4 Steps Millennials Are Taking To Become Millionaires

More than half of millennials (54%) believe they need to be millionaires to thrive in today’s economy , according to a new study from Arta Finance . Unfortunately, many members of this generation are still far from this milestone — 57% currently live paycheck to paycheck.

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However, 46% of millennials believe they will become millionaires in their lifetime, and many are taking active steps to achieve this goal. Here are a few of the strategies millennials are using to achieve millionaire status .

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Saving for Retirement

The most common way millionaires are building their wealth is by saving in retirement accounts — 38% of millennials are using this strategy, the Arta Finance study found.

“Saving for retirement starts with fully utilizing one’s employer benefits like 401(k) [plans], IRAs and HSAs,” said Samita Malik, chief insurance officer at Arta Finance. “These are tax-advantaged investment vehicles and very often come with an employer match — which is essentially free money.”

To achieve millionaire status, investing in retirement savings accounts is a good first step, but you will likely need to invest outside of these accounts too.

“Once these tax-advantaged basics are covered, a brokerage account with investments in low-cost ETFs and index funds can be a good next step, followed by diversification into real estate and/or alternatives, and tax-smart strategies like direct indexing,” Malik said.

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Budgeting and Tracking Expenses

Over one-third (37%) of aspiring millionaire millennials said they stick to a budget and track their expenses.

“You can’t manage that which you can’t measure,” Malik said. “Knowing your cash in and cash out can help ensure that you are living under your means to generate savings required for investments.”

She said that when it comes to budgeting for long-term wealth, it’s more important to focus on major expenses than small day-to-day expenditures.

“The focus here should be on big-ticket expenses like car payments, rent/mortgage, healthcare, child care and the like,” Malik said. “Saving on a cup of coffee a day isn’t going to make much of a difference if you live in an overpriced apartment.”

Taking on a Side Hustle

According to the study, 30% of millennials said they have taken on a side hustle to improve their financial standing.

“Reducing your expenses is great, but being able to increase your income simultaneously is even better,” Malik said. “Side hustles can help increase that topline in your budget and create room for additional savings, provide a buffer from a job loss and help create assets for future income.”

Malik said the best side hustles are those that help build assets. These can be tangible assets, like buying and managing a rental property, or intangible assets, like creating an online brand. The important thing is that it provides ongoing monetization.

“Anything that helps you make money while you sleep,” she said. “The more diversified the side hustle from your main income source and the more tax-efficient it is, the better.”

Investing More in the Stock Market

Over a quarter of millennials (28%) said they are increasing their investments in the stock market to bring them closer to seven-figure wealth.

“After ensuring at least six months of expenses are in a high-yield savings account for emergencies, the bulk of investments for millennials should be in high-growth investments like equities,” Malik said. “Millennials have time on their side with another 25 to 40 years of a working career, but they need to start [investing] now.”

She noted that the focus should be on making the maximum contributions to retirement savings accounts before investing in a brokerage account, to get the full benefits of tax-deferred compounding. When you do start investing in the market, the key is to be consistent over time.

“Remember, time in the market beats timing the market or picking stocks,” Malik said. “Don’t delay, start today!”

This article originally appeared on GOBankingRates.com : 4 Steps Millennials Are Taking To Become Millionaires