Discovering what life is about

How do the wealthy really live





The research of the late Dr. Thomas Stanley informs us of the reality of American millionaires. If you really want the details, read (or listen to) The Millionaire Next Door.


Here are some key findings:


80% of America’s millionaires are first-generation rich. This is contrary to those who would have you believe that wealth is usually inherited.


Only 20% of millionaires are retired


50% of millionaires own a business


The authors write, "In the course of our investigations, we discovered seven common denominators among those who successfully build wealth." Those characteristics are:


1. They live well below their means. In general, millionaires are frugal. Not only do they self-identify as frugal, they actually live the life. They take extraordinary steps to save money. They don’t live lavish lifestyles. They’re willing to pay for quality, but not for image.


2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth. Millionaires budget. They also plan their investments. They begin earning and investing early in life. The authors note that “there is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one’s financial future”. In other words, the more time someone spends buying things that look good, the less time they spend on personal finance.


3. They believe that financial independence is more important than displaying high social status. The authors spend far too much time beating home this point: usually millionaires don’t have fancy cars. They drive mundane domestic models, and they keep them for years. (There’s an entire 31-page chapter devoted to how millionaires shop for cars. It’s tedious. It may be the worst chapter I’ve ever read in any personal finance book. And the authors go on ad nauseum about the average price per pound of various vehicles. There’s even an appendix showing the average price-per-pound for the most popular models.)


4. Their parents did not provide “economic outpatient care”. That is, most millionaires were not financially supported by their parents. The authors’ research indicates that “the more dollars adult children receive [from their parents], the fewer they accumulate, while those who are given fewer dollars accumulate more”.


5. Their adult children are economically self-sufficient. This chapter is fascinating. The authors clearly believe that giving money to adult children damages their ability to succeed.


6. They are proficient in targeting market opportunities. “Very often those who supply the affluent become wealthy themselves.” The authors discuss how one of the best ways to make money is to sell products or services to those who already have money. They list a number of occupations they feel have long-term potential in this area.


7. They chose the right occupation. “Self-employed people are four times more likely to be millionaires than those who work for others.” There is no magic list of businesses from which wealth is derived — people can be successful with any type of business. In fact, most millionaire business owners make their money in “dull-normal” industries. They build cabinets. They sell shoes. They’re dentists. They own bowling alleys. They make boxes. There’s no magic bullet.





I have been called wealthy by many people because of the house I live in. But I don’t consider myself wealthy. I was able to purchase the large, beautiful house I live in (it is free of mortgage) because I have throughout my life been prudent with my spending and saving. Here’s how to become “wealthy” in the way that I have:


Buy used cars, not new.


Put aside money in an interest bearing account to pay cash for your car. Always pay cash for autos and keep making that monthly “car payment” to your own interest bearing account.


Learn to cook and eat wonderful meals at home with your family.


When you go to a restaurant with your slew of kids, have everyone drink water, NOT $1.79 soft drinks.


Do not fall into the trap of buying LABELS on clothing. Purchase the less expensive clothing that no one can tell the difference without looking inside your collar.


There are nice vacations that are not expensive. Consider them!


Choose hobbies that pay you, where you can create interesting things that others will pay for! Not hobbies that you have to pay to play.


Take maximum advantage 401-k and retirement plans where there is employer matching.


When your kids go to college, consider state schools, not expensive “Ivy League” schools. Your are purchasing an education, not a LABEL.


Your little kids will be just as happy with hand-me-down toys and clothes as with new stuff. Hey, they haven’t heard of LABELS yet. They just want their own things.


INVEST your extra money in the stock market. Mutual funds with broad selection of stocks that spread out the risk.


Don’t “fritter away” extra cash. Just because you have extra cash in hand, consider putting it in the bank or an investment account and seeing it grow.


Your house and investments are the only assets that have the potential of increasing in value. Everything else loses value over time. Put your money where it will pay you. Everything else you spend your money on enriches

someone else at your expense.


DO share your money with others less fortunate. Having extra money allows you the gift of being able to help others.


Do not neglect your obligations to your church. Tithing is not an expense. Every dime you have belongs to God.




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Categories : Finance    Themes : Value
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