The following is an extract from the book "The Millionaire Next Door" by Thomas J. Stanley and William D. Danko. Here are the six common characteristics of millionaires.
Who gets rich?
Usually a wealthy businessman is a person who has lived in the same town since he was born. This person most likely has owned a small factory, a chain store or a service company. He was married only once, and lives with the same partner. He is a good neighbour to people who only have a fraction of his wealth. He is an inventive person and an investor. And he has created wealth for himself. 8% millionaires in the world are first-generation.
Wealthy people have a lifestyle that surprisingly accumulates wealth. Here are the 6 most common characteristics of these individuals:
- They live well below their earning potential.
- They are using their time, energy and money efficiently, finding ways to increase their wealth.
- They believe that financial independence is more important than portraying a high social status.
- Their parents gave them financial support once they finished their studies.
- Their adult children are successful as well.
- They have excellent skills when it comes to searching for new business opportunities.
Furthermore, in the book, the authors also reported that:
- Most of them are millionaires at the age of 55, are married and have 3 children.
- One in five are already retired. Nearly two-thirds are self-employed.
- Most of the businesses are considered "normal." They are builders, pharmacy owners, car dealers, pest control, farmers; they are buying and selling antiques, and so on...
- Half of the wives do not work outside the home. The main occupation of those who work outside is in the education field.
- On average, their annual expenses are less than 7% of their fortune. They have enough savings to live more than 12 years without working.
- The majority (97%) own their own home, and have lived there for more than 20 years.
- The majority are not feeling disadvantaged by not receiving an inheritance. About 80% of them are first generation millionaires.
- They live comfortably below their potential. They are using cars that almost everyone can afford. Only a minority own sports car or the latest models.
- Their wives plan their budgets meticulously and are very good in handling their expenses.
- They save at least 15% of their income.
- They have a fortune of about 6.5 times larger than their neighbors who are not millionaires, but in the neighborhood, these non-millionaires spend in excess of 3:1. Someone could say that non-millionaires prefer sacrificing their wealth to have possessions that give them social status.
- Most of them work 45 to 55 hours per week.
- They are investors.
- They have good education. Only one in five did not graduate from university.
Benjamin Franklin once said: "The road to wealth depends crucially on two things: work and saving."
