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5 Signs You’ll Never Be a Millionaire Despite Your 6-Figure Salary, According to Money Coach Rachel Covert

Updated: 01-11-2024, 11.46 PM

Earning a six-figure salary is a major financial goal for many people. Only 18% of people in the U.S. earn $100,000 or more annually, according to a 2023 Zippia study. When you hit this benchmark, it can feel like the key to unlocking financial security and becoming a millionaire — but is it?

Find Out: 7 Reasons a Financial Advisor Can Grow Your Wealth in 2024

In a recent Instagram post, millennial money coach Rachel Covert argued that even people earning six-figure salaries may never become millionaires if they don’t handle their money responsibly. Here are her five signs that you’ll never be a millionaire, even if you’re earning $100,000 or more.

Also see nine steps to become a millionaire in five years or less.

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Financial planning would be much easier if everything were perfectly predictable 100% of the time, but that’s just not how life goes. You’ll definitely face some emergencies and unexpected situations that come with similarly unexpected costs over your lifetime. The key to protecting your financial health is having an emergency fund to cover those costs when they arise.

Covert argued that if you don’t have at least $4,000 in an emergency fund (or a similarly liquid account) to cover such costs, that’s a sign that you’ll never become a millionaire. If you don’t have that money saved up and a $4,000 emergency were to arise, you’d have to go into debt. Since debt, especially credit card debt, can be expensive, not having a fully funded emergency fund can threaten your financial future.

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Most salaried employees in the U.S. receive a paycheck every other week. When you see that money hit your account, you may be tempted to go out and spend most of it. But then you have to wait another two weeks for your next paycheck. You can easily run out of money in that period of time if you’re not careful.

Covert’s post said that running out of cash and needing to put essentials like groceries on your credit card is a sign that you won’t become a millionaire. Someone who manages their money well and makes it last between paychecks is better equipped to reach millionaire status, even if they don’t earn more money. Resist the urge to spend your money as soon as you get paid. Instead, focus on allocating enough of your paycheck for your essential expenses, saving some of the money and planning for your future financial goals.

Credit card debt is a problem that plagues many people, including high earners. Collectively, Americans owe more than $1 trillion in credit card debt, and the average borrower owes more than $6,000, per TransUnion. The average interest rate is over 21%, meaning the average person pays hundreds of dollars each year in credit card interest alone.

If you consistently make large payments on your credit card balance and still can’t seem to eliminate the debt, Covert believes that could be a sign you won’t become a millionaire. The reasoning is that credit card debt is costly and can quickly get out of hand as fees and interest payments add up.

Being unable to eliminate your credit card balance despite making significant payments means either your existing balance was too large or you’re adding enough monthly charges to counterbalance your payments. Either way, credit card debt needs to be under control before you have any chance of growing your wealth to become a millionaire.

It’s normal to want to buy things beyond the bare essentials. In fact, part of financial freedom is being able to afford things you want, not just things you need. However, if you find yourself justifying almost any purchase, even when you know you probably shouldn’t buy something, that’s one of Covert’s signs that you’ll never become a millionaire.

Part of becoming a millionaire, even on a six-figure salary, is learning to say no to some purchases you want when they don’t support your larger goals. Set stricter standards for the purchases you make to avoid wasting money.

Finally, not knowing how much your monthly expenses are is the final sign that you won’t become a millionaire, according to Covert. After all, if you don’t know how much you’re spending, how can you effectively budget your money to reach your financial goals?

It’s easier for your expenses to get out of control if you’re not aware of how much you’re spending. Take some time to review your monthly expenses over the last few months and check for any surprises. If you discover that your spending habits aren’t supporting your goals, make a plan to lower your expenses and be more mindful about your money.

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This article originally appeared on GOBankingRates.com: 5 Signs You’ll Never Be a Millionaire Despite Your 6-Figure Salary, According to Money Coach Rachel Covert