Can the Average New Zealander Become a Millionaire?

Understand the reality behind building wealth in New Zealand. Our guide explores strategies, common traps, and the disciplined mindset needed for financial success. We also cover the difference between real and fake wealth and why avoiding consumer debt is key to achieving long-term financial freedom.

Updated 7 September 2024

Summary

Becoming a millionaire is a common financial goal for many New Zealanders. It's often viewed as the pinnacle of financial success, providing security and freedom - but is it attainable for the average New Zealander?
The good news is that becoming a millionaire is (mathematically) possible for anyone with the right personal situation, strategies, habits, and mindset. However, we must emphasise that while possible, it's highly unlikely that most people will become millionaires. So, while it is 100% achievable, the statistics suggest it's not likely for all. This is down to increasing personal debt levels, limited earning ability, flattening house prices and personal circumstances.
Wealth has never been more confused. There is a big difference between real wealth and fake wealth. It seems like almost every second YouTube or TikTok video seems to be of some 20-year-old "millionaire" who made it big in two years, and you can be ‘like’ them too if you just purchase their course, follow their 'investing' strategy or trade options.
In reality, many of these people are either not millionaires (e.g. they rent the lifestyle they show off to social media) or got extremely lucky (through an extremely risky investment that could’ve gone to zero). We have published this guide to shine a light on the realities of the steps to take to become a millionaire. Real wealth doesn’t come from the promises made in a YouTube ad.

Know This: The idea of becoming a millionaire still matters.

In today’s financial landscape, with rising living costs, inflation, and shifting economic conditions, becoming a millionaire is still a good goal. It’s not just about having $1 million in net assets - it’s about the freedom and security that comes with it.
Being a millionaire can mean being financially independent, having the ability to make lifestyle choices without being tied down by financial constraints, and offering security for your family and future.
However, becoming a millionaire isn't just a pipe dream — it's achievable for many people with a solid plan, financial discipline, and realistic expectations. The challenge lies in setting the right goals, staying patient, and avoiding the distractions of short-term thinking.

To help explain what's important, our guide covers:

What’s defined as a “Millionaire”? When am I considered a millionaire?

The term "millionaire" is often thrown around but can have many different definitions. A few common definitions might be:

Net Worth millionaire (assets minus liabilities)
Asset millionaire (e.g. $1 million of property value but not factoring in liabilities or mortgages)
Liquid millionaire (excluding housing)
Individual millionaire (versus household millionaire)
New Zealand Dollar millionaire (versus a Millionaire in other currencies)
Young millionaire (versus older millionaire)

It’s important that if you do try to use millionaire status as a benchmark or comparison tool, you use the right type of millionaire. As detailed above, there are many different interpretations of what's defined as a millionaire.

MoneyHub Founder Christopher Walsh shares his comments about whether the average New Zealander can become a millionaire:

"While the average New Zealander can become a millionaire, the reality is that many won’t. Various factors, such as health challenges, limited access to education, family responsibilities, and other circumstances, make it difficult for some.

For those with steady incomes, the journey to wealth requires discipline, and the lure of consumerism often becomes a significant barrier along the way. Earning $100 and spending $110 equals misery - yet our credit card debt keeps growing, and too many of us are living payday to payday, not because we don't earn enough, but because we're drowning in debt and as at March 2024, 1 in 10 New Zealanders were behind on their repayments.

The biggest culprits are long-term car finance payments and high-interest GEM Visa cards (and similar) with (close to) 30% p.a. rates - these are nothing but shackles that keep you working to make someone else richer.

Consumer debt is a game of snakes and ladders but without the ladders. One wrong move, like taking on unnecessary debt for things that don't matter, and you slide backwards into an overdraft of a close to $0 bank account balance. How can you expect to get ahead if you're servicing debt at interest rates designed to make shareholders rich? You can't. That impress-the-neighbours new car you're paying off at 15.99% p.a. finance for seven years? It's costing you not just in interest but in opportunity – the opportunity to invest, save, and grow your wealth.

Instagram, TikTok, the so-called influencer economy – it's all fake. The people who look like they have it all figured out are often the ones furthest from it. True happiness doesn't come from the endless scrolling or the pressure to keep up with lifestyle trends. Real wealth is built quietly, behind the scenes, while most people waste time chasing the latest must-have or trying to impress people who don't care. The happiest people aren't flaunting it online; they're living in financial security, with money in the bank and investments that work for them while they sleep. They do what they want, knowing the money is real.

Debt and Consumerism are wealth killers. It's a disciplined process to become a millionaire. Saving consistently, living below your means, and investing wisely are simple, yet consumerism makes it nearly impossible. When you get sucked into the vortex of buying things you don't need, you're playing a losing game. Every dollar that goes into paying off debt is a dollar you're not investing in your future.

Consumer debt is nothing but a leash; the sooner you break free from it, the sooner you can build real wealth.

Becoming a millionaire isn't about luck or earning a six-figure income. It's about discipline, avoiding the traps of debt, and understanding that the long-term rewards of financial security far outweigh the short-term highs of consumption".

Christopher Walsh
MoneyHub Founder

The Numbers Speak: Wealth in New Zealand

Social media and mainstream culture have skewed perceptions of what it takes to become a millionaire. With images of luxury cars, multi-million dollar homes, and stories of “overnight success”, it can seem like everyone except you is already rolling in cash. However, according to national wealth data, the reality is far more grounded.

According to Statistics New Zealand and our research, the median net worth of a New Zealander is around $400,000, with significant disparities between age groups. The individual average net worth for New Zealanders aged 35 to 44 is around $300,000, while for those aged 55 to 64, it’s $700,000. Reaching millionaire status is a gradual process, typically achieved by people in their late 40s and 50s after years of consistent saving, investing, and mortgage repayments.

Looking at the median data (meaning if you lined up one hundred New Zealanders from left to right based on net worth and picked the 50th person, this is how much wealth that person would have), at least 50% of New Zealanders never reach millionaire status (as individuals).

This brings us to the core point: becoming a millionaire is possible for the average New Zealander, but it’s usually a very long-term goal and definitely not being achieved by the majority of people (statistically).

Exhibit: Individual Median and Mean Net Worth (Source: MoneyHub Analysis, Stats NZ).

Important: The Social Media Distortion and Recalibrating Expectations - Wealth Takes Time

One of the biggest obstacles to wealth-building is unrealistic expectations. The truth is that most New Zealanders who become millionaires don't do so until their 50s or 60s.
Social media can make it seem like everyone is getting rich quickly, but the reality is much more gradual, and we would argue that many serial posters may be reversing their net worth and financial security. Understanding this can help you stay patient, confident and focused on your long-term goals.
It's easy to feel disheartened when scrolling through social media and seeing people your age living lavish lifestyles. However, it's important to remember that what you see online is often far from the truth. Many people project an image of wealth that doesn't reflect their financial situation. Flashy cars, luxury holidays, and expensive clothes are often funded by debt rather than real wealth.

The Path to Becoming a Millionaire: Strategies for Different Types of New Zealanders

Regardless of where you start, whether you’re a fresh graduate earning $50,000 or a Double Income No Kids (DINK) couple making $150,000, becoming a millionaire is attainable with focus, discipline, and sound financial planning.

Important: The below examples are meant for illustration purposes only – some readers may disagree with the assumptions being made, particularly when it comes to reality and varying factors such as:

Variability of incomes (higher, lower, or layoffs)
Not focusing on housing costs (which are increasing, meaning the saving rates stated below are ambitious)
Varying effective tax rates
Varying savings rates (incorporating periods of higher costs or efforts to save more)
Varying rates of return (depending on what the person has invested in)
Timing of cash flows (and whether the money is compounded annually, monthly, weekly or daily)
The timeframe (achieving millionaire status in the 40s, 50s, 60s)
Inflation (whilst the examples below use real returns, meaning the million dollars in the future have the same purchasing power as a million dollars today; whether their investments can generate 7% real return is debatable)

However, the point of the below examples is not to get the modelling perfect but to show a high-level analysis that it's possible to become a millionaire. Since our examples assume no wage increases and apply straightforward higher-rate taxation, we believe the projections are conservative.

Know This: The three examples below treat each scenario as a household (e.g., the young graduate as a household, the DINKs as a household, and the single mother as a household). Milestones for millionaire status will likely vary heavily depending on individual versus household net worth.

Example 1: The Young Graduate Earning $50,000 Straight out of University

Scenario: A 24-year-old fresh graduate earning $50,000 and living in Auckland.
Challenges: High living costs, student loan repayments, and limited disposable income.

The general plan:

Live below your means: In Auckland, rent and living costs can consume a significant portion of your income. House-sharing or living at home can help save considerably during the first few years.
Automatic savings and investments: Start with a regular KiwiSaver contribution of 3% and set aside an additional 10% for investing in index funds. Compounding over 30 years can lead to impressive results even with a lower income.
Side income: Consider part-time freelance work or gig economy jobs to boost your savings.

Key assumptions:

$50,000 income.
25% Effective tax rate
50% Savings Rate (achievable by living at home into his or her 20s)
7% Real Returns (net of tax and fees)

Outcome: Assuming this young graduate is an extreme saver, with a very high savings rate of 50% (on their net income, e.g. after taxes have been paid) and a diversified investment portfolio (such as low-cost index funds), this individual could realistically reach millionaire status by their late 40s. Again, many caveats and assumptions will likely not be reflected in this example (e.g. no pay raises, not including KiwiSaver in this scenario, whether 7% real returns is possible going forward).

Disclosure: This is an example to show that achieving millionaire status is possible even on a low income, with a high savings rate and a long time period. We are aware that a 50% savings rate on $50,000 is extreme and highly unlikely for a typical Kiwi. Having said that, this is written to show what is possible, not what is probable.

Example Net Worth Progression:

Example 2: The Dual-Income, No Kids (DINK) Couple Earning $150,000

Scenario: A couple in their mid-30s earning a combined household income of $150,000, with a mortgage on a home in Wellington.
Challenges: Mortgage repayments, lifestyle inflation, and potential plans for children.

The General Plan:

Aggressive mortgage repayment: Focus on paying the mortgage faster by making extra payments. The sooner they become mortgage-free, the more they can invest in other wealth-building strategies.
Maximise KiwiSaver: Contribute enough to maximise employer matches and direct any surplus income to a diversified investment portfolio.
Balanced lifestyle spending: It's tempting to upgrade cars, take frequent overseas trips, or eat out often. However, they can still enjoy a good lifestyle by prioritising investment and debt reduction without derailing their long-term goals.

Key Assumptions:

$150,000 income.
33% Effective tax rate
30% Savings rate
7% Real Returns (net of tax and fees)
Starting from scratch from age 35.

Outcome: Even starting later than the graduate (mid-30s) and not saving as much as the graduate (e.g., spending more - potentially on mortgage repayments or on holidays), thanks to the couple's higher income and consistently saving 30% of their combined income, this couple could reach millionaire status well before retirement, potentially by their early 50s.

Example Net Worth Progression:

3. The Single-Income Parent Earning $70,000

Scenario: A single mother of two, earning $70,000 yearly and living in Christchurch.
Challenges: Childcare costs, limited disposable income, and balancing work and family life.

The Plan:

Frugal living involves sticking to a strict budget that prioritises essentials and minimises non-essential spending. Meal planning, buying second-hand items, and minimising entertainment expenses can free up savings.
KiwiSaver and investments: Even if savings are limited, a consistent 3-5% contribution to KiwiSaver and an additional small amount towards investments can grow significantly over time.
Government assistance: Take advantage of any Working for Families tax credits and other benefits, redirecting any surplus towards debt reduction and savings.

Key Assumptions:

$70,000 income.
25% Effective tax rate
20% Savings rate
7% Real returns (net of tax and fees)
Starting from scratch at age 35

Outcome: While progress might be slower and savings lower than the other two examples due to high costs of things like childcare, careful budgeting, consistent KiwiSaver contributions, and small investments over the long term could enable this parent to reach millionaire status by retirement age (65 years old).

4. The Mid-Career Professional Earning $100,000

Scenario: A 40-year-old professional earning $100,000 and living in Hamilton with a small mortgage and two children.
Challenges: Supporting a family, mortgage repayments, and lifestyle inflation.

The Plan:

Catch-Up contributions: If savings and investments have been modest until now, this is the time to ramp them up. Contributing 30% of income towards investments and increasing mortgage repayments can fast-track wealth accumulation.
Children’s education fund: Consider setting aside funds in a separate investment account for children's future education costs while keeping the primary focus on retirement savings and investments.
Debt reduction: Pay off high-interest debts (e.g., credit cards) and maintain a lean budget to maximise savings.

Key assumptions:

$100,000 income
25% Effective tax rate
30% Savings Rate
7% Real Returns (net of tax and fees)
Starting from scratch at age 45

Outcome: Even starting later in life with higher costs, focused efforts and disciplined saving/investing, this professional could still achieve millionaire status within 20 years.

The Key Principles to Becoming a Millionaire

No matter your starting point, the fundamental strategies remain the same:

Have a Clear Financial Plan

Whether you aim to pay off your mortgage early, save for retirement, or invest in your first rental property, having a clear financial plan is essential. You will need to set specific, measurable goals and review them regularly to ensure you stay on track. This includes saving and investing consistently - and committing for the long-term.

Have the Right Mindset

The road to becoming a millionaire is a long one. One of the key aspects of becoming a millionaire is the mindset you adopt. Having a "millionaire mindset" is not about being obsessed with money but about developing healthy financial habits, setting goals, and making smart decisions consistently. Some key mindset shifts to adopt are:

Delayed gratification: Many of today’s financial struggles stem from a “buy now, pay later” culture. Successful wealth-builders understand the value of delayed gratification - sacrificing some luxuries now to enjoy financial freedom later. Car loans, credit cards, personal loans and long-term finance cards for non-essentials are a fast track to being held back in debt.
Focus on the long term: Markets will fluctuate, property values may rise and fall, and economic conditions will change. However, you are more likely to succeed by focusing on long-term wealth-building strategies rather than trying to time the market or chase trends.
Growth-oriented thinking: The belief that you can improve your financial situation over time is crucial. Whether you learn new skills to increase your income, manage your money better, or refine your investment strategy, a growth mindset helps you adapt and thrive financially.
Staying the course: Building wealth is often arguably boring and repetitive. Consistently saving, cutting down on expenses and investing without immediate results can be tough. However, staying committed is critical to reaching your financial goals.

Time is Your Greatest Asset

The earlier you start saving and investing, the more time your money has to grow. Compounding is one of the most powerful tools available to investors. Often, the New Zealanders who save and invest earlier have far greater wealth than their peers who start later (even if the peers who started later save multiples more over their lifetimes).

Consistent, Long-Term Investing Beats Speculation

Many New Zealanders get drawn into speculative investments, like cryptocurrencies or high-risk shares, hoping for quick riches. However, the most reliable path to becoming a millionaire is consistent, low-risk investments, such as index funds and diversified portfolios.

Investing in broad market indices like the S&P500, NZX50 and global-focused funds reduces risk while providing steady growth over time.

Avoid Lifestyle Inflation

It's easy to let spending creep up as your income grows. Whether dining out more often, upgrading to a newer car, or taking more holidays, lifestyle inflation can seriously hinder your wealth-building efforts and delay your time to millionaire status. While not all lifestyle inflation is bad, knowing what spending is worthwhile and lower-yielding is important. The key is to live below your means, regardless of how much you earn.

Focus on Debt Management

Don’t let debt snowball out of control. While not all debt is bad, high-interest debt like credit cards and personal loans can significantly drag on your finances and substantially slow down your path to millionaire status. Paying off these debts as quickly as possible should be a priority, allowing you to redirect those funds toward savings and investments. Our guide to repaying credit card debt on an average salary is a useful starting point.

Maximise KiwiSaver Contributions

KiwiSaver is one of the easiest ways to build wealth. Ensure you’re contributing enough to receive your employer’s match (effectively a 100% return on your initial 3% contribution) and the government's annual contribution of $521. For most people, that means contributing at least 3% of their income but increasing contributions to 6% or 8% will make a significant difference over time.

Must Know Facts Related to Becoming a Millionaire

The earlier you start, the better your odds of becoming a millionaire

One of the most critical concepts in wealth-building is compounding. This is the process where your money generates returns, and those returns generate even more returns. Over time, compounding accelerates wealth accumulation significantly.

For example, if you start with an initial investment of $10,000, add $500 per month and benefit from an average annual return of 7%. In 30 years, that initial investment would grow to over $600,000. If you increase your contributions over time or start with a larger sum, you can easily reach or exceed the million-dollar mark.

The power of compounding returns highlights why starting early is crucial. The longer your money has to grow, the less you need to save regularly. Even small amounts, if invested consistently, can lead to significant wealth over time.

Understand the difference between income and wealth

Wealth isn't about how much you make but how much you keep, grow, and protect. It’s important to differentiate between having a high income and being wealthy. You can earn a high salary but still struggle financially if you’re not managing your money wisely. Conversely, someone with a modest income can build significant wealth by saving diligently, living below their means, and investing consistently.

For instance, in New Zealand, a single high-income professional earning $150,000 per year might struggle with debt if they overspend on lifestyle upgrades - car finance, an over-sized mortgage, clothing and dining. On the other hand, a couple earning a combined $90,000 but living frugally and investing wisely could be on their way to becoming millionaires by the time they retire.

Suggested reading: Our view is that many contributors to the Reddit Personal Finance NZ forum are middle-income but focused on making every dollar go further while focusing on financial security. As such, we suggest reading the topics on a regular basis.

A million dollars isn’t what it used to be

$1 million in the 1980s would have enabled New Zealanders to buy far more than what $1 million gets in 2024 – but don’t be discouraged, $1 million is still a huge milestone. It’s important to recalibrate expectations and realise that thanks to inflation, millionaire status is only a step in the wealth-building journey and is typically more of a slow and steady journey rather than a rapid sprint.

Becoming a millionaire is entirely possible, it’s the timeframe that people expect to become millionaires that’s unrealistic

Becoming a millionaire is entirely possible for most New Zealanders (but unfortunately, it’s not probable as the data suggests). However, achieving this goal requires disciplined saving, strategic investing, and a long-term mindset.

Many people can become a millionaire if they have a sufficient income, dedicated savings and a long enough timeframe. It's mathematically certain that you will eventually become a millionaire if you earn enough money and consistently save/invest a significant portion of it over decades.

However, life gets in the way. Maybe your parents run into health problems early, you decide to have kids in your 20s, or you unexpectedly get laid off, you switch jobs and take a pay cut or you have a family and go down to one income. Many of these situations have similar financial implications: a drop in income, a drop in savings rate (e.g. higher short-term costs) or a short-term cash hole that requires you to reduce the amount of assets you have invested (and working for you).

The key is to relax when you expect to become a millionaire and just trust the process (while riding out all the inevitable curveballs life throws your way).

Our view is simple: Compounding returns can power (slightly above) average income earners to near-millionaire status.

For example, someone earning $80,000 annually and consistently saving $5,000 yearly sees their investments compounding at 5% net over 40 years.
With disciplined saving and the power of compound interest, they would accumulate just over $600,000 by the end of the 40 years.
While the final amount may not reach a million, it demonstrates the substantial potential of long-term saving and compounding, even with modest contributions. This is a testament to the power of consistency in wealth building. Becoming a millionaire may require higher contributions or a more aggressive investment approach, but consistent efforts can build significant wealth over time.
We believe that contributing to KiwiSaver is an essential part of the process. Our guide to how valuable government contributions can be over time explains how KiwiSaver can help build wealth.

Frequently Asked Questions Related to Becoming a Millionaire

Is it possible for any New Zealander to become a millionaire?

It's arguable that anyone 'can' become a millionaire. However, not everyone will become a millionaire. Reaching millionaire status (particularly earlier in life) requires incredible dedication, sacrifice and luck. There are a lot of forces against it - family, wages, risk and more.

Reaching this milestone is not common (Stats NZ data suggest over half of New Zealand will never reach this threshold in their lifetime). We can't emphasise this enough - being a millionaire is not the norm in New Zealand.

Is property still a good investment?

Property has traditionally been a cornerstone of wealth for many New Zealanders. However, with higher interest rates (compared to the lows of 2020-2022) and affordability challenges, many New Zealanders rightly question whether property is still a good investment.

While property can still be a valuable part of a diversified portfolio, it's not the only path to wealth. Balancing property ownership with other investments, like shares and managed funds, can reduce risk and provide better long-term growth.

Generally speaking, with price-to-income and price-to-rent ratios becoming increasingly expanded, the risk-reward of investing in property is far less attractive than it once was (e.g. in the 70s, 80s, and '90s). Having said that, if you are considering investing in property as a primary source of wealth creation, consider these elements:

Location and growth potential: Investing in areas with strong growth prospects and infrastructure development can lead to significant long-term gains.
Debt management: It's easy to overleverage, especially when interest rates are low. However, the goal should be to pay down debt while gradually benefiting from property appreciation.
Positive cash flow: Properties that generate positive cash flow (i.e., rental income exceeding mortgage payments and expenses) provide both an income stream and asset growth.

For those who already own their home, focusing on paying down the mortgage can unlock equity faster, allowing for other investment opportunities or simply reducing financial stress.

How does becoming a millionaire relate to FIRE (Financially Independent Retire Early)?

The FIRE movement focuses on aggressive saving and investing to retire much earlier than the traditional retirement age. While it’s a more extreme approach, adopting some FIRE principles—like saving 50% or more of your income - can significantly accelerate your wealth-building timeline.
For many New Zealanders, reaching millionaire status is part of a larger goal: achieving financial independence. This is the point where you no longer need to work to cover your living expenses because your investments, property, and other assets generate enough passive income.
While $1 million might be enough for some people to retire and never have to work again, many New Zealanders have a far higher target (and associated yearly burn rate), meaning achieving millionaire status is more of a checkpoint than the finish line.
That said, financial independence is not necessarily about retiring early. For many, it’s about having the freedom to choose work that aligns with their passions, reducing work hours, or simply enjoying life without financial stress.

When do most New Zealanders become millionaires?

Many New Zealanders don't. However, those who do usually hit millionaire status later in life (e.g., in their 50s and 60s).

Why should I bother trying to become a millionaire? Isn’t it just a vanity metric?

It's less about the status and more about what that million dollars enables. For many New Zealanders, having $1 million enables peace of mind in pursuing certain careers or hobbies, knowing they've got a safety net and the ability to pay the bills for many years in case things don't pan out.

More Details on FIRE:

More Details on Wealth: