Sports cars, private planes, multiple homes in exotic locations are where most people’s minds wander when thinking about millionaires. However, this would be completely wrong when it comes to the majority of those in the 7-figure net worth bracket. In fact, your own next-door neighbor may be a millionaire and you would never know it. According to the book, “The Millionaire Next Door,” and the subsequent book, “The Next Millionaire Next Door,” these folks enjoy flying under the radar. They are most likely to own a commuter car that is a few years old. And, a home in a working-class neighborhood. They also tend to be extremely frugal. Eighty percent of millionaires are self-made. They have received no inheritance from their family. And, outside of providing an excellent education for their children, do not support them financially into adulthood. Keep reading to learn more about the top attributes of the affluent.
Six common denominators of the wealthy:
1. Live well below their means
On average self-made millionaires live on 7% of their net worth. The majority or 97% are homeowners. They live in this modest home for approximately 20 years. Millionaires are also prolific savers and investors. Almost all sock away a minimum of 15% of their earned income every month.
2. Allocate time, energy, and money efficiently in ways that build wealth
Self-made millionaires are folks that are comfortable in their own abilities. They don’t spend time thinking about the inheritance their parents didn’t leave them. Instead, they are self-sufficient and spend time and resources in ways that multiply their wealth. As an example, these masterful accumulators of wealth spend more time exercising, planning future business decisions, managing investments, working and reading than non-millionaires. Non-millionaires tend to spend more time playing video games, sleeping and on social media than their wealthier counterparts
3. Financial independence is more important than displaying high social status
The majority of millionaires don’t spend money on expensive clothing, jewelry or accessories. 70% of millionaires drive Toyotas, Hondas or Fords. These vehicles are at least three years old. Additionally, most millionaires do not lease their vehicles. And, the average spent approximately $35,000 on their last vehicle purchase.
4. Their parents did not provide economic outpatient care
More than 80% of millionaires are first generation affluent. Most did not receive an inheritance. Instead, they were raised with the values of hard work and frugality. This has given them the traits needed to successfully build wealth.
5. Their adult children are economically self-sufficient
Self-made millionaires do not finance their adult children’s lifestyles. Instead, they spend heavily on their education’s as youth. And, they recommend their children go into professions that support the wealthy such accounting, law, tax advising, and estate planning.
6. Choose the right occupation
42% of millionaires are self-employed. Their companies are considered “dull normal” such as welding contractors, pest controllers and paving contractors. Others work in somewhat “boring” professional occupations with above average income. These occupations are unaffected by trends such as engineering, accounting, internet technology, healthcare or law.
Getting it wrong on wealth
As you can see, most people have it all wrong about wealth. Wealth is what you accumulate, not what you make. Wealth is a lifestyle of hard work, perseverance and planning. For many of us, it a relief to learn that wealth can be achieved through our own behaviors, regardless of our family background or ethnicity. Accumulating wealth is also a slow activity that takes time and many years of self-sustained effort.
What steps have you taken to accumulate wealth? Are you in the beginning, intermediate or advanced stages of your journey? What do you enjoy or not enjoy about the path to financial freedom? Leave a comment below, I would love to hear from you!
If you are interested in learning how to improve your money management skills including understanding the emotional and behavioral elements of dealing with money, understanding your spending habits, creating a budget, outlining a financial plan, learning how to create an emergency fund or managing debt schedule a free 30-minute consultation to learn how to get started.