I read the Millionaire Next Door almost 20 years ago and this book strengthen my strategies to build wealth for my family. The book documents the simple spending and saving habits of U. S. Millionaires. As a bonus it helps you avoid the sometimes-stupid mistakes majority of Americans make.
Today, about three percent or 12 million U. S. households are worth greater than $1 million. The authors surveyed over 11,000 millionaires and conducted in depth interviews with over 500. From this data set they identified seven critical practices that determined how U. S. millionaires became and STAY wealthy.
When the authors started their study their assumptions about the lifestyle of millionaires were almost 100% wrong. There are major differences between television millionaires and REAL millionaires. In fact, I will bet you $1.00 (as you can see I am not a big gambler) you come across millionaires every day if you routinely leave your house. How can you spot them? You cannot.
PRINCIPLES PRACTICED BY THE AVERAGE U. S. MILLIONAIRE
FRUGALITY – EARN MORE THAN YOU SPEND! U. S. millionaires tend to be frugal and live WELL below their means. This allows them to save and invest large percentages of their HARD EARNED MONEY. In their eyes, status symbols (expensive new cars, huge homes, etc) waste THEIR HARD EARNED MONEY!
THE VALUE OF TIME: We all get the same 24 hours each day. Millionaires value and allocate time, energy and money efficiently, so as to continue building wealth. You will not find them playing games on their phones – unless they are inventing the apps!
FINANCIAL INDEPENDENCE: Millionaires believe financial independence is MORE important than proving just how rich they are, like the majority of professional athletes who are dead-broke within three years of their career’s ending. After all, how many toilets in your house do you need?
EARNED THEIR WEALTH: They did not inherit their wealth – THEY EARNED THEIR NET-WORTH WITH LOTS OF HARD WORK!
SELF – SUFFICIENCY: Millionaires became self sufficient at an early age and so do their adult children. You will not find their children living at home until 45!
GOOD STATISTICALLY RELIABLE INVESTMENTS: Millionaires find good opportunities and invest. They do not swing for the fences but consistently go for one base hits.
CHOOSE THE RIGHT OCCUPATION: Millionaires choose the right occupation based on their skill sets. Majority of U. S. millionaires do NOT have a four-year degree and are not sitting on a degree on the “Study of the Body Temperature of Mosquitoes” stuck with $200,000 in college loans and working in Starbucks. HELLO!
TWO TYPES OF ACCUMULATORS OF WEALTH – ONE VERY VISIBLE AND ONE WALKS AMONG US!
UNDER ACCUMULATORS OF WEALTH (UAW) – People living above their means. UAW’s look act and dress rich. You know these people. Fancy and expensive apartments in NY City, BMW 7 Series, eat at five star restaurants most nights AND FLAT BROKE! They are at best living paycheck to paycheck and in many cases living on growing debt. Their favorite song should be “The Great Pretender”!
PRODIGIOUS ACCUMULATORS OF WEALTH (PAW) People living below their means. These are the people that have true wealth. You sit on the train with them, see them in Arby’s. Some may be your neighbor you see doing his own yard each week. They will NEVER EVER waste their HARD EARNED DOLLARS trying to impress you. Because they do NOT give a rat’s tiny round balls what you think of them!
If you want to become a millionaire you must develop the habits of those who became millionaires. It is seldom inheritance, luck, advanced degrees or even intelligence that enables some people to amass fortunes. For most wealthy Americans wealth is created from hard work, perseverance, planning and the most important trait- SELF-DISCIPLINE.
With all our bickering and the utter stupidity of DC, the U. S. is the best country that gives us an opportunity to work hard and earn more than we spend. Just like a business it is your over head (rent, new cars, expensive CRAP) that determines if you are wealthy or flat broke.
Scroll back up and read the principles. Do any of these sound impossible? If you have read this far, you have what it takes to target and achieve wealth. GET STARTED!
Start by spending less than you make. If you have access to a 401K and your employer is matching and you are not contributing the minimum to get the match – I want you to fill your bathtub with water and stick your head in it! You can come up ONLY when you have sense enough to get that matching money, which your employer budgeted to pay you! Stop making your company’s Chief Financial Officer (CFO) happy!
Start building multiple streams of income. I currently have five streams, working on a potential 6th. And I am in the process of buying another rental house to increase my rental income stream. Having multiple income streams is one of the most effective methods to grow your Net-Worth and become wealthy.
GIVE BACK! With wealth comes responsibility. Let’s meet our responsibilities and GIVE back to the groups that provide great services to those in need.
Read the book. Buy it. Rent it from your local library – which is most likely FREE. BUT GET STARTED!
SIMILAR PAST BLOGS
WHAT IF I TOLD YOU THAT BRAND NEW DREAM CAR IS COSTING YOU ~$800,000 OVER THE NEXT 30 YEARS? STILL WANT IT?
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I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger, with a NC State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I started my first business at ~13 years of age. I am a successful investor in equities and real estate and happy to share my personal finance and investment lessons learned with you. However, I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or financial advisors.