I read an excellent book, “the millionaire next door” by Thomas J. Stanley; I highly recommend this book – it will challenge your way of thinking. I’m actually not endorsing everything millionaires do – some appear to be cheap and stingy. . . Nonetheless, I believe you can learn a great deal from this book. See below my top ten take-aways:
1) Most millionaires do not live in fancy houses or drive luxury automobiles – they typically live in middle class neighborhoods and drive non-descript automobiles (i.e., not a foreign luxury car). They live well below their means and are generally frugal.
2) They intentionally set out to become financially independent – they have a budget and track how well they do against that budget. They have goals: monthly, annual, and even longer. They spend a disproportionate amount of time planning their financial future.
3) They strategize to minimize their taxes.
4) They are disproportionately entrepreneurs and self-employed. They believe being an employee is risky – you only have one source of income. . . This thinking is consistent with their lifestyle – which is definitely counter to conventional wisdom and conspicuous consumption habits.
5) They take risks and are aware of opportunities when they see them. They enjoy what they do and chose wisely in regards to their occupation.
6) In short, some are good at offense (generating income) and some are good at defense (expense management) but many are good at both.
7) Married only once.
8) Compulsive saver and investor.
9) 80% of millionaires are first generation rich (didn’t inherit their wealth).
10) Becoming a millionaire takes discipline, sacrifice, and hard work. Are the trade-offs worth the cost?