Did you know that there are approximately 2.8 million millionaires in Australia right now?
I wouldn't blame you if you didn't. Yes, out of a population of 27.12 million (as of 31 March anyway), Australia has 2.8 million people with a household net worth of at least $1 million. That works out to be roughly 13% of the population.
This is all according to a new 'Wealth Building' report from Finder on the current financial health of the Australian population.
This report examined the primary drivers of wealth in this country and the primary factors that separate millionaires from the rest of us.
The seven-figure club
Most people would tell you that a good starting point for determining someone's wealth is by looking at their income. However, that's only the start of the equation. The Wealth Building report found that the biggest drivers of wealth building in Australia are investments. Particularly those centred on property, the share market and superannuation.
It's worth noting that superannuation is not an asset class in itself. Rather, it is a vehicle that enables us to invest in assets like property and shares.
According to the report, owner-occupied housing was the largest factor in wealth creation and inequality in Australia in 2024. Other significant drivers were 'shares, business and other financial wealth', superannuation, and investment property.
How to become a millionaire
In this report, Finder surveyed 1,000 Australians who are actively building wealth with investments and asked them what factors have contributed the most to their net wealth.
By far, the most popular choice was 'budgeted carefully/reduced expenses so I can save more' at 38%.
Coming in second was 'invested frequently/increased investments' at 12%. Following that, we had 'paid off debt' at 9%, 'marrying someone rich' at 7%, 'invested in real estate' at 6%, and 'increased retirement contributions/put money into super' at 5%.
Other, less popular, answers included:
- Set up passive income streams (royalties, dividends etc.)
- Inherited money
- Increased income/second job/started a side hustle
- Hard work
- Consultation with a financial adviser
- Negotiated a raise
- Rented out property
- Consolidated debt
Obviously, some options are not available to everyone, such as 'marrying someone rich' or 'inheriting money'. But the good news is that the top three most popular options are accessible to every Australian.
Breaking down the 'budgeted carefully/reduced expenses so I can save more' choice, some "frugal habits" of the investors surveyed included buying groceries when they are on discount, regularly eating home-cooked meals, regularly comparing household bills to finding the cheapest provider, and driving a cheap car.
The report finds something that we regularly preach here at the Motley Fool: Building wealth successfully requires spending less than you earn and regularly investing the difference in cash-producing assets like shares and property.
If you can pull that off, you have a good chance at joining the 2.8 million Australians currently in the millionaires club.
