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Want To Be A Millionaire?
All of us aspire to be wealthy. Now there's a book that will help us get there. Thomas Stanley and William Danko have written a fascinating (and bestselling) book based on their studies of the wealthy over two decades — The Millionaire Next Door: The Surprising Secrets of America's Wealthy.
Picture a room full of millionaires. What are they wearing? Stanley and Danko would tell you they are dressed just like you and I. What cars do they drive? (Most likely American cars especially a Ford). Where do they live? (In your neighborhood in an unspectacular home). In fact Stanley and Danko will show you how the wealthy in America are almost mundane in their normality. But behind the scenes they are saving a great deal more than they are spending — that is the most abnormal characteristic they possess.
"Wealth is the result of a lifestyle of hard work, perseverance, planning and, most of all, self-discipline," the authors assert. They continue, "Usually the wealthy individual is a businessman who has lived in the same town for all of his adult life. This person owns a small factory, a chain of stores, or a service company. He has married once and remains married. He lives next door to people with a fraction of his wealth. He is a compulsive saver and investor. And he has made his money on his own." You will feel completely at home and comfortable with their description of the vast majority of American millionaires.
This research contradicts the media myths of the Donald Trump wealthy - the Michael Jordan wealthy - the Frank Sinatra wealthy. In fact, ostentatious spenders tend to overspend their earnings, no matter how large those earnings are.
How much should you be worth right now? Are you an under-achiever as a net-worth builder or an over-achiever? The authors give this formula to check how you are doing as a wealth-builder:
"Multiply your age times your realized (taxable) pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be."
Stanley and Danko list seven common traits that show up again and again among those who have accumulated wealth:
1. They live well below their means. This is a key finding and allows for wealth accumulation. The authors note "Wealth is what you accumulate, not what you spend."
2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth. In other words, they consciously pursue the course that will build their savings as a top priority.
3. They believe that financial independence is more important than displaying high social status.
4. Their parents did not provide "economic outpatient care." Since they tend to be first generation wealthy, there may not even have been an inheritance. The authors take a dim view on the effect of inherited wealth.
5. Their adult children are economically self-sufficient.
6. They are proficient in targeting market opportunities. The authors emphasize that a great path to becoming wealthy is by providing services -- they mention remodeling -- to the wealthy.
7. They chose the right occupation. While 20% of the wealthy are retirees, more than 2/3rds of the rest own their own businesses. The self-employed "are four times more likely to be millionaires than those who work for others," note the authors . And, even in this age of Silicon Valley millionaires, the companies the wealthy tend to own are what the authors call "dull-normal." They include pest control, ambulance service, meat processor, janitorial services, mobile-home park owner.
Read this book I predict that you'll conclude that you are well suited to being wealthy. Economic times are wonderful for remodelers. Are you saving more than you are spending? Are you living below your means?
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