How to become a millionaire as a student

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So you fancy being a millionaire? There probably isn’t a student alive who hasn’t thought what it would be like to have a bottomless bank balance.Student to millionaireWhile we’ve all dreamt of countless jaunts to far-flung destinations, and an endless queue of gorgeous people wanting to help you splash your cash, short of a lottery win, chances are you’ve ruled it out as a daydream.
But being a ‘millionaire’ isn’t really as difficult and unachievable as you might think. Lots of people prove each and every year that you don’t have to be a banker, EuroMillions winner or be born with a silver spoon in your mouth to build up your wealth to seven figures.
So, here’s our ultimate guide to getting that million. Let’s get rich!What makes a millionaire?

save moneyOk, so a million quid ain’t what it used to be. It’s actually getting easier every day thanks to things like inflation. So for many budding rich-listers it’s a question of lifestyle and not having to worry about your finances.
To live like a millionaire, you don’t actually need to have a million pounds in the bank – 99% of ‘millionaires’ don’t. To actually be a millionaire you will most definitely have to be right on top of your finances and investments!
Being a millionaire can mean all sorts of things, but in this guide we’re essentially going to look at a realistic path in which you can build up your wealth to a target beyond £1,000,000.
We’ve suggested a few ‘fast track‘ ways to becoming a millionaire at the end for those who just can’t wait… but stick with us for the fool-proof guide first!
Let’s briskly walk through the rest of your life, taking a look at the steps you can take to become a millionaire (or even a billionaire!).

As a student

Rich StudentMost students have to scrimp just to get by, and can expect to leave university with a hefty amount of student debt (see how much).
So, becoming a millionaire at this stage in your life is a tall order. If you’re serious about being wealthy though, now’s the time to get your act together.

Set goals!

The wealth game is a long slog. Money doesn’t come easy. Before you embark on your millionaire challenge, it’s vital that you have a clear life plan.
You need to work out a feasible and realistic route to making your millions that draws on your past skills, experience and ambitions.
We’ll touch on setting income goals later on, but if you’re serious about this then you need to know how to achieve it not just dream it!

Sort out your spending habits

Most millionaires don’t run around buying Lamborghini’s all the time while cracking open the Champagne for breakfast. In fact, that’s part of the reason why they’re millionaires in the first place.
Smashed lamboThey say that ‘a fool and his cash are soon parted’, and that’s a fairly decent motto to live by if you want to join the super-rich.

Hone in on your money skills

Practicing and learning some basic budgeting and money saving skills while you’re a student will stand you in good stead for the rest of your life, so don’t just write it off as ‘something you’ll do another day’!
If you haven’t already got it, download our free book: The Essential Student Guide to Finance.

Start earning

To be wealthy you need to have income! Use any spare time you have (aside from studying and partying) to earn some cash. It’s a good idea to land a part-time job, but it can also pay off to be more creative.
Check out our quick ways to make money guide, or why not start-up a small business if you have something to offer?

Start saving

There’s no getting away from the fact that you will have student debt, but because you don’t have to pay it all back right away (if ever) it’s not like other debt (read about the repayments).
You may find that sometimes you do have a few quid to spare, especially when the loans come in.
BankGet into the habit of putting this into a savings account (easy access is best at this stage) and you’ll be surprised how much interest you can earn on it during your time at uni.
At the same time, remember to cut down on spending. Avoid having a car and think carefully before splashing out on big-ticket items if you don’t really need them.

As a graduate

graduateGoing from a life of education into a world of work can be a daunting prospect. There’s a lot to adjust to, and you might still be worrying about what you actually want to do with your life, nevermind the challenge of becoming a millionaire in the next few years!
Our advice is don’t worry about the unknown, things always work out and there are lots of things you can do to boost your chances of breaching the high-life.

Get a job

Your first priority to maximise your income at this stage is to secure a well paid job. Having said that, think carefully about the career you want to embark on: one you will enjoy and can progress quickly in. Read more about finding a graduate job.
If you’re finding it hard to get on to the career ladder, then pick up a part-time job for the time being whilst you job hunt. And if you’re really struggling to find any paid work then don’t be afraid to sign on at the Job Centre for a short period.

Start a business

The fast-track method of becoming super wealthy in your twenties is to start a high growth, high return business with a plan to exit within 5 years or so.
But, of course. there is absolutely no guarantee you’ll even make a penny, and the risk can often outweigh your other options of building a longer term income.
Facebook MarkIt’s important to have a well researched idea and a solid business plan before you start, and a clear picture of how you’ll support yourself when there’s no money coming in.
Having said all this, there may never be a better time to start in business than as a graduate. You’re responsibilities are minimal and even if it all goes Pete Tong, you’ve got a wealth of experience to build on to take forward.
Start with our own list of business ideas.

Take advantage of tax-free ISAs

One of the reasons why people will never become millionaires is simply because they don’t know how. There are lots of competing options out there fighting for you to invest in, but you need to think smart and do your homework on what is available to you and then what will give you the best return.
money on printingTax free cash ISAs are one of the best ways to consistently build up your savings. If you don’t yet have an ISA, get one now! Why? Read on…
Every year, each person in the UK over the age of 16 has an allowance of money they can put in a tax-free savings account, called an ISA. Once your money’s in the account, it stays tax-free, year after year. So if you have a little bit of spare money lying around, you should absolutely, definitely, 100%, put it in an ISA. After all, why pay tax (currently 20% on savings interest) when you don’t have to?
You can open a different ISA every year with a different provider if you want to, so shop around for the best rate. The top interest rate you can expect right now is around 3%. If you deposit £5,760 (the max. allowance for 2013/14) in one of the best ISAs, you’ll earn £169.76 over the year in tax-free interest. If that same amount was invested in a normal savings account paying 3%, after tax you’d receive £135.
For more on ISAs, read our guide on the best ISA accounts.

Before you’re 30

Millionnaire by 30A few years on from graduating, you’ll hopefully have a decent amount of cash coming in on a regular basis. Now’s the time to start getting serious. Being wiser with your spare money is what makes the difference between your Average Joe and your millionaire.

Get on the property ladder

Homes under the hammerWhilst you’re renting a property, you could see it as throwing cash down the drain every month.
Of course there are lots of benefits in renting, but by this point you should be a little more settled both in where you want to live and financially.
You may be quite happy living with your parents for a few years after you graduate (even if they’re not over the moon), and building up your cash reserves, but sooner or later, you should be looking into buying your own place.
Once you’ve bought your own house or flat, you’ll probably be paying much less every month in mortgage repayments than you had been forking out on rent, and you actually have a place of your very own at the end of it. Historically, property prices follow a strong upward trend so you really are investing in your future.
If you’re in a good financial position, then considering a buy-to let investment is the next step to financial freedom. So long as you can get the initial deposit down, and get a good mortgage deal which is less than the rental income, you’re on the fast track to being rather rich.
Again, you are also likely to benefit from a rise in overall property prices meaning you can bring in big bucks by selling up at the peak of the market and buying at the bottom.
Of course, there is the whole issue of getting a deposit together, and that’s a lot easier said than done.
But going back to those budgeting skills you honed as a student, you can put a plan in place to save up the necessary amount. You’d typically be looking at needing 10% of the property value.

Invest in stock markets using index-trackers

chart risingIf you’re not familiar with the stock market, it can all seem a little bit daunting. Index-tracking stocks are fairly straightforward though, and more to the point consistently beat the vast majority of managed and hedge funds.
In simple terms, these funds are a collective investment scheme that replicates the movements of one particular financial market (eg. the FTSE 100). There are 3 big advantages over other stock market investments:
  • Very low-cost, with long-term returns of up to 10%pa
  • Don’t require much knowledge or professional help
  • Avoid the classic issues of following greed and making stock choices
  • Easy to manage
  • Can be wrapped in a Shares ISA for tax-free returns
  • Maximizes the magic of compound interest (where interest income is reinvested)
This sort of investment works best when it’s given several years to appreciate and mature, so think of it as a long-term venture rather than a get rich quick scheme. But be assured, over time your wealth portfolio will swell nicely.
andrew hallamRead our guide on index-tracking investments, and if you really want to learn how to make your millions using this strategy then definitely read Andrew Hallam’s Millionaire Teacher. Highly recommended.

Get to grips with your pension

Retirement might seem like a long way off yet, but sorting out a pension fund before you hit 30 is a very wise move.
The benefits of pensions in growing your wealth are on a par with index-tracking investments. Even a modest amount put into a pension fund now can make a big difference in the future.
As with many of the other tips on this page, the key thing is to grow your knowledge of these major types of investment products available to you.
You might be able to get a good pension through your employer, who often match every pound you put in, but don’t forget to look at other providers too.
Try to pick a flexible one, that allows you to pay in as much or as little as you can afford, with a low annual fee.

Before retirement

Rich before retirementWhen you retire you’ll still require an income to cover not only basic living essentials (like rent and food) but to sustain the lifestyle you have worked so hard to achieve.
To be a millionaire OAP requires some planning years before you reach retirement age.

Set an income goal

goal-earnMost retirees are ‘pensioners’ because, well, they are living off of their pension which at least covers living costs. But you want to live like a millionaire, right?
To get to this level of income without working requires a fairly sizable pension plus a good number of other streams of income being earned every month on your capital assets.
If you want to really live it up post-work, it’s important to set an income goal before you retire that does not require you to work any more. This number will vary for everyone, but whatever it is, pick one and work to it. Instead of retiring at 70 you might find you’re able to retire at 58 if you wanted to, because you’ve reached your goal.
By the time you give up work, your investment portfolio becomes your income portfolio. To protect your nest egg you need to diversify…

Diversify your interests

Don’t keep all your eggs in one basket. Over the years, you should aim to build up a portfolio of wise investments that will get you set for when you retire.
A good income portfolio would ideally include a mix of:
  • pie chartCash and stock ISAs
  • Government bonds
  • A pension (private or state)
  • Index-tracking funds
  • Buy-to-let property (UK or overseas)
  • Cash
All of these are sources of sustained income. This kind of balanced portfolio will leave you in a position to enjoy your retirement, rather than wondering how you’ll afford it. And with the UK’s state pension getting worse each and every year, that’s a very good position to be in.

Write a Will

Remember, whatever happens, you can’t take it all with you when you’re in the ground. After a life of saving and building up your wealth, you want it to fall into the right hands when you’re gone.
It can be worth seeking professional legal and tax advice to make sure you have a strategy that maximizes the beneficiaries of your Will. And don’t wait until you’ve gone grey, the earlier the better!

Fast tracks to becoming a millionaire (legally)

Become a millionaire
If the long but fool-proof road to becoming a millionaire – that is, scrimping and saving as a graduate and building a well-balanced and sustained investment portfolio in your 30s onwards – doesn’t appeal to you, then there are other more creative ways to becoming filthy rich in a shorter time-frame.

Try these for size:

  • Move abroad – with a healthy bank balance you can live like a king in exotic countries such as India, Mexico and Thailand
  • Lotteries, game shows & competitions – this method of course all comes down to luck, but for a (very) small group of people a punt has paid off big time
  • Career choice – this guide has mostly focused on investing, but get into a high paying industry or job and you might be driving the flash car quicker than you think
  • Sell a business – we touched on this, but there’s still lots more to be said for starting up a company, adding value, generating sales and flogging it on
  • Gambling – not one to recommend since the majority of gamblers get into bad debt, but nonetheless it can be a quick way to big bucks for some. Check our guide to Matched Betting to profit without risk
  • Property developing – you’ve seen the daytime TV shows, and adding value to houses is without doubt a great way to build wealth relatively quickly
  • Inheritance – you probably haven’t got much choice in this one, but you can always send a Christmas card to distant wealthy relatives, just in case.
A million isn’t what it used to be, but it’s still more than enough to give you a very comfortable lifestyle. Making wise investment choices will help your cash to stand the test of time –  AKA inflation, your biggest wealth enemy.
Whether you’ve got a couple of tenners spare or perhaps a couple of thousand, give some really serious thought to what you should do with it.
But remember, if you want to be a millionaire, you’d much rather stash it away to earn more money than spend it now.
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  2. There are a lot of students nowadays who are making serious amounts of money by making apps. If you're into web or app development, that's a good way to earning your first million online. :)