If I ask you what you want out of life, your first answer will probably have something to do with money — lots of it. You want to win big at the casino. You want to hit the lottery when the jackpot is at $200,000,000. You want big money! Right?
Wrong!
Think about it. If your ultimate goal in life is to be rich, what are you going to do when you achieve that goal? Remember — a goal is the final destination of a journey. When you reach your goal, you’re at the end of your journey.
The Millionaire Next Door by Thomas J. Stanley and William D. Danko
In the book, The Millionaire Next Door
1. They live well below their means.
2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
3. They believe that financial independence is more important than displaying high social status.
4. Their parents did not provide economic outpatient care.
5. Their adult children are economically self-sufficient.
6. They are proficient in targeting market opportunities.
7. They chose the right occupation.
I found this book really interesting as it gave me a glimpse inside the lives of millionaires. They don’t live glamorous lives like one would expect. Instead, they invest their money carefully, are most often either self-employed or owners of one or more businesses, and they spend about 8 to 10 hours a month on studying their investments. They are unlikely to buy expensive watches, cars, etc. and they know how to live well below their means. In fact, in many cases, the children of millionaires are unaware of their parent’s wealth until they are adults.
The authors discovered that most millionaires are married couples that are getting close to retirement age or have just retired, and that both the husband and wife are frugal. Surprisingly, most of the millionaires they studied became wealthy in one generation; very few inherited any of their wealth. As well, most of the millionaires they studied were well aware of their monthly expenses and kept within a budget.
Throughout the book, comparisons are made between high wage earners and millionaires. It explains how those who don’t know how to live below their means will never be millionaires no matter how much money they earn, and how those with modest incomes can still become millionaires if they are diligent at saving and investing.
This book is full of interesting statistics, charts, and research findings about millionaires and their spending habits. I would recommend it to anyone who is interested in acquiring wealth or is just plain curious about what millionaires do with all of their money.
Wouldn’t it be nice if there was a specific formula for making millions of dollars? “If you want to become a millionaire, all you have to do is A, B and C.” You know . . . . “Go get a degree in small-business management, talk to Jim at the bank to set you up with a Subway franchise, and invest in Microsoft today because it will skyrocket tomorrow when they report earnings.” Unfortunately, life is just not that gravy. The good news is there are some defining characteristics, habits and belief systems that self-made millionaires share in common. Take this a step further, and I believe almost all self-made millionaires’ financial success boils down to one thing.
Now, I’m not talking about the 0.5% of “self-made” millionaires that hit the lotto or scored big on buying Microsoft at its lowest-low and selling at its highest-high. I mean the people that sacrifice, slave, and sweat their way to become financially free. I’m referring to the people that spent 20-30 years on a strict budget, giving up everything to build successful businesses – all the while living well below their means, and doing it happily at that.
What makes these people not want to spend the money they worked so hard for on a nice car or an extravagant dinner? Why would they choose to read Money magazine and study business over watching the NFL draft? This lifestyle just sounds boring and exhausting. After all, what’s the point then of being filthy rich?