How to Build Wealth Without a Six-Figure Salary — What Actually Works

For as long as most of us can remember, there has been a belief that if you make a six-figure salary, you’ll find a way to retire comfortably in the US. This belief relies on the idea that this salary level will provide plenty of savings to invest, and by the time you turn 65, you’ll be a multimillionaire. 

While it won’t come as any surprise to learn that most six-figure earners these days are actually just scraping by, there is a question of what happens to someone who doesn’t make six figures. Is it still possible to build wealth without a salary that was a virtual guarantee of wealth at one point? 

Get Started Early

Regardless of your salary, the most important thing you can do is get started early with savings. The earlier you begin putting money away, the more time you have to accrue wealth and assemble a retirement fund you can be proud of. 

Think of it this way, and this math is subject to change, but if you saved roughly $14 per day at the age of 23, for a total of $5,040 per year, and invested this money with a 6% annual return, you’re a millionaire by 67.

I know that $5,040 might be a lot of money on a non-six-figure salary, but you’ll have to figure out how to get started early and do this because if you are starting at 35, it gets a lot more expensive. 

Invest Your Money

This method of building wealth shouldn’t be surprising on this list, and it ties back to the previous step, but investing your money can add up in a big way. Whether through stocks, bonds, or employee-matching 401(k) accounts, take advantage of these opportunities so your money is earning compounded interest every year. 

Live Below Your Means

Unfortunately, becoming wealthy on a smaller salary means that you have to make some sacrifices, and not all of them will be welcome. In this case, you want to try and live below your means so that you have between 10 and 20% of your salary available for investing, even if it’s as low as $20 per week. 

The faster you can build up habits of making coffee or lunch at home, the faster you’ll stop thinking about where to spend and instead turn to thinking about where to save. On top of everything else, you can also set aside money for an emergency fund, which is equally important as putting away money to build up enough wealth to retire comfortably. 

Make Everything Automated

If you’re concerned that you won’t be able to account for savings every month, automate it as soon as your paycheck is directly deposited. There are far too many success stories out in the world of those who automated their savings, which means a certain dollar amount percentage was deducted from a paycheck as soon as it hit the bank and was moved into savings or an investment account. 

“The Big Three” 

Piggybacking on living below your means, you also want to focus on where to cut costs around “The Big Three,” housing, transportation, and food. While food has already been covered, you might want to think about public transit instead of owning a car if you live in a city. You can also look at things like rideshare, where you split the cost of transportation with colleagues or friends every day. 

Pick Up A Side Hustle

If your primary job doesn’t afford you a six-figure salary, you’ll have to get creative, which could mean a side hustle. With over 55% of millennials earning extra money with a side hustle these days, this has gone from being a fad to being widely accepted and almost something you must do. 

There is a good chance that earning extra income through a side gig will not necessarily make you rich, but it will create more of an opportunity to invest and save while still paying all of your bills and hopefully having a little leftover to enjoy.

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