The book The
Millionaire Next Door (amen.To/YE8Cxe) is a thoroughly researched book about
the lives of actual multi-millionaires. The insights in the book are
astounding. By and large. Millionaires live more like the rest of us and less
like the billionaires we look into Forbes.
Becoming billionaire takes extraordinary risk combined with
extraordinary luck—and some would add talent to that equation. Becoming a
millionaire requires principally patience and discipline.
The following are some observations from The Millionaire Next Door:
1.
Millionaires are frugal. Of
course there are exceptions, but most millionaires are frugal. They accumulated
their wealth by not going through here the money they earned rather than by
earning vastly more than other people.
2.
Millionaires drive frugally. Most
millionaires drive cars for a long time. A very long time in some cases. Though
they don’t necessarily scrimp on the cars they drive, they don’t typically have
a new car every year or two. More commonly, they drive their cars for ten years
or more.
3.
Millionaires live frugally.
Typical millionaires are placed in homes that represent less than ten percent
of their net worth. Most do do not live in homes that would be described as
luxury homes. By being placed in modest homes, they put themselves in a position
to compare their spending to people who generally have much less money and thus
feel less social pressure to spend extravagantly on their clothes, cars and
vacations.
4.
Millionaires save. Millionaires
appear to have been a discipline to save scarce amounts of their earned income,
sometimes as much as 40 percent. Most Americans save less than 4 percent of
their earned income.
5.
Millionaires aren’t lawyers.
Surely there are lawyers who are millionaires, but not many millionaires are
lawyers or other professionals who are employed in shiny, tall buildings in
major city centers. Such people, the book found, often feel a lot pressure to
consume their lavish incomes that they are in a position to accumulate
significant wealth. Simply not functioning with or around high consuming people
helps people to salvage and invest rather than consume.
6.
Millionaires are entrepreneurs.
Most millionaires are under the age of a business. They may not derive huge
incomes from their businesses, but the business itself is a valuable asset over
time. When millionaires retire, they not only have the benefit of savings
invested like most of the rest of us, but also have to value businesses that
can be bought to help finance their retirements.
So, if you already live frugally, you already live like a
millionaire. If you are young and you are consistently saving and investing
your earned income, you can accumulate $1 million or more by the time you
retire. Don’t fool yourself, however; you can’t easily turn a measly $1,000 savings
account into $1 million even over forty years. Accumulating wealth, as the
wealthy have been demonstrated, requires discipline, living frugally and saving
consistently.
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