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Author Thomas J. Stanley spent his career interviewing millionaires and found that they share some common habits. In particular, he noticed that they began to build wealth at a young age.
Most of the millionaires he surveyed had goals for both career and finances since their youth and tended to develop healthy consumption habits early on.
Stanley also noted that the more education he or she had, the more difficult it was for someone to gain wealth. People with a lot of education spent more time doing it while others were already making an income.
Most millionaires share similar financial habits when it comes to spending, saving, and investing. One important thing they have in common: They started building wealth when they were young.
Author Thomas J. Stanley spent years interviewing over 500 millionaires from the United States. His findings flowed into his book "The Millionaire Next Door", which deals with the patterns and habits of millionaires.
Many of the millionaires he interviewed had similar stories, and most began their wealth creation the same way: from scratch. Stanley has identified four traits that have contributed to the success of many millionaires.
1. You set clear goals for your money and your career
Stanley interviewed a high school dropout who started a wholesale business when he was 19 and built his fortune with. When asked how he built up his millions in sales, he simply said, “I've always been goal-oriented. I have a clearly defined set of daily goals, weekly goals, monthly goals, annual goals and life goals ”.
Although the path to these goals is different for everyone, most agree that wealth accumulation is not just a result of luck, but also depends on good planning.
2. They bought real estate when they were young - and stayed there.
A high percentage of millionaires are homeowners - only 3% of the millionaires Stanley surveyed were renters. Home ownership is often a large part of the net worth of many families, but for many of the millionaires Stanley surveyed, owning an affordable home is a way to use money for other investments as well.
Stanley found that the millionaires he interviewed tend to buy a house at a young age and live in the same houses for many years. Stanley's research found that about half of millionaires have lived in the same house for at least 20 years. During this time, the value of their home mostly rose, which helped them build up their capital.
3. You resisted the temptation to consume wastefully.
In an interview with Teddy Friend, a high-income millionaire with relatively low wealth, Stanley discovered a link between life experiences and spending habits. Friend says he grew up as a relatively poor child in a community of wealthier families and began to equate success with beautiful things.
"Mr. Friend never equated 'wealth' with wealth accumulation," notes Stanley. “To have wealth meant to display one's high income by displaying status symbols”. He developed a way of thinking about money and how to spend it that did not make him prosperous.
The more effective millionaires Stanley interviewed did the opposite of Friend; namely to live frugally. Instead of spending their fortune on a large mortgage, several expensive cars, and other status items - as Friend did - they invested their money.
4. They began to build wealth sooner rather than later, sometimes even at the expense of studying.
In his research, Stanley also found that people who spent less time in universities found it easier to build wealth. “The longer you stay in college, the longer you postpone earning an income and building wealth,” writes Stanley. It's also worth noting that since this book was first published in 1996, the price of college has increased significantly.
Stanley gives the example of a business owner with a two-year college degree. “He started working and building wealth at the age of 22. Today, 30 years later, he has benefited greatly from the meteoric increase in the value of his retirement plan ”. While annuities are less popular today, high growth is possible with an employer's 401 (k) plan.
Compared to a similarly old doctor with the same income, this business owner and technical college graduate has had better opportunities to build wealth because time is on his side. Because the doctor spent his young life increasing his debt through college spending rather than earning it, he is less likely to accumulate wealth in the long run.
Stanley emphasizes the importance of "starting earning and investing early in adult life." While the 20s are about mastering your life on the one hand, it is also a time when you have to start increasing your prosperity on the other.
This article was published by Business Insider in August 2020. It has now been reviewed and updated.
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