How Real People Made a Net Worth of Over $500,000

Building a net worth of $500,000 isn’t just for the wealthy elite or those with six-figure salaries—though that no doubt helps. Brenton Harrison, a certified financial planner, founder of New Money New Problems, and a member of Investopedia’s Advisor Council, said that he’s often helped ordinary people regularly achieve this milestone by following specific strategies, even when starting with debt.

“My clients who have reached this milestone did so by combining a debt repayment plan with an investment plan,” Harrison said. “We start with an extra amount they can dedicate toward their goals and then split the amount between paying down debt and investing in the market.” This dual approach, he said, has proven more effective than trying to eliminate all debt before starting to invest.

Common Starting Points and Challenges

Most people who eventually reach a $500,000 net worth don’t start with a clean financial slate. In addition, today’s wealth builders face more headwinds than previous generations, Brenton Harrison and David Tenerelli, who is a certified financial planner at Values Added Financial Planning, pointed out.

“The cost of living in key areas has made it harder to make gains than in years past. For my community, those areas are housing, childcare, and schooling (for themselves or their children),” Harrison said. Rising costs require a more sophisticated approach to financial planning than before. “It’s not as simple as ‘save three months expenses and invest in your 401(k)‘ anymore. You really have to have an understanding of how taxes, employee benefits, investments, and insurance can work together to free up money to invest.”

Core Strategies That Work

“A high income is not the only way to financial prosperity,” Tenerelli said, adding that living within your means, “investing wisely, and optimizing for taxes are all important ingredients for anyone to accumulate financial wealth.” 

Harrison said a mistake many make is waiting too long before investing. “People try to complete one goal before addressing another, like paying off all debts before investing,” he said. “In my experience, paying off debt often takes longer than they planned, and by the time they’ve done so, it can take even more money to catch up for the years they weren’t investing.”

Instead, Harrison recommends several strategies that consistently help ordinary people build their net worth to $500,000. “Insure the insurables first,” he said. “While it feels like you’re starting backward by adding costs to your monthly budget…a long-term disability or death could make growth impossible if you haven’t protected your earning potential.”

The ‘Easy Pick-Ups’

Another strategy is finding what Harrison calls the “easy pick-ups.” These include maximizing employer benefits like health savings accounts and flex spending accounts, taking advantage of employee matches for retirement plans where available, switching mortgage payments to biweekly schedules to shave years off repayment time, opening bank accounts with fewer or lower fees and reducing use of credit cards.

These tactics might seem modest on their own, but combined, they can help you attain significant savings over time. For example, if you invest $300 monthly starting at age 30 with an 8% average annual return, you’ll have over $500,000 by age 60. Putting aside a set amount no matter what, called dollar-cost averaging, works because of compound interest—where your returns earn their own returns.

“Systematically buying investments incrementally over time is a proven method to a successful long-term outcome because it helps investors ignore the noise of financial news and the folly of attempting to time the market,” Tenerelli said.

The Bottom Line

Reaching a $500,000 net worth is achievable for ordinary people. Many who do so follow a dual approach—paying down debt while simultaneously investing—rather than tackling one goal at a time. In addition, not everything has to work out ideally for you to reach your financial goals—few things in life do. “Finding a balance between ideal financial behaviors and what’s realistic for your personality, relationship, or household is important,” Harrison said.

A key part of this balance is attaining a “more sustainable relationship with money,” Tenerelli said, which is helped by keeping in mind that “accumulating wealth isn’t the goal” but is best seen as “a tool for achieving deeper life satisfaction.”