partner with Your Spouse
Lisa references an article in the Harvard Business Journal she came across recently entitled “Being a Two-Career Couple Requires a Long-Term Plan.” She says it captures much of how they handled being married and both having careers while raising a family.
Couples need to look at the bigger overall picture. There are times when it makes sense for one person to take a step back to allow their partner to pursue something. That’s exactly what Lisa did.
Lisa became the primary caregiver at home, with some work mixed in here and there. This allowed her husband to get really good at his job and make career strides. She was proactive and made sure he followed a healthy work-life balance. By Lisa stepping back, it allowed his income to grow, helping their overall financial goals.
Once their kids were older and more independent, Lisa started her own small business through developing a blog, bookkeeping and coaching. They weren’t dependent on her income, so she didn’t have to go back to a traditional job at that point, which wasn’t her desire anyways.
6. Have Fun Along the Way
Lisa’s family has made it a point to build fun into their lives. Budgeting and investing are important, but you also need to enjoy the journey.
Recently, Lisa did some extra bookkeeping work on the side to earn cash to surprise her husband for his 30th birthday. She asked family to watch their child and told her husband to pack a bag, and handed him an address.
He didn’t know what to think when they pulled up to an enormous mansion with a six-car garage. A gentleman walked out and handed Brian the keys to a Porsche 911 (his dream car) and says, “See you back in 48 hours.”
Lisa used an app called TURO, which allows you to rent people’s cars, including luxury vehicles. They spent two days driving down the coast, staying at amazing hotels, and eating great food. What fun is becoming a millionaire if you can’t enjoy the journey?
Lisa says it’s important to make things count and enjoy what you have.
Continue to Set Goals
Another way Lisa and Brian enjoy life is by continuing to set goals. They currently have two financial goals:
The plan is for her husband to retire at 55, while she may retire a few years soon. Brian enjoys his career, so there’s no rush to exit for greener pastures at this point.
Pay off the mortgage early
They do have a mortgage and created a spreadsheet to analyze the best way to pay off their home. Some say it’s better to pay off directly, while others opt to invest and let it grow, paying off the house later. They’ve chosen to do both. They have a taxable investment account since they’ve maxed out contributions elsewhere, but they also pay down their mortgage each month.
You’ve probably heard about the FIRE (financial independence, retire early) movement. Lisa and Brian belong in the Fat FIRE camp, choosing to enjoy life a little more instead of focusing solely on saving goals. Lisa says they aren’t living for that retirement day. Instead, they love to travel with the kids, having made many domestic trips to cities like Seattle and Austin.
They also created “Fun Money” accounts. A dedicated amount each month is set aside for each person to use as they please. Lisa tends to save hers while Brian likes to spend more often. She says the accounts started small, but now they can afford to add a little more.
Having these accounts actually helps them budget better. Instead of feeling so stressed about every dollar they spend, there’s an opportunity for each person to spend some money on things that fit their own tastes and values, without affecting their larger financial goals.
7. Give Back
Lisa says giving back is a big deal for her family, both with money and time. Something they learned from their personal finance class is that you should be as generous with your first dollar as you are with your last. So, they’ve prioritized giving along their journey.
They love to get the kids involved too. Like many people, around Christmas time, they participate in a giving tree, but they’ve also gotten creative and made up stockings for the homeless.
For the person listening who wants to become a millionaire by 30, Lisa says you should figure out what your next long term goal is and start with that. Have a goal you’re excited about because it will motivate you to do the work of budgeting and saving.
Lisa compares this to runners and other athletes. They tend to train differently when they know they have a race in mind. It’s also important to pick a date for reaching your goal. Even if you end up changing it. Having a date helps you set your pace, and you're more motivated when working towards that goal.
Lisa says, “Once you feel how amazing it is to set a goal and accomplish it, then you can’t wait to figure out your next goal, and the momentum builds from that.”
For another resource, check out how Andy and Nicole became millionaires in less than 10 years.
How would your life look different if you were to become a millionaire by 30?
Please let us know in the comments below.