I live by these nuggets of wisdom I gleaned from one of my favorite books, The Millionaire Next Door.
Wealth is not the same as income.
Wealth is what you accumulate not what you spend. Being frugal is the cornerstone of wealth building.
Wealth is most often the result of a lifestyle of hard work perseverance, planning and self-discipline.
The seven common denominators among those who successfully build wealth include:
- Allocate Time, Money, and Energy Efficiently
- Living Well Below Your Means
- Financial Independence is More Important than Status
- Their parents did not provide economic outpatient care
- Their adult children are economically self-sufficient
- They are proficient in targeting market opportunities
- They chose the right occupations
They live on less than 7% of their wealth.
- 20% of the household’s wealth is in transaction securities such as stocks and mutual funds. They rarely sell their equity investments.
- Over 20% of the household wealth are in pension plans while 21% of the wealth is in private business.
Self-employed people make up 2/3 millionaires in America. Yet, the self-employed represent less than 20% of the workers in America.
- Millionaires usually go into businesses that are classified as dull to normal and include careers such as rice farmers, pest controllers, stamp dealers, paving contractors, etc.
The wealthy are highly educated.
- The wealthy are educated. 4/5 millionaires are college graduates. 18% have masters’ degrees, 8% have law degrees, 6% medical degrees and 6% are PhDs.
- They spend heavily on education for their offspring. Only 17% attended private school as a child. Yet 55% of their children attend private school. Johnny Millionaire funds his children’s college accounts before they even begin attending college.
Johnny Millionaire owns his home.
- 97% of the wealthy are homeowners and have occupied the same home for more than 20 years. Johnny Millionaire lives in a fine home but has no mortgage.
Johnny Millionaire does not overspend.
- The typical millionaire never spends more than $140.00 for a pair of shoes.
- Over half of all millionaires never spend more than $235 for a wristwatch.
- Most of the wealthy wear inexpensive suits. Most millionaires never pay more than $399.00 for a suit and own American made cars that are not the current year model.
Embrace the millionaire mindset!
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