I have spoken about the book The Millionaire Next Door many times. It is a research based description of America’s wealthy which they define as having one-million dollars of investible non-real estate wealth. They found that many people who live in expensive homes and drive luxury cars do not have much wealth. Even odder – many people who have a great deal of wealth do not live in upscale neighbourhoods. Wealth is not the same as income. Wealth is what you accumulate, not what you spend.
Below are the 6 factors that describe this group. Try adopting some of these attributes and behave yourself into becoming A Millionaire Next Door.
Let me know if you would like to read The Millionaire Next Door. I have free copies for the first 5 requests.
They live well below their means. The book states that “being frugal is the cornerstone of wealth-building.” What does this look like? This means buying clothes off the rack and not custom-made. One millionaire describes his beer preference by saying he likes two types: free and Bud. The data also says that you should never own a home that requires a mortgage twice your annual household income.
They allocate their time, energy, and money efficiently in ways conducive to building wealth. Millionaires spend a considerable amount of time budgeting, monitoring their spending and planning their finances. Prodigious accumulators consult with professional advisors such as accountants, lawyers and financial advisors more than less active savers. Prodigious accumulators also spend less time worrying about their economic wellbeing.
They believe that financial independence is more important than displaying high social status. As one millionaire said: “If your goal is to become financially secure, you’ll likely attain it…But if your motive is to make money to spend money on the good life,…you’re never gonna make it.” Under Accumulators tend to agree with the following statements “I can’t devote enough time to my investment decisions and “I’m just too busy to spend time with my own financial affairs.”
Their parents did not provide economic outpatient care. The research suggests that, independent of post-secondary educational support, more than two-thirds of America’s millionaires received no economic gifts from their parents, including most of those whose parents were affluent.
Their adult children are economically self-sufficient. Parents who provide economic support for their adult children have significantly less wealth than those parents with the same age, income, and occupational cohorts whose adult children are economically independent. Economic support is widespread in America. More than 46 percent of the affluent in America give at least $15,000 worth of support to their children / grandchildren annually.
They choose the right occupation. Most of the affluent in America are business owners and self-employed professionals. Twenty percent of the affluent households in America are headed by retirees. Of the remaining 80%, more than two-thirds are headed by self-employed owners of businesses. Self-employed people are four times more likely to be millionaires than those who work for others. Moreover, most operate in ‘dull’ industries such as sand blasting contractor, pest control, long-term care facilities or diesel engine distribution.
The above mentioned book, The Millionaire Next Door by Thomas J. Stanley and William D. Danko, its views and/or opinions are for general information only and should not be considered as product endorsement or for promotional purposes by Assante Wealth Management.
