For five years, author and Certified Financial Planner™ (CFP®) Tom Corley studied the habits of 233 millionaires. He also studied habits of people in poverty to see what differences he could find and the key habits in building wealth.
Based on his Rich Habits study, Corley found that there are four typical paths people follow to become millionaires. Some of them are long shots, but there's also one that's accessible to most Americans.
No matter how high your financial goals are, it's good to know what has worked for other people. Here are the four paths that Corley identified.
1. Saver-investor
The saver-investor path is a simple one: Consistently save 20% or more of your income. Contribute that money to savings and investments, including any retirement accounts and brokerage accounts you have.
This is the long road to becoming wealthy, taking an average of 32 years, but it's also the most common. Among self-made millionaires, 49% are saver-investors. Unlike other paths, this one doesn't require special skills or talents. It's an option for anyone who can save (and invest) 20% of each paycheck.
Now, that's easier said than done. But if you make it a habit, you could build quite a bit of wealth. Let's say you're able to invest $10,000 per year (about $833 per month). You get an 8% annual return, which is realistic based on the stock market's average growth. After 30 years, you'd have contributed $300,000 -- but your balance would be $1.22 million.
2. Company climber
A company climber by Corley's definition works for a big company and climbs the ladder to become a senior executive. Expanding on it a bit, this path could also include those who increase their salaries by job hopping or by working their way up to other high-paying positions. There's more options for these out there than just senior executive jobs.
This is the second-fastest way to become a millionaire. It takes company climbers an average of 20 years to become wealthy, but it requires long hours and excellent relationship-building skills.
While the company climber path is intense, it's usually a good idea to maximize your earning potential. Even if you're not interested in climbing to the very top, getting the occasional raise is important to keep up with (and preferably, beat) inflation.
3. Virtuoso
A virtuoso has advanced skills or knowledge that they use to make money. Corley divides them into knowledge-based virtuosos and skill-based virtuosos. Examples of knowledge-based virtuosos include lawyers and doctors. Skill-based virtuosos include musicians and professional athletes.
With this path, it takes an average of 21 years to become wealthy. That's largely because of how much time it takes to develop the skills or knowledge required to be a virtuoso. It can also be a costly endeavor because of the education, coaching, or mentorship needed.
4. Dreamer-entrepreneur
The dreamer-entrepreneur path involves pursuing a dream that can be monetized. For entrepreneurs, that dream is starting a successful business.
This is the fastest path to become a millionaire. It took self-made millionaires an average of just 12 years to become wealthy this way. But it's also arguably the riskiest and most difficult. You need a high risk tolerance, and you need to devote long hours to your dream to be successful.
Which path should you follow?
It's important to clarify that these paths aren't all mutually exclusive. For example, even though saver-investor is its own path, millionaires who follow the other three paths eventually save and invest, too. It just tends to take longer for virtuosos and dreamer-entrepreneurs to start doing that, because they need to build their income first before they can build their savings account balances.
Think about where your talents lie and which path is best for your personality. If you like where you work, you may want to see how high you can climb on the company ladder. If you've always wanted to launch your own business, then the entrepreneur path will likely be the most fulfilling. And if you don't want a path that's too intense or requires long hours, being a saver-investor could be the perfect fit.
