Millennials are earning less than their parents or grandparents did, when they were young adults.

A recent study by the Federal Reserve found that young men in 1978 earned a median income of $56,100 (in 2016 dollars). But by 2014, that median income had dropped to a worrying $49,500.

Even in the midst of full employment since 2014, the US economy has failed to produce real wage growth. And while young women’s median income rose over the last 40 years, it hasn’t risen by enough to offset the decline in men’s incomes.

Similarly, millennials’ median net worth is lower than their parents’ were at their age as well. The median net worth among young adults in 1989 was $63,300 (again in 2016 dollars), compared to $55,000 in 2016.

So as a young adult today, what can you do battle the odds and become a millionaire?

Here are six steps to reach that elusive seven-figure club of millionaires.


1. Get a College Degree

Of all the tips outlined in this article, this is the easiest to demonstrate with cold, hard data.

According to one study by Georgetown University, the lifetime value of a bachelor’s degree is $2.8 million. That’s how much more the average college graduate earns than their degreeless peers, out-earning them by a whopping 84%.

The numbers do vary depending on the researcher. Another study by the Social Security Administration found that the median college-educated man earned $900,000 more than the median male high school graduate. The gap was lower for women at $630,000 – but still an impressive margin. Men and women with graduate degrees earned $1.5 and $1.1 million more than high school graduates, respectively.

If you want to earn a strong living, give yourself a head start with a college degree. Better yet, make it a graduate degree for even higher average earnings.


2. Negotiate a Higher Salary

My grandfather, an entrepreneur and high earner in his own right, used to say it all the time: “You don’t get what you deserve in life. You get what you negotiate.”

Your employer wants the highest possible productivity for the lowest possible cost. That doesn’t make them evil; it’s simply that their financial interests and yours aren’t perfectly aligned.

If you want to earn more, you can’t sit around waiting for them to voluntarily pay you more. Their financial interest is to pay you as little as they can while still keeping you as an employee (assuming you bring strong value to your employer).

It’s up to you to take the initiative and press for higher compensation. But before you storm into your boss’s office making demands, do your homework. Look for ways to bring more value for your employer, and then put together a case for just how high that value has become. The more numbers and data you can use, the better.

Don’t overtly threaten to quit and find work elsewhere; it’s crude and embarrassing for both you and your boss. Instead, leave it unsaid but gently implied: “I like working here. I like the company culture, my colleagues, and the management team. I’d like to stay, if we can come up with a compensation package that works for both of us.”

Finally, remember that “compensation” doesn’t end with salary. It could include commissions, bonuses, financial benefits (such as health insurance and retirement benefits), or lifestyle benefits such as the flexibility to set your own hours or work from home.


3. Make Your Career Moves Before Age 35

Ready for a depressing statistic?

The Federal Reserve found that nearly all the income growth in the average worker’s career occurs before age 35. If you’re going to earn the big bucks, you need to do it by then, at least statistically.

Part of that involves negotiating higher salaries, of course. But it also means you should aggressively pursue fresh job opportunities, and get any training needed for your dream job – and dream salary.

According to the study, only the top 10% of earners continued seeing income growth after age 35. Position yourself to become a top earner, and do it early in your career, if you want to reach a seven-figure net worth.


4. Maximize Your Savings Rate & Investments

It’s not enough to earn a high salary. You have to actually save and invest part of it.

And the larger that “part” is, the wealthier you’ll become.

Throw out your current budget and start from scratch. Begin with these financial cleanout steps to build wealth faster.

Keep in mind that building a nest egg that you can retire on requires compounding, not just savings. Invest your savings and keep reinvesting the returns, and use our Choosing Wealth Calculator to determine how much you’ll need to save and at what rate of return in order to reach your target net worth.

Maximizing your savings rate is the single greatest action you can take to accrue wealth.


5. Avoid Lifestyle Inflation

When the average person gets a raise, the first thing they do is find ways to spend it.

It could be moving into a larger apartment, or buying a fancier car, or just more dinners out and entertainment. Every person’s temptation takes a different form, but they all lead to the same result: spending your higher income rather than using it to build wealth.

Instead of succumbing to lifestyle inflation and spending more when you get a raise, invest the extra income. Funnel it directly into stocks, real estate, bonds, or any other investment that will generate income and appreciate in value.

No matter how much money you earn, you won’t accumulate wealth if you spend every penny. Earn more money – but invest it, don’t spend it.


6. Start a Business

The wealthiest people in the world aren’t doctors or lawyers or accountants or any other salary-earning professional.

They’re business owners.

Every few years, the IRS releases data on how the wealthiest Americans earn their money. In the most recent report, only 4.47% of their income came from salaries or wages. All of the rest came from businesses and other investments they owned.

Start with a side hustle, while you’re working a full-time job. My personal favorite is investing in rental properties; you get passive income, value appreciation, a slew of available tax tactics to slash your tax bill from both the business structuring and the properties themselves. But the sky’s the limit, and you can create any business that intrigues you.

As your business income grows, you can eventually quit your full-time job and plunge full-time into accelerating your business. An entire world opens up for you, as you learn how to leverage other people’s time and efforts to build your income and wealth.


Final Word

You don’t necessarily need to become a millionaire to retire early or reach financially independence, living off your business and investment income.

The first step is calculating exactly how much you need to accumulate, to replace your day job’s salary. Start with an understanding of safe withdrawal rates, to help you use our retirement calculator to reach a target figure.

With young Americans earning less than they did a generation ago, you’re on your own to build a wealthier future. Buck the trend! Prove yourself the exception to the rule, and start generating real wealth.

You won’t get there by spending more money. You’ll get there by earning more, saving more, investing more, and learning everything you can about wealth literacy. Knowledge is power, and nowhere is that truer than in personal finance.

What’s your plan to become a millionaire?