So I had several emails about the millionaire habits post post from January 19. I just read more on these habits in Dr. Sarah Stanley Fallaw’s book The Next Millionaire Next Door (with her late father Dr. Thomas J. Stanley).
The book is a follow-up to the 1996 original, The Millionaire Next Door by Thomas J. Stanley and William Danko. Interestingly, the habits of the typical millionaire seem not to have changed much in 20 years. But today I will go a little more granular.
Lists
We start with the grocery list. As it turns out, most everyday millionaires still go to the grocery store with a list of the items they went for. So they seldom spend money on things that they did not intend to.
Clothing
The average millionaire next door still wears simple bespoke clothing and few have ever spent more than $300 on a watch or $500 on a suit, although the AppleWatch is starting to push that watch average up.
Privacy
Millionaires are very private about their finances. This is why so many millionaires just go unnoticed. People who “look wealthy” typically are not. Research 20+ years later shows that the millionaire next door still lives within their means. They definitely do not buy things they cannot pay cash for.
“Buying Wealth”
We’ve all seen the ads on Facebook and YouTube of people who advocate “buying wealth” through leverage. That is, borrowing large sums of money to acquire real estate or start a business. Although many millionaires next door still own businesses, they started them without enormous leverage. Debt avoidance is universal among the average millionaire.
Sacrifice
Average millionaires are the kings of delayed gratification. How many times have you heard successful people saying that short-term sacrifice leads to long-term success.
Income is not Wealth, and vise-versa
“Rich” people have high incomes and spend it on symbols of wealth. They “look wealthy” but they have low net worth. Wealth can be acquired through disciplined investing.
Network is Net Worth
It’s still about living on less than you earn, being frugal, and having patience. The average age of the millionaire next door is about 57. My mom always said, “Birds of a feather flock together.” Not surprisingly, everyday millionaires hand with… well, other everyday millionaires.
What About the Joneses?
The millionaire next door does not try to “keep up with the Joneses.” You know the type… When the neighbor gets a new widget, the “keeper-upper” gets a new widget that is just a smidge better than the neighbors’ widget. Avoid this if you want to build wealth!
No Credit Card Debt
Maybe the most important aspect of becoming a millionaire is not carrying balances on credit cards. Dave Ramsey calls credit cards snakes — “If you play with snakes, you will get bitten.” Those who do use credit cards use them as cash and pay the whole balance every month. No high balance loans here! If you can’t afford a widget, save up and pay cash!
As Always…
Thanks for reading! I hope this information provides food for thought. Remember that I am not a certified financial planner, a certified public accountant, a licensed real estate agent, etc. My content is for educational purposes. I am a math educator who happens to have a finance degree. Like they say, never take financial advice from a math teacher! (Do they really say that?)
But you should spend less than you earn, invest the difference, and stay out of debt!
I would so appreciate your sharing my content with anyone you feel could benefit. And if you would like a free exploratory conversation or just want to shoot the breeze about personal finances, call me and leave a message or send a text to 570-731-0425.