8 Millionaire Tips to Reach Financial Freedom as a Coder : Emily Rosemary Collins
by: Emily Rosemary Collins
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If you’re like me, you don’t want to hear tips from people who haven’t been there and done that, so let’s start with a few words on my financial situation:
About Me: My investments and business portfolio is worth north of one million USD at the time of writing. While I’m technically financially free in that I don’t have to work anymore to maintain my lifestyle, I love business and finances, so I keep writing blogs for Finxter.
For some readers, my financial situation may be uninterestingly low. Others may find it significant. Only you can judge if I’m the right person for you to take seriously. Finally, this is not investment advice but educational entertainment.
With this out of the way, let’s get started with the slow lane to becoming a millionaire:
Five Millionaire Tips From the Slow Lane
The National Study of Millionaires by Ramsey Solutions provides valuable insights into the financial habits and behaviors of millionaires in the United States.
Contrary to popular belief, the majority of millionaires did not inherit their wealth, nor did they earn it through high salaries or risky investments.
Instead, they achieved their financial success through consistent investing, avoiding debt, and smart spending. Let’s recap these points as they are important:
- Consistent Investing
- Avoiding Debt
- Smart Spending
Here are some key takeaways from the study, particularly relevant for techies and coders:
Millionaire Tip #1 – Invest Consistently
Three out of four millionaires (75%) attributed their success to regular, consistent investing over a long period of time. This is a crucial lesson for tech professionals, who often have access to employer-sponsored retirement plans like 401(k)s. By consistently contributing to these plans and taking advantage of employer matching, techies can build substantial wealth over time.
I have written a blog post about the math of consistent investments as a coder for various specific situations:
Recommended: The Math of Becoming a Millionaire in 13 Years
Millionaire Tip #2 – Avoid Lifestyle Debt
Nearly three-quarters of the millionaires surveyed have never carried a credit card balance. For tech professionals, who may face student loan debt or the temptation to overspend on gadgets and tech gear, it’s essential to prioritize paying off debt and avoiding new debt. This will free up more money for investing and reduce the financial stress that comes with carrying debt.
The only debt acceptable is debt to build financial assets such as a business or investments (e.g., real estate) because it can help you inject leverage and financial horsepower into your life.
However, the risk is significant, and even if financial leverage can accelerate your wealth-building journey, it can cost you dearly: every number, no matter how large, multiplied by zero is zero.
Millionaire Tip #3 – Spend Smartly
The study found that 94% of millionaires live on less than they make, and 93% use coupons when shopping. Tech professionals can adopt similar frugal habits by budgeting, tracking expenses, and looking for ways to save money on everyday purchases. This will allow them to invest more and reach their financial goals faster.
Millionaire Tip #4 – Educate Yourself
The majority of millionaires in the study graduated from college, with over half (52%) earning a master’s or doctoral degree. For tech professionals, continuing education and skill development can lead to higher earning potential and career advancement. Whether it’s pursuing advanced degrees, certifications, or online courses, investing in education can pay off in the long run.
The Finxter Academy, for example, provides relevant tech courses with certifications you can use to showcase your skills to potential employers such as Google, Facebook, Amazon, OpenAI, or Tesla. 
Millionaire Tip #5 – Focus on the Right Career
The top five careers for millionaires in the study include engineer, accountant, teacher, management, and attorney. For techies, pursuing a career in engineering or management can be a path to financial success. However, it’s essential to remember that hard work and dedication are more critical factors than job title or salary. In fact, 93% of millionaires said they got their wealth because they worked hard, not because they had big salaries.
As my blog post “Millionaire Math” outlines, there are many paths to financial freedom, but all of them require a savings rate of 10% or (much) higher.
In conclusion, becoming a millionaire in the US is achievable for tech professionals who are willing to invest consistently, avoid debt, spend wisely, and work hard. By adopting the financial habits and behaviors of millionaires, techies can build substantial wealth and achieve their financial goals.
Three Millionaire Tips From The Fast Lane
The slow lane is good enough to becoming a millionaire coder. Many have done it. You can do it too. But becoming rich young may be even more attractive for you.
In that case, you have other options you can employ in addition to (not necessarily instead of) the slow lane:
Millionaire Tip #6 – Leverage Scalable Business Models
A coder creates a software application that solves a specific problem for a niche market. Over time, the app gains traction and attracts a large user base. The coder monetizes the app through a subscription model, generating $500,000 in annual revenue. After a few years of consistent growth, a larger software company takes notice and offers to acquire the app for $2.5 million at a 5x revenue multiple. The coder accepts the offer and experiences an explosive wealth event by selling the app.
Stories like these happen every day. The odds are much higher than playing the lottery — in fact, many savvy entrepreneurs have proven that this strategy is replicable. I have built roughly three-quarters of my wealth by leveraging scalable business models and asset value through the profit multiple.
Below is an expanded table of profit multiples and example business valuations for one-person coding startups, along with example businesses that a one-person coder could realistically build.
| Profit Multiple | Annual Net Profit | Business Valuation | Example Business |
|---|---|---|---|
| 2x | $50,000 | $100,000 | A mobile app for time management |
| 3x | $100,000 | $300,000 | A SaaS platform for small business accounting |
| 4x | $150,000 | $600,000 | A web application for project management |
| 5x | $200,000 | $1,000,000 | A cryptocurrency trading bot |
| 6x | $300,000 | $1,800,000 | A machine learning tool for data analysis |
| 7x | $500,000 | $3,500,000 | A blockchain platform for supply chain tracking |
| 8x | $1,000,000 | $8,000,000 | A cybersecurity software for enterprise protection |
| 9x | $2,000,000 | $18,000,000 | A cloud-based platform for IoT device management |
| 10x | $5,000,000 | $50,000,000 | A virtual reality platform for education |
| 11x | $9,090,909 | $100,000,000 | An AI-powered platform for personalized marketing |
It’s important to note that achieving a business valuation of $100 million as a one-person coder is a significant accomplishment and would likely require a highly innovative and scalable technology, a large addressable market, and strong competitive advantages. Additionally, as the business grows, it may be necessary to hire additional team members, seek external funding, and expand the business’s operations.
It’s also worth noting that the profit multiples used in the table are for illustrative purposes and may vary based on the specific circumstances of the business. Factors such as growth potential, competitive landscape, and risk profile can all influence the profit multiple and business valuation.
One-person coders have the potential to build valuable businesses by leveraging their technical skills and entrepreneurial mindset. By creating innovative and scalable technology solutions, coders can address market needs, generate revenue, and achieve significant business valuations.
Millionaire Tip #7 – Monetize Open-Source Contributions
A coder contributes to an open-source project that becomes widely used in the tech industry. The coder decides to offer premium features and support services for a fee. The coder’s contributions and premium offerings become so popular that they generate $200,000 in annual revenue. A venture capital firm recognizes the potential of the project and offers to invest $1 million in exchange for a minority stake in the coder’s business. The coder agrees to the investment, which provides an immediate influx of capital and an explosive wealth event.
Here are five real examples of open-source developers who have created significant wealth as a result of their open-source work:
- Linus Torvalds: Linus Torvalds is the creator of the Linux kernel, which is the foundation of the Linux operating system. Linux is one of the most successful open-source projects in history and is used by millions of servers, desktops, and embedded systems worldwide. Torvalds has earned significant wealth through his work on Linux, including awards, speaking engagements, and his role as a Fellow at the Linux Foundation.
- Guido van Rossum: Guido van Rossum is the creator of the Python programming language, which is one of the most popular programming languages in the world. Python is used for web development, data analysis, machine learning, and more. Van Rossum has earned significant wealth through his work on Python, including his role as a software engineer at Google and later as a Distinguished Engineer at Microsoft.
- Matt Mullenweg: Matt Mullenweg is the co-founder of WordPress, the most popular content management system (CMS) in the world. WordPress is an open-source project that powers over 40% of all websites on the internet. Mullenweg has earned significant wealth through his work on WordPress, including his role as the CEO of Automattic, the company behind WordPress.com, WooCommerce, and other products.
- Dries Buytaert: Dries Buytaert is the creator of Drupal, an open-source CMS that is used by many large organizations, including NASA, the White House, and the BBC. Buytaert has earned significant wealth through his work on Drupal, including his role as the co-founder and CTO of Acquia, a company that provides cloud hosting and support for Drupal sites.
- John Resig: John Resig is the creator of jQuery, a popular JavaScript library that simplifies web development. jQuery is used by millions of websites and has become a standard tool for web developers. Resig has earned significant wealth through his work on jQuery, including his role as a software engineer at Khan Academy and his work as an author and speaker.
Millionaire Tip #8 – Build Multiple Income Streams
A coder starts a side hustle offering tech consulting services to small businesses. Over time, the coder’s reputation grows, and the consulting business generates $250,000 in annual revenue. The coder decides to scale the business by hiring additional consultants and expanding the service offerings. After a few years of growth, a larger consulting firm approaches the coder with an offer to acquire the business for $1 million at a 4x revenue multiple. The coder accepts the offer and experiences an explosive wealth event by selling the consulting business.
During all this time building the successful venture on the side, the coder also had a full-time income from their job and investment portfolio — multiple income streams!
In each of these scenarios, you leverage your technical skills and entrepreneurial mindset to create value and generate revenue. By seizing opportunities and making strategic decisions, you can experience explosive wealth events that significantly increase your net worth.
Feel free to read our advanced article on the math of becoming a millionaire:
Recommended: The Math of Becoming a Millionaire in 13 Years
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August 15, 2023 at 05:03PM
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