Financial Planning
April 29, 2024

Financial Planning for the First-Generation Millionaire

Stewart Willis

Being a first-generation millionaire signifies that you haven't simply inherited your riches. Instead, you've earned your success through innovative thinking, relentless hard work, and maybe some good luck.

If you can now proudly exclaim, “I’m a first-generation millionaire,” you should learn more about the financial dynamics of being one. This blog will guide you through the fundamental principles of efficiently overseeing and expanding your fortune.

What Does It Mean to be a First-Generation Millionaire?

A first-generation millionaire has independently achieved a net worth of at least one million dollars. This means they achieved this financial milestone without inheriting their families' wealth or significant financial support. First-generation millionaires are typically self-made individuals who have accumulated wealth through their efforts. This could be through entrepreneurship, investments, or lucrative professional careers.

What Percentage of Americans Are Millionaires?

The American dream of becoming a first-generation millionaire is not just a fantasy. It's a tangible goal for many. Recent statistics reveal that around 8.8% of U.S. adults have reached this financial milestone, highlighting many individuals who have attained millionaire status.

Many American millionaires are first-generation self-made individuals. A recent report revealed that approximately 79% of millionaires did not inherit wealth. This means most millionaires are first generation, challenging the notion that riches are primarily passed down through generations.

What percentage of people are millionaires? According to a Global Wealth Report from Credit Suisse, 1.1% of the world’s population is a millionaire.

Challenges Unique to First-Generation Millionaires

Becoming a first-generation millionaire has distinctive challenges that can affect you. Let's dive into the common issues that often arise in this unique situation.

Understanding Your Finances

Regular consultations with a financial advisor are vital in maintaining your financial health. By seeking guidance from a professional, you can ensure that your wealth management strategy is solid and flexible enough to navigate any changes that may come your way. Think of it as investing in peace of mind and financial stability for the long term.

Continuous learning will help you better understand wealth management and investments. Even if you aren’t managing your assets yourself, you should stay in tune with your financial status. If you outsource your financial planning, don't think you should avoid thinking about money. When you choose to work with a financial planner, they should help you get a firmer understanding of your status and how exactly they can address your needs.

Lifestyle Creep

American millionaires who are first-generation may be at a higher risk of lifestyle creep. It’s easy to get carried away with money and overspend on things that you don’t need. There is always this expectation or assumption that the rich spend lavishly. The truth is different—the truly wealthy spend wisely.

This is where financial planning for first-generation millionaires comes into play. Managing your lifestyle isn’t about limiting the luxuries you want or restricting yourself. You can live comfortably and use your wealth to work for you.

Woman stacks coins next to bank notes on desk

Financial Planning Strategies for First-Generation Millionaires

Navigating wealth as a first-generation millionaire goes beyond splurging on luxuries. It requires diligent financial planning and smart asset management to ensure long-term prosperity. You’ve worked hard for your money; now, you need your money to work for you. Here are essential principles to steer you through this exciting yet challenging journey.

1. Establish a Strong Financial Foundation

Establishing a solid financial foundation is important, and debt management is part of that. By paying off high-interest debts first, you can save money in the long run and pave the way towards a debt-free future. This approach reduces financial stress and creates opportunities for wealth accumulation and a more secure financial future.

2. Budget with a Purpose

You gain valuable insights into your financial habits when you introduce a better budget into your life. It allows you to make informed decisions to reach your financial goals and manage your cash flow. It's all about being mindful of where your money goes to ensure a secure financial future.

Living within one's means is a key principle followed by many first-generation millionaires. Instead of succumbing to extravagant spending, they prioritize smart financial decisions. They can build wealth steadily and sustainably by spending wisely rather than simply cutting back. Financial planning helps manage this situation without sacrificing desired luxuries.

3. Improve Financial Literacy

Take charge of your financial future by investing in your own financial education. Gain a better understanding of financial markets, various investment strategies, and how the economy affects you. More knowledge will you empower yourself to make well-informed decisions that can positively impact your overall financial well-being. However, be diligent of where you get your information from—friends and family aren’t always the best sources.

Consider enlisting the services of a seasoned financial advisor who manages high-net-worth individuals. Investing in professional guidance can make a world of difference in securing your financial future.

4. Diversify Your Sources of Income

Diversification provides a cushion against unexpected market volatility and potential losses. You spread your risk exposure by diversifying your investment portfolio across different asset classes. This protects your overall wealth from sudden downturns in any particular market sector. This strategic approach protects your hard-earned money and stabilizes and enhances your long-term returns.

5. Regular Financial Reviews

Stay on top of your financial plan to make sure it's in line with your evolving goals, market trends, and personal situation. Regular reviews and adjustments are essential for first-generation millionaires to achieve lasting financial success. Without consistent reviews or budget adjustments, you’d be surprised at how easy it is to blow through our funds.

Stay informed about new tax laws, investment options, and financial products that could affect your wealth. Being proactive and knowledgeable will help you make informed decisions for a secure financial future.

6. Establish Long-Term Focus

When it comes to retirement planning, the earlier, the better! By maximizing contributions to retirement accounts like 401ks and IRAs, you're leveraging tax advantages. You are also setting yourself up for compound growth. Work with a financial professional to examine which financial vehicles can help you plan for your future.

Estate planning is a crucial step in securing the future of your assets. By carefully outlining how you want your wealth to be distributed, you can ensure your loved ones are cared for according to your wishes. Effective estate planning can also mitigate tax burdens for your heirs. It will provide a smoother transition and preserving more of your hard-earned legacy.

Make Your Money Work for You

Let the Asset Preservation Wealth and Tax team help you live comfortably. Enjoy the fruit of your hard work by working with our financial advisors. We take a holistic view of our client's financial situation and plan around their needs.

Get your free portfolio review today!

Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to and search by our firm name or by our CRD # 175083.

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