What comes to your mind when I say the word millionaire? Do you think of someone with a fancy car? A big house? A nice pool in the yard with a fancy pool house and outdoor kitchen? Beautiful clothes and always well dressed? Sure, a millionaire could be any one of these things, but not the typical millionaire next door. Thomas J. Stanley wrote a book called ‘The Millionaire Next Door’ that showcases the 7 basic habits that the wealthy live by. Dave Ramsey, Chris Hogan and their team just finished a study of more than 10,000 millionaires and wrote a book called ‘The Everyday Millionaire’ proving many of the same principles and sharing statistics of the “typical” millionaire. And yet another great author I respect, David Bach wrote ‘The Automatic Millionaire’ and ‘The Latte Factor’, also showing many of the same principles.
Over and over again, it’s been studied that what everyday millionaires do, is actually quite simple and they’re not who we think they are. So I’ve taken some of the best of the best tips from some ‘everyday millionaires’ and put them together for you below. And just remember, a millionaire is not someone with a million dollars in the bank, nor who makes a million dollars a year. It’s simply someone who has a million dollars of assets that they own, and either no, or low liabilities to negate them. What you own, minus what you owe equals your net worth.
Live Below Your Means
Sounds simple, right?? For so many Americans, it’s one of the hardest things to do. Our lifestyle creeps up with time and pay increases so that we never truly ‘get ahead’. We always fight to keep up with the mythical Jones causing 78% of Americans to live paycheck to paycheck.
Millionaires are frugal where it makes sense and create an artificial environment of scarcity with their budgets (and yes, another trait is that most of them live on budgets). They pay themselves first putting away money for retirement before it even comes home. They shop at discount stores like TJ Maxx for clothing, or have a rule, always wait for a sale. Have you ever noticed that most stores always have a sale that rotates on a regular basis? Self made millionaires sacrifice high consumption items today for financial independence tomorrow. This means buying used cars, taking out mortgages that are less than twice their annual income, taking simple family vacations and understanding delayed gratification.
Avoid Debt Like The Plague
73% of millionaires never had a penny of credit card debt. Why? They realized early the benefits of making efficient decision with money, time and energy. Investing early and taking advantage of compound interest is by far the easiest path to become wealthy and having debt means having less money to invest. Did you know that a 20 year old could invest just $500/month and have more than $2.6 M at retirement? This is compared with doing only $500 a month at 30 years old and having $1.1 M or waiting until 40 and having $500K. There are big shifts with time when we talk about compound interest and millionaires have taken it slow and steady.
Does that mean that if you’re over 30 it’s too late? Heck NO! It’s just going to take a little more work, more determination and more money to invest. But eliminating debt is the number one easy way to get on the path of becoming a millionaire.
Do Work That Matters To You
I said this above, but it’s less about what you make and more about what you believe. And doing work that matters to you and that you love doing every day, automatically increases your chances of being more successful.
According to the survey done by the Ramsey team, the top five occupations among millionaires in the U.S. are engineer, accountant, teacher or professor, management, and lawyers. 62% of millionaires earn a household income of less than $100,000 annually. Let all of that sink in!
Surround Yourself With Experts And Like Minds
Millionaires build themselves a team of support and expert guidance to help them avoid common pitfalls and make sure they’re not overlooking blind spots. They work with those who provide investment services, accounting services, tax advice, legal services, medical care, educational products, homes, and products and services for their businesses.
In addition, who you associate with on a regular basis (meaning choose to hang out with) will directly affect your level of success. If you always surround yourself with negative people, you’ll be negative too. If you surround yourself with friends who are chasing dreams, they’ll encourage you to chase dreams too. You are the average of your closest 5 friends…surround yourself wisely!
Look For Opportunities to Grow
The average millionaire reads 2 or more non-fiction or self improvement and development books per month. They’re not all geniuses either. Almost 50% had a B average in college or less and 9% didn’t even graduate from college. They have an insatiable desire to learn and grow outside of traditional education.
Setting daily goals is also an important habit under this umbrella. They can be business related, financial, health or otherwise, but everyday millionaires set goals and reach for them always striving to be better and learn from their mistakes.
There are a ton of books and studies on these habits as I mentioned in opening, and in the end, they all have many of the same conclusions…how can so many people be wrong? Studies show also that it takes an average of 20 years to become a net worth millionaire and I absolutely believe it. Once you decide to get serious about your money, becoming debt free may take 1-5 years, paying off the mortgage is an average of 11 years and then you can invest the amount of your mortgage, in addition to your 15% all while enjoying life and becoming one of those overnight successes in 20 years!