The habits of real millionaires…not what you see on TV

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These are some findings from Dr. Thomas Stanley’s new book, Stop Acting Rich: And Start Living Like a Real Millionaire, based on his research and a national survey carried out by University of Georgia Survey Research Institute. You may find some of these interesting.

1. The #1 most popular make of car among millionaires is Toyota – not BMW or Mercedes.

2. Real millionaires pay about $16 (tip included) for a haircut at a traditional barbershop.

3. Nearly 4 in 10 millionaires buy wine that costs around $10.

4. There are currently more than 350,000 millionaire educators (working or retired teachers or professors) – a profession that is far better at transforming income into true wealth than doctors or lawyers.

5. Only 5.7 percent of all surveyed millionaires nationally paid $1000 or more for their most recently acquired suit.

6. Sixty-four percent of all real millionaires have never owned a second house.

7. The number one preferred brand of shoes worn by millionaire women is Nine West and their favorite clothing store is Ann Taylor – with the Gap and Costco not far behind.

8. Most real millionaires own Seiko watches and not Rolex, Omega or Tag Heuer.

9. Those who give away larger portions of their incomes to charitable causes end up accumulating more wealth.

What do you think about these results? It seems obvious to me that there is a fundamental mindset of frugality. Millionaires by nature look for ways to minimize expenses and do not spend a lot of items that return no value to them.

Thank you to FreeMoneyFinance for great article. [Source: http://www.freemoneyfinance.com/2009/11/what-real-millionaires-do.html]

One millionaire’s advice on attaining wealth

These are quotes from an individual who did not make a lot of money, yet understood the basic principles of attaining wealth. Wealth is not accumulated by what you do, but it is accumulated by what you are. It is a state of mind where the natural consequence tends to be wealth as you define it. This is different for each individual, therefore I will not provide a static definition. Therefore, if you have goals to achieve a desired level of wealth, then the simple solution is to be that which you strive for. Once you become that, then you will ultimately bring all that you want into your life. Opportunities will begin to present themselves to you, you will come across financial information that are aligned to your goals, people will come into your life to help you…it is great how this works.

These are the quotes from one of our blogging relatives…FreeMoneyFinance

• “The real secret is to spend less than you earn. I don’t care how much you earn, you spend less than you earn. Spend less than you earn. This is true whether you’re on welfare or a millionaire.”
  The idea here is presented by most personal finance professionals; a very simple and fundamental formula. The opposite to this leads to leverage. Avoid leverage at all costs.
  
• “No smoking or alcohol consumption. This has nothing to do with morals and health – okay, maybe health – it’s all about the money.”
  This refers to expensive habits.
  
• “No-load mutual funds are the only way to go. To give anybody 3-4% of your money off the top is insane.”
  No-load mutual funds are funds where you do not have to pay the managers commission up front when purchasing. I agree, this is the way to go. There are many no-load mutual funds that are also low cost (very low expense ratio). See Vanguard to begin with.
  
• “Volunteer to help others.”
  Giving is always useful. I wrote an article a while ago on the benefits of charitable giving as it pertains to wealth. See Wealth and Charitable Giving.
  
• “I can buy whatever I want. Not need, but want. I just don’t want very much.”
  When you don’t want very much, you do not have a desire for a lot of material possessions. This allows you to retain a lot of your wealth. This is a great mindset to develop. Focus on what you need, not want. When you do so, everything becomes available to you, because you desire nothing.
  
• “Wealth is created by investing money, not by working longer and harder.”
  Invest now. There is no point to wait. Your money should be working for you; it should not only be the other way around. Each year you wait reduces the amount of money you can earn through the power of compounding over time.

8 Keys to Financial Success

1. You need to have great role models that influence your life.

There are many people that have had a positive influence on my life; I consider them all role models. However, the main individuals that have impacted my life today are my parents, Dr. Wayne Dyer, Dr. David Hawkins and Warren Buffett. My parents taught me the benefits of hard work and education, Dr. Dyer and Dr. Hawkins both taught me that the most important part of life is one’s spiritual development and that we must be kind and loving to all of life, and Warren Buffett taught me the value of investing in businesses for the long term and philanthropy. I have chosen these individuals because their philosophies resonate on a very deep level with me and I think they are great at what they do, operating with the highest of integrity.

 

2. Learn as much as you can.

Education is very important and learning must never stop. Most successful people will tell you that they learn something new each and every day. This is why it is important to do what you love doing, otherwise, you would not care about learning more about it. Strive to become better at what you do and you are guaranteed success.

 

3. Marry the right person.

This is undoubtedly one of the most important decisions in your life. Be sure that you are marrying for the right reasons and that you understand the person and yourself. Marry someone that you are aligned with otherwise you may end up in a divorce which brings stress, financial despair and unhappiness. It is not easy to tell if it is the right person, but once you fully internalize it, you will not regret the experience no matter how things go.

 

4.  Be the best employee you can be.

Your primary job is where you generate the majority of your income, therefore it is crucial to be the best at this by improving your job skills. Your value will increase in your company along with your potential for future growth. When layoffs occur, you will not be one of the unfortunate ones to lose their jobs.

 

5. Start saving now.

As soon as you receive your first paycheck, start a savings plan and stick to it. Over time, the combination of the magic of compounding and your financial discipline will increase your net worth drastically. You should contribute to your 401k or 403b retirement plans and consider Roth IRAs and other investment vehicles as well. Pay yourself first…

 

6. Live frugally.

Live within your means. This is a fundamental principle to follow to achieve financial success.

 

7. Increase your knowledge of personal finance and investing.

In order to manage your finance, it is to learn as much as you can about investing and personal finance. Read as much books or blogs as you can; every bit of knowledge helps. You will realize how much more confidence you will gain as your knowledge increases.

 

8. Start a business

Most of the wealthy individuals in the United States today own their businesses. Not many inherited wealth as many of us may think. Consider starting a business based on something you are great at and passionate about. The rewards will follow.

 

If you have any other keys you would like to share, leave a comment. Can’t wait to hear them.

5 Habits of Millionaires Worthy of Emulating

These are five (5) common traits of millionaires that allow them to be successful:

1. They focus on saving and investing.
They don’t have the desire to spend money as soon as it is earned. Instead, they have an innate ability to delay immediate gratification for future gain. This has a huge benefit in that you focus on saving and investing money for the future, allowing your money to grow significantly over time. The magic of compounding then kicks in, and wealth is the natural condition that prevails. Many wealthy individuals live quite simply choosing financial independence over material ownership.

2. They are able to focus their efforts on a project and make it successful.
They have the ability to set their minds to a task and pursue it with an undeniable focus. It is recommended that goals are clearly defined, which makes it easier for one to focus. “Winners focus, losers spray.”

3. They are willing to sacrifice to make ideas successful.
They are willing to do whatever it takes to make their ideas successful, even if it involves a degree of sacrifice. People who earn millions are able to focus and persevere in the pursuit of their goals. It may require endless hours of reading, learning new things, working extra hours, starting a new business etc.

4. They take calculated risks.
They take risks that are more likely to pay off in the future. Strategic risks are needed to earn and grow money. The younger you are, the more risks you are able to take, since you have more than enough time to recover.

5. They are generous.
They understand that they are blessed to have a wealthy status and share what they have earned with society. Read this previous post on Wealth and Charitable Donations.

Warren Buffett once said that if you want to be a certain way, you should exhibit the qualities that you admire in other people. Therefore, if you want to attain wealth, you should exhibit qualities that are common in many of today’s successful millionaires. These characteristics are not a bad place to start.

10 Ways to Becoming a Millionaire

1. Reduce consumption and increase investments. This is the most fundamental equation in increasing net worth.

2. Create a budget and stick to it. It is important to know where you spend your money.

3. Increase your financial knowledge. Read as much as you can about personal finance. It will soon become habitual and you will automatically act in ways that are beneficial to your financial success.

4. Make contributions to your investment vehicles on a consistent basis. Keep focused and continuously put money into your investments. Dollar cost average + time can increase returns significantly.

5. Start a part-time business to increase income and take advantage of tax write-offs. Starting a business is a great way to achieve financial independence. Being frugal is great, but ultimately you have to increase your income to be wealthy; starting a business is a great way to do so.

6. Surround yourself with like-minded people who believe and support your goals. One of the best ways to achieve a particular goal is to put yourself around people who have already achieved it, or people who have similar goals. It helps keep the focus and the experienced may provide priceless advice when it comes to financial decisions they have made when they were at your level.

7. Find great CPAs and other trusted advisors. There comes a point where it is wise to seek financial advice. If you have a friend or mentor that has these qualifications, seek advisement from time to time. Make ample use of your network.

8. Set short and long term goals. Setting short term goals helps you see more readily attainable tangible results and keeps you on track to your long term goals.

9. Make a commitment to become a millionaire. There is nothing more important than the declaration of becoming a millionaire. Clearly stating that you want to become a millionaire actually increases the possibility of that actually occurring; all part of the Heisenberg Principle.

10. Start now. Time is your friend when it comes to investing. The earlier you start, the faster you can reach your goals. The power of compounding begins to work its magic.

The Secrets of Financial Freedom | An Interview with a Millionaire Next Door

This interview by J.D. Roth of Get Rich Slowly, one of my favorite personal finance blogs, is a great read. John, as he is called, followed basic principles that we all are able to adhere to, in order to achieve wealth. I am certain that many of these principles will be very familiar to the readers of this blog, however, hearing it from someone who has practiced them consistently for a lifetime can have a different effect. Read this interview and work on incorporating some of them into your own life. Practice creates a habit and habits bring about change. Enjoy!

These are some of the main principles:
1. Spend less than your earn.
2. Learn what a kilowatt hour is.
3. If you have a credit card, you should benefit from it.
4. People need to learn to cook from raw materials.
5. It is ok to buy used.
6. A dollar spent will never produce dividends.
7. No-load mutual funds are the only way to go.
8. Volunteer to help others.

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"The greatest thing one can do for the world is to raise one's own level of consciousness"....~Dr. David Hawkins