Why You're Not a Millionaire

The Research Topic:

Book: The Millionaire Next Door - Stanley / Danko

What makes a millionaire, and how can I become one?

Why is it important to me?

❌Learn why you're not a millionaire

💵Learn what makes a millionaire

📈How to become a millionaire, and the actionable steps to get there

A Deep Dive:

Millionaire Secrets

• Fewer than half of millionaires received any inheritance

• 80% of millionaires accumulated their wealth in their lifetime as a result of their work

• 90% of millionaires who live in homes valued under $300,000 are extremely satisfied with life

This information comes from the book’s study of thousands of millionaires in America.

So how do we become like them?

Millionaire Habits:

Habit #1

They are frugal.

Millionaires upgrade their income, not their lifestyle.

Status is the first part of building frugality, we must eliminate it from our desires.

Many high-income earners buy the big house, with nice cars and boats to show off:

High Social Status

How millionaires achieve their wealth is they save and invest it, so it looks like they are average:

Low Social Status

The first part of becoming frugal is finding a comfortable zone.

A lifestyle you can support, that is not buying the latest luxury, but also does not mean you're barely living.

The majority of people can be happy with less, if they just drop the ego, and don’t care about social status.

That’s what millionaires do.

Habit #2

They Invest.

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.

Millionaires on average spend 8.4 hours a month, or just about 1% of their time planning their financial future.

95% of millionaires own stocks.

32% keep their investments for more than 6 years.

They don’t track the daily market, wealth takes time to build, and millionaires know this.

They spend time researching the market, invest their money, and let compounding do the work.

Habit #3

They Budget their expenses.

Millionaires create and live by monthly and annual budgets.

They know exactly what their family spends annually on basic needs like food, water, hygiene, etc.

Wealthy people spend twice as much time planning their financial futures and investments as high-income non-wealthy people do.

The difference between the wealthy, and a high-income earner is budget.

High-income earners make a lot of money, but spend it all.

Wealthy people budget, and save/invest the majority of their income.

You can make $500,000 a year, but if you don’t save 1$

the guy who makes $50,000 and saves $50 has you beat!

Just like we talked about in Habit #1, high-income earners who aren’t wealthy chase status

and

Wealthy people chase freedom, so they budget, save, and invest their money.

Habit #4

They Drive Used Cars.

They understand new cars are overpriced and depreciate as you drive them off the lot.

Most car owners spend 30% of their net worth on cars,

millionaires spend only 1%.

Millionaires choose quality brands, and purchase used vehicles about 3 years old.

The steepest depreciation happens within the first 3 years of owning a vehicle, which is why millionaires look for cars 3 years or older.

Spend more time learning how to create financial independence than you do looking good for people who don’t care,

and you have an exponentially increased chance of becoming successful.

Habits take about 66 days to form, let’s start in the next section⬇️

Actionable Steps to Success:

Our Plan to Become a Millionaire

First, we must implement the 4 habits from the last section.

How?

Track your current income and expenses:

There are tons of apps to automate this for you, like Rocket Money

But for the old-school way here it is:

• Open your bank account app, look at how much each paycheck was for the last month, and write it down

• Now look at each expense for the last month and write it down, this includes anything you purchase

• Now design a goal for how much you would like to save, and invest per month, per year

Use software like PocketGuard to track your savings and investing

or write it down on a piece of paper, this will reinforce the idea.

• Get out of your comfort zone, and change your appearance

Shirts like these are super cheap and if you think that people will treat you differently because you wear something affordable,

stop wasting your time around those people.

I am not saying completely change your fashion, just when you buy in the future set limits,

and change your appearance and notice that the majority of people don’t care.

• Design a plan to pay off your current debt, and stay out of any upcoming debts

Track paying off your debts with a resource like SmartDollar by Dave Ramsey.

Or just write down how much you owe, write down the minimums, and design a plan to aggressively destroy your debts!

The Capital Challenge:

Your 30-Day Challenge

Create a budget, and stick to it.

Budgeting is a term often associated with people who don’t have a lot of money,

but the opposite is true!

Wealthy people have so much money, because they stick to a budget, and maintain it!

Your challenge is to take the steps from the previous section and design a budget based on your income, expenses, and goals.

Define them, write them down, and then plan how you will reach them.

Allow room for spontaneous purchases, and expenditures.

You are still a human, but now is your time to show that you can be a wealthy one.

Additional Resources: