3 Habits That Are Stopping You From Becoming a Millionaire

There are an estimated 5.3 million people in the U.S. who are considered millionaires. That might seem like a large number, but actually, millionaires only make up about 2% of the U.S. adult population. However, if you'd like to join the ranks of the select few (relatively speaking) who get to call themselves millionaires, then these are a few habits you may want to break.

1. Spending money on interest

Many of us routinely spend money on interest. We do so when we finance vehicles or pay off our homes via a mortgage loan. And in situations like these, spending some amount of money on interest may be unavoidable. 

But one type of interest it really pays to avoid is that of the credit card variety. Not only does credit card interest tend to be exorbitant, but it often (though not always) goes toward purchases that aren't essential (whereas having a home and a car are essential, unavoidable expenses). So if you want to become a millionaire over time, do your best to limit your debt to key purchases only. And also, borrow judiciously to minimize the amount of interest you're paying when doing so is unavoidable.

You might, for example, have to finance a home repair because you don't have the money in your savings account. But doing so via a personal loan or home equity loan might mean losing less money to interest than charging that expense on one of your credit cards.

2. Spending your paychecks in full

Many people consider it a victory to make it to the end of the month without having racked up any debt. But while that's a good thing in its own right, if you want to become a millionaire in time, you simply can't keep spending your entire paycheck month after month. If you don't free up some money to save and invest, you'll struggle to build wealth. 

If you're eager to break the habit of spending your earnings in full, do a spending audit. Comb through recent credit card statements to see where your money has been going. Chances are, there are at least one or two items you can eliminate or cut back on to free up some cash. 

3. Playing it too safe with your money instead of investing

You may be inclined to keep your money tucked away in a savings account, where it can earn interest without the risk of losing out on principal (assuming you have that account at an FDIC-insured bank and aren't over the $250,000 limit for FDIC protection). But if you stick to a savings account through the years rather than invest your money, you might end up falling short of your millionaire goal.

The stock market has, over the past 50 years, rewarded investors with an average annual 10% return (before inflation), as measured by the S&P 500. Savings accounts happen to be paying generously these days, with many offering around 4% interest on your money. But today's rates aren't the norm. And so if you keep your money in a regular savings account over time, you might end up with a lot less wealth than what you'd get by investing in a brokerage account.

Let's say you contribute $300 a month to a savings account over 40 years, all the while generating an average annual 4% return in the process, which, again, is generous for banks. All told, you'll end up with about $342,000.

Now, let's say you put that $300 a month into S&P 500 stocks or ETFs over a 40-year period. Assuming a 10% average yearly return, you'll end up with about $1.6 million.

Becoming a millionaire certainly isn't easy, which explains why only about 2% of U.S. adults have reached that point. But if it's a goal you want to pursue, kicking these habits could be your ticket to making it happen.