The one thing the wealthy have learned that others have not is that looking wealthy is the arch enemy of being wealthy
In Studying the habits of millionaires, researchers have discovered that millionaires are not who people think they are. They tend to be very low key in their appearance, frugal in their expenditures and modest in their housing and style of living.
In Their book “The Millionaire next door “ authors Thomas J. Stanley and William D. Danko have unearthed some fascinating and instructive facts about Millionaires.
Millionaires spend about the same amount of money to buy a car as the regular population and generally drive a car for a long time before trading it in. They tend to like large, American made, non luxury cars with a low cost per pound.
About 80% of millionaires have accumulated their wealth entirely through their own efforts without the help of inheritance. Millionaires tend to work more and harder than the rest of the population.
Millionaires generally don’t pay more than a few hundred dollars for a suit, buy them on sale preferably at a place like J. C. Penny.
Millionaires are a lot more likely to wear a Timex than a Rolex , and probably realize that a Timex keeps better time.
Millionaires have a high tendency to live in relatively modest housing in middle class neighborhoods and stay for long times in their original home.
Millionaires have a strong tendency to keep not only their cars for a long time, but also their houses for a long time and their spouses for a long time.
Millionaires often spend a lot of time budgeting or else pay themselves first by setting aside their saving and investing money before they do anything else with their money.
Millionaires' spouses tend to be very frugal. Millionaires tend to live in a mental state of “artificial poverty” that gives them the mind set that they hate to spend money.
This explains why some older people who have accumulated a lot of money can’t stand to part with it even though they can afford to. Millionaires often own their own businesses, which are often of the non glamorous type such as heating and air conditioning.
The nationality that turns out the most millionaires per capita is Russian. The nationality that tends to produce millionaires using the smallest average income is the Scots. Those scotch jokes are more than humor. Evidently it is a lot easier to make a lot of income than it is to become wealthy.
America abounds with many people who have a lot of income, but relatively little personal wealth. Bank tellers are often bewildered by the people who drive up in big expensive cars dressed in expensive clothes and have about $35 in their bank accounts or are overdrawn.
These people were spending their money looking rich instead of becoming rich. Maybe this partially explains why so many so many millionaires come from mundane professions; they feel little pressure to look rich.
Doctors, Lawyers and business leaders feel they are under pressure to look the part and consequently many look rich without being rich. Most millionaires learned their frugality from their parents
One thing most millionaires are mindful of is that each extra ten thousand dollars spent on such things luxury cars or exotic vacations cost between $160,000 and $600,000 over a working lifetime depending on whether you assume 7% or 10% return on your money.
That explains why so many of them drive Fords or Chevrolets. From all of this we are led to the conclusion that it is much more important how you handle your money than how much money you have to handle.
In fact, virtually anybody can become independent if he or she handles their finances properly Before leaving this topic consider the great American Ponzi Game, The Social Security System.
Over a working lifetime almost every American worker and employer puts more than 10% of his or her paycheck into Social Security tax. This is enough to make anyone financially independent over a working lifetime if the money were put into real assets.
As most of us now realize the Social Security money is either given to presently retired people or spent by the politicians. No Social Security money whatsoever is invested in real assets.
This is a Great American tragedy.
The optimistic lesson to be learned from millionaires is that financial success depends mainly on discipline and is within the reach of virtually all Americans. Your chance of becoming financially independent is very good if you don’t develop expensive habits, “under spend” your income and invest the rest.