Who Wants To Be A Millionaire?

Who Wants To Be A Millionaire?

A book that has had a tremendous influence on the way I think about money, especially debt and savings, is a book called, The Millionaire Next Door.

I don’t know if you’ve ever read it. It’s a bit dated, but it’s a fascinating read. The authors, Dr. Thomas Stanley and Dr. William Danko, wanted to discover who were the millionaires in the United States and how they become millionaires.

A startling realization

The authors began the book by sharing a surprising fact that they stumbled upon early in their research:

Twenty years ago we began by studying how people become wealthy. Initially, we did it just as you might have imagined — by surveying people in so-called upscale neighborhoods across the country. In time we discovered something odd. Many people who live in expensive homes and drive luxury cars do not actually have much wealth.

Then we discovered something even odder. Many people who have a great deal of wealth do not even live in upscale neighborhoods. Most people have it all wrong about wealth in America. Wealth is not the same as income. If you make a good income each year and spend it all, you’re not getting any wealthier. You’re just living high. Wealth is what you accumulate, not what you spend.

The  surprising characteristics of millionaires:

In their research the authors discovered aspects of the average millionaire lifestyle that surprised them:

  • 80% of the people who became millionaires were self-made. In other words, people couldn’t look at them and say, “Well, they’re millionaires because their mommy or daddy gave them money.”
  • Most had good but modest household incomes.
  • Most lived in modest homes.
  • About half of the wives didn’t work outside the home, which means they didn’t become millionaires because of dual incomes. The #1 occupation for wives that did work was a teacher.
  • Most had common jobs that many would consider quite dull — welding contractors, auctioneers, rice farmers, owners of mobile park homes, pest controllers, paving contractors.
  • The average millionaire drives a late model Ford truck.
  • They wear inexpensive suits.
  • They rarely buy expensive watches.
  • They don’t take elaborate vacations.

What makes the average millionaire wealthy?

The authors shared three things that were worth noting:

  1. They use budgets meticulously.

They said that when they started sharing this information around the country in seminars, people would ask, “Why would people who are millionaires budget?” They said the answer was very simple. They became millionaires because they were meticulous budgeters. They maintained their wealth because they were meticulous budgeters.

  1. They learned to control their spending.

The metaphor that they used in the book is that people who have limited income but become millionaires have a good offense. They go out and make as much money as they can. But they also have a good defense. They lower their spending considerably.

  1. They define wealth differently: Net Worth vs. Lifestyle

The biggest reason they’ve become millionaires is the way they define wealth. To the average millionaire, wealth is not the abundance of material possessions — big homes, luxury cars, vacations, private schools.Wealth is the money you have in the bank after you’ve paid all your bills.

The author said there was a phrase used by a Texas millionaire that aptly described people that lived way beyond their means: “Big hat, no cattle.”

Or as Proverbs 13:7 says, “One person pretends to be rich, yet has nothing. Another pretends to be poor, yet has great wealth.”

Christians will argue about whether one should aim to accumulate a certain amount of money by a certain date, but the one thing we can all agree on is that being debt-free is a good thing.

That’s a goal we should all share.

Is there a financial book that has made a big impact on how you handle money?

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