The 1 Thing (Most) Millionaires Have in Common
There's an enormous amount of personal finance information in the world today. Everyone claims to know the secret to success, but what works for one person might not work for you.
Still, if you're trying to get ahead with your money, the best advice may come from the millionaires who have managed to achieve a great deal of financial success throughout their lifetimes. Studying these figures may help you envision your path to millionaire status, or give you helpful tips you can work into your daily life.
While many common characteristics exist among the wealthy, there's one thing that all of America's self-made millionaires have in common.
The Biggest Lesson From Self-Made Millionaires
One of the best personal finance books ever published is "The Millionaire Next Door" because it speaks to the everyday habits of millionaires. The authors, Thomas Stanley and William Danko, were professors who studied the habits of people who became millionaires (as opposed to those who simply inherited their millionaire status).
Millionaires share many traits in general, but there's one somewhat surprising characteristic you're most likely to find among them; they all make a budget. The majority of self-made millionaires budget and track every penny. They know how much they spend on groceries, gas, and every other household item.
One passage of the book reads, "Planning and controlling consumption are key factors underlying wealth accumulation… Operating a household without a budget is akin to operating a business without a plan, without goals, and without direction."
In "The Millionaire Next Door," the authors share one particularly compelling story about a husband who, after reviewing his net worth, announced to his wife that they were officially millionaires. The wife nodded, then went back to clipping coupons.
Common Characteristics of Millionaires
"The Millionaire Next Door" exposes several common habits that millionaires share, but nearly all of them can be traced back to their tendency to create detailed budgets. The introduction of the book outlines seven common denominators among self-made millionaires. These seven characteristics, traits, and values are:
- Living below their means
- Allocating time, energy, and money efficiently in ways that build wealth
- A belief that financial independence is more important than displaying social status
- Parents that didn't give them money after they became adults
- Children that are, themselves, financially self-sufficient
- A proficiency for targeting market opportunities
- A sense of having chosen the "right" occupation
In real life, there are many ways these characteristics take shape, including:
- Frugal living
- Driving used cars
- Never leasing a car
- Buying a house that's below their budget
- Generally avoiding debt whenever possible
- Marrying partners who share their frugal values
- Owning a business or managing a side hustle
- Focusing on business potential rather than fads
How to Become a Millionaire
As you can see, self-made millionaires understand the value of money. They don't spend too much on a house, and they tend to avoid car payments and other forms of debt. When you keep expenses at a minimum, you'll have more to save and invest toward your financial goals.
Millionaires start with a big-picture goal. They have a clear sense of what they want to achieve and why they want to achieve it, and that's where you should start, too. Make a list of your financial goals, and next to each goal, detail the reasons driving you to pursue this goal.
To make these goals a reality, you'll need to create a budget and track your expenses.
Most self-made millionaires will agree that budgeting and monitoring the outflow of money is the best way to see if their spending aligns with their big-picture goals.
Becoming a self-made millionaire often means clipping coupons, wearing inexpensive clothes, and finding other ways to live below your means. If millionaires are constantly clipping coupons and looking for opportunities to cut expenses from their personal budget, then anyone seeking to grow their wealth should do so, as well. Like a millionaire, you should make budgets, track your money, and figure out how to cut spending so you can invest more.