What images come to mind when you hear the word millionaire?
Big house, fancy car, posh neighborhood, shoes for every day of the month?
What if I told you all these things aren’t an accurate representation of the average millionaire?
Hogwash you say?
In the late 80’s, early 90’s Dr. Thomas Stanley and Dr. William Danko did a decades-long research into the lives of millionaires. Millionaires who have a net worth of at least one million dollars. Turns out the average American millionaire is the old couple down the street driving the 2001 Toyota sedan. Or the middle-aged married couple with 2 kids about to start college.
Outward appearances are deceiving.
So what do these everyday Janes and Johns have that you don’t?
Knowledge of how to build wealth slowly, and a few habits that you can start using today.
The younger you are when you decide to change your money habits, the more likely you are to become a net-worth millionaire by the time you reach retirement age. That means your assets minus your liabilities (debt) equal one million or more dollars.
Why not adopt the habits of net-worth millionaires. Here are 3 you can start today.
1. A Frugal Mindset
Being frugal means you look for value as opposed to price. It’s a better deal if you buy a set of cookware that’s easy to clean and will last many years, versus one that is super cheap. Or, opting for the pair of shoes that go with many different outfits, is comfortable to wear, and resists stains versus one that looks flashy and lasts for one outing.
Another way you could be frugal is to get your money to make more money. Whether it be to purchase something that can help you start a small business, or putting that money in an account that earns interest. An investment account is a good place to start.
The value you get from the interest is much better than the value you’ll get from buying an item you didn’t need in the first place.
2. Save first, buy later
According to a 2014 Federal Reserve report, “47% of respondents say they either could not cover an emergency expense costing $400 or would cover it by selling something or borrowing money.” This is a scary statistic.
As soon as you get paid, put some money away into a savings account. $20 here $50 there. You can be sure of Murphy’s Law and the fact that your tires will one day need changing, your computer will need upgrading, and your children will need to go to the doctor. Saving some money for these irregular, but more-than-likely expenses help to prevent you from reaching for the credit card and going into more debt.
Saving a little over time and staying away from debt is how millionaires accumulate such a massive net-worth. Don’t stop with just a savings account either, check out rates for online checking accounts to help you become more prepared for an emergency.
3. Budget, Budget, Budget
In the research that Stanley and Danko did, all the millionaires they interviewed had one thing in common. They all used a monthly household budget.
A budget is your key to getting out of debt and finding money to save. It’s the most valuable thing you can do with your money. And best of all, setting up a budget is FREE.
A budget will help you get control of your money and help you decide what expenses to cut and whether you need to find ways to make more money.
A million millionaires can’t be wrong! Start managing your money with a simple budget and you’ll be telling your money where to go instead of your money telling you where to go.
If you think being a millionaire is out of reach, think again. The sooner you adopt the millionaire mindset, and take on their habits, the quicker you’ll be on your way to becoming a millionaire yourself.
Do you think you have what it takes to develop the millionaire mindset? Share in the comments!