Editor’s note: This story originally appeared on Living on the Cheap.
The best way to become a self-made millionaire is to learn from the people who already exist. And as you can see from the list below, the habits of self-made millionaires are very easy to follow in your daily life. Because being a millionaire is not about spending as if you were rich, it is about saving money and investing it as if you were rich.
Becoming a self-made millionaire requires hard work, but thanks to this list, you will definitely be on the right track to seven figures.
1. Self-made millionaires start small
According to the 2010 bestselling The Next Door Millionaire by Thomas J. Stanley and William Danko: “Twenty percent of America’s affluent households are headed by retirees. Of the remaining 80%, more than two-thirds are headed by self-employed business owners. In America , less than 1 in 5 households, or about 18%, is headed by an employer or a self-employed professional. But those self-employed people are four times more likely to be millionaires than those who work for others.”
Pauline Paquin of the blog Investment Zen adds that a self-made millionaire is generally someone who is humble and realistic about the future: to go from zero to millions, it will take a lot of time and hard work. They put a lot of effort into their business and try to keep debts at bay. Some self-made millionaires didn’t pay themselves until their business was in full swing.
Most people who are successful will start with a small operation, and then expand their fleet or franchises. Don’t get too ambitious quickly. Yes, you need a little initial cash to make more money, but you have to fall back on shiny desks and other recurring expenses that will disrupt your bottom line early.
2. They are not afraid to live economically
There certainly wouldn’t be a luxury goods market without millionaires and billionaires buying yachts and Bentleys. But in “The Next Millionaire Next Door,” a 2018 update to the original book, co-author Sarah Stanley Vallow writes that “Most of the millionaires we interviewed highlighted the great freedom that comes from spending below their means.”
For example, billionaire Warren Buffett still lives in the modest Omaha home he bought in 1958 for $31,500. (At the urging of his first wife, Buffett also bought a California beach house in 1971 for $150,000, and sold it in 2018 for $7.5 million.)
“How can I improve my life by owning 10 homes around the world?” asked the BBC’s Evan Davis in an interview. “I feel warm in the winter, I’m cool in the summer, and it works for me,” he said in the interview. “I can’t imagine having a better home.” (Buffett also buys hail-damaged cars that have been repaired to save money.)
3. They save hard
Paquin of Investment Zen stresses that self-made millionaires know that every dollar saved is a dollar you don’t have to work for. Even better, it is the dollars that will start to reap the benefits and grow into more dollars. Make sure you’ve matched your company, 401(k) cap, and other tax-deferred accounts before anything else to maximize returns.
Want to start investing? Here is our guide to getting started.
4. Keep learning
Thomas Corley interviewed 177 self-made millionaires for his book Change Your Habits, Change Your Life. Nearly 9 out of 10 millionaires he interviewed said they read every day to increase their knowledge of their jobs and field of work. Over three-quarters, 85%, reported reading at least two books per month, and 63% reported listening to audiobooks or podcasts.
5. They know that building wealth takes time
In this blog post, author Corley writes that “Millionaires fall into four different categories when it comes to their approach to their money: Saver-Investors, Big Company Climbers, Virtuosos, and Entrepreneurs.”
“More than three-quarters, 80%, of the participants in my study were 50 or older, and they had accumulated fortunes over time,” he says. “For Saver-Investors, it took them an average of 32 years to become millionaires. For Big Company Climbers, it took 22 years. It took 21 years for Virtuosos and 12 years for entrepreneurs.”
6. They communicate intelligently
Paquin states that millionaires will always tell you that they owe their success to other successful people who have inspired and helped them along the way. As a result, they value their contacts and keep in touch regularly to maintain the strength of their valuable network.
7. They practice “dream poses”
More than 80% of millionaires surveyed by Corley spend at least an hour a day in what Corley calls “dream mode.” In a CNBC post, Corley outlined four parts to the dream-making process.
- Define your ideal future life, through a text of 1,000 words or more. In this scenario, you step out into the future for five years or more and paint a picture in words of every aspect of your ideal future life. The house you own, the neighborhood you live in, the income you earn, the money you collect, the car you drive, the cool people who are your best friends, the places in the world you travel to, etc.
- point every dream within your script.
- building goals about every dream.
- Follow every goal until it is achieved.
8. They get up early
If you are going to make your dreams come true, you need to set an alarm. There is an old saying that “what is done first, gets done”. Nearly 50% of the self-made millionaires in Corley’s study said they woke up at least three hours before the start of their workday. “Getting up at 5 a.m. to tackle the three most important things you want to achieve in your day allows you to take back control of your life,” Corley wrote.
9. They prioritize their health
A healthy mind is a healthy body. More than three-quarters of millionaires surveyed by Corley said they exercise at least 30 minutes a day, four days a week. And 93% said they sleep at least seven hours a night.
You can make the most of your workout time by listening to a podcast or an audiobook.
10. Happy millionaires donate generously
Danko, co-author of The Millionaire Next Door, followed up with this book, Richer Than a Millionaire: A Path to True Prosperity. It turns out that money alone does not buy happiness. According to Danko’s book, satisfied millionaires had strong family and faith connections and were engaged in charity.
Harvard Business School researchers Grant E. Donnelly and Michael Norton looked at the relationship between wealth and happiness, and agreed that giving money makes the rich — and their heirs — happier.
Andrew Carnegie came up with one solution: He donated the vast majority of his fortune to charities, foundations, and universities during the last few years of his life, keeping it from his heirs in an apparent effort to lead them to useful and valuable lives. His solution is also more wise: because research shows that giving to others leads to greater happiness than spending on oneself, Carnegie was also using his wealth in a way that was more likely to increase his happiness.”
11. Millionaires see opportunity everywhere
According to Paquin, millionaires are curious and see opportunities you don’t want. Every situation to solve a problem is a potential money-making idea. As we discussed above, many will not even be considered, many will fail, but some may succeed.
12. They have multiple streams of income
“Self-made millionaires don’t rely on one single source of income,” Corley said, noting that 65% had at least three income streams they created before making their first million dollars.
This helps millionaires navigate life safely. While they invest a significant portion of their net worth, they also keep cash reserves in case of emergency. Cash emergencies can kill your early stage business; Millionaires know this and plan accordingly. Here is our four-step guide to building your own emergency fund.
13. They don’t give up
Millionaires are not afraid of failure. Like normal people, they probably tried and failed, but unlike many, they shrugged it off, got on their feet, analyzed failure so they wouldn’t make the same mistakes again, and tried again. In the end, they succeeded. As Corley writes, “Nearly two-thirds, 63%, of the millionaires in my study shared that they took calculated risks as they built their fortune. And 27% said they had failed at least once in business.”
You just have to keep going.
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