The overwhelming majority of millionaires and billionaires in the United States are self-made. In other words they didn’t inherit their money, they created it themselves through hard work, focus and determination.
While there’s no guaranteed formula for financial success, there are several traits most millionaires have in common.
1. Millionaires Don’t Ignore Their Spouse’s Input on Major Financial Purchases:
One trait that is shared among financially successful people is their strong relationship with their spouse, especially when it comes to financial decisions. It’s hard for a couple to succeed financially if they’re not on the same page. Open communication with realistic goals and expectations go a long way in ensuring you and your spouse maintain a healthy relationship, both personally and financially.
2. Millionaires Don’t Buy Homes to Impress Other People:
According to Thomas Stanley’s ground breaking research on millionaires (Millionaire Next Door), the average self-made millionaire has lived in their current home for 20 years. This is another reason they’ve been able to build such a high level of wealth. Not only have they built equity in their current homes, they’re able to invest what they would have been paying for a more expensive house.
3. Millionaires Don’t Spend Their Money Without a Plan:
Believe it or not, most self-made millionaires are highly disciplined at budgeting their money. They avoid spontaneous purchases and never make a big financial decision without spending an adequate amount of time thinking about alternatives (learn more about my budgeting technique).
4. Millionaires Don’t Neglect Their Finances:
In addition to being religious about their family’s budgeting, millionaires are highly disciplined about keeping their ATM/Checking account registries up to date and managing their bills. They set aside time each week to reconcile their checkbook and ATM transactions with their bank statements and take great pride in paying their bills on time. For them, financial responsiblity is a testament of good character. (Download my free Excel checkbook spreadsheet).
5. Millionaires Don’t Make Financial Decisions Based on Fear:
Millionaires don’t let fear dictate their financial decisions. They don’t try to time the stock market or rush to buy a new home because interest rates are rising. They’re always looking at the “long term” and fully expect (and prepare) to experience bumps along the way.
6. Millionaires Don’t Buy Things They can’t Pay Cash for:
While a million dollars isn’t what it used to be, most millionaires have the means to buy exceedingly expensive things through various forms of financing. However, outside of using a credit card for convenience, most millionaires avoid buying things they can’t afford to pay cash for unless it is for investing in assets that go up in value (real estate, small business loans, etc.).
7. Millionaires Don’t Buy Flashy things to Draw Attention to Themselves:
Another trait you’ll find amongst a surprising number of self-made millionaires is an aversion to drawing attention to themselves. There are many people who go to great lengths (and debt) to project an image of financial success by buying fancy watches, leasing expensive cars, and mortgaging homes way outside their price range. By contrast, millionaires place a high value on financial security vs. material possessions. I’ll never forget the time I met David Rockefeller (Sr.) on Mount Desert Island, Maine. I was working as a parking lot attendant and an elderly man approached me needing help jump starting his car (he was in his early 80’s at the time). The car was a late model Ford Escort, well below the means of one of the wealthiest persons in the world. If he could drive a base model Ford car, than so could I (and that’s exactly what I did).
8. Millionaires Don’t Finance Their Vehicles:
Second only to housing costs (mortgage, rent, etc.), car payments are the single biggest monthly expense most Americans pay. According to Edmunds, the average monthly car payment in the United States is over $500 per month! Imagine how quickly you could build wealth if you invested that $500 somewhere else instead of throwing it away in to something that rapidly depreciates in value. Millionaires save up and pay cash for dependable used vehicles and invest the difference in stocks, mutual funds, real estate or their own small businesses. Some people will argue that millionaires don’t finance their cars because they can afford to pay cash, I argue that anyone with an average car payment could become a millionaire if they opted for a more economical car and invested the difference. I doubt you’ll ever meet a millionaire who claims they got rich by financing expensive vehicles.
9. Millionaires Don’t Ignore Their Health:
Outside of mortgages and excessive automobile purchases, medical bills are one of the biggest reasons people suffer financial hardship and/or declare bankruptcy. Staying on top of your health with periodic preventative care and annual exams is a highly valued trait of self-made millionaires.
10. Millionaires Don’t Accept the Status Quo:
Self-made millionaires are always looking for improvement opportunities whether it be in their own lives or fulfilling a need for others. Millionaires are often stereotyped as being eccentric; however, it is often this eccentricity that lead them to their financial successes.
11. Millionaires Don’t Pre-judge Others:
Over the years I’ve had the privilege of meeting a variety of self-made millionaires. The overwhelming majority of these individuals (and couples) are the nicest and most warming people you could meet. Perhaps it’s because many self-made millionaires are small business owners and continually look for the best in their employees to help foster their success.
12. Millionaires Don’t Ignore Their Entrepreneurial Spirit:
You’ve got to admire people who go after their dreams and make them a reality. The majority of self-made millionaires are struck from this mold having built successful small businesses. They believe in themselves and commit everything they have to turning their ideas into profitable enterprises.
13. Millionaires Don’t Get Discouraged by Failure:
Millionaires see failure as an opportunity to improve. They habitually pick themselves up with an even stronger desire to succeed. Find a self-made millionaire and you’ll likely find someone who failed multiple times to get where they are today. Very few self-made millionaires achieve their financial success on the first try.
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