4 Habits of Millionaires (Have Any of These?)

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habits of millionaires
The book The Millionaire Next Door analyzes the financial habits of millionaires. It shares the results from interviews and surveys with millionaires. The goal of the book is to give an accurate idea of what characteristics make a millionaire. I found four of those characteristics especially important.

4 Essential Habits of Millionaires

1. Millionaires practice frugality.

“They live well below their means.”
Here are some stats on millionaire shopping habits:
  • Average paid for a suit = $399
  • Average paid for a pair of shoes = $140
  • Average paid for a watch = $235
While those numbers might seem a little higher than the average middle class shopper, it is certainly a far cry from the $4,500 pair of shoes we think millionaires would wear. Did you know that for every 100 millionaires who don’t budget there are 120 who do? Perhaps it is time for you to start a budget. It is time to make sure that you spend less than you earn.

2. Millionaires spend time managing finances.

“They allocate their time, energy, and money efficiently, in ways conductive to wealth building.”
Those who become wealthy don’t often become accidental millionaires. Instead, they take time to set and keep clear goals. While most of us feel like don’t have time to budget because it is a “waste of time,” millionaires do. It is difficult to reach any kind of a goal until you are first willing to allocate some time to working toward a goal.

3. Millionaires build wealth, not status.

“They believe that financial independence is more important than displaying high social status.”
Ouch. This one hits home. How often do we buy things based on what others will think? People often talk about teen spending and consumerism, but what about adult spending? A person who is upside down and in debt still thinks they can afford a car payment. Why do those in debt always seem to spend more money and own nicer things than those who are debt-free? I guess we each need to grow thick enough skin so that we do not think about what others think of us. Make a plan and reap the rewards of your financial planning – even if people think you’re weird. Here’s an example based on the type of cars millionaires drive:
Latest Model-Year of Vehicle Owned Percent of Millionaires
Current Year 23.5
Last Year’s / One Year Old 22.8
Two Years Old 16.1
Three Years Old 12.4
Four Years Old 6.3
Five Years Old 6.6
Six Years Old or Older 12.3
(This chart is from The Millionaire Next Door on page 113.) Here’s the deal. Millionaires don’t mind driving older cars. The masses who are in debt love owning new vehicles that cost $25,000+. Meanwhile, they can’t make their minimum car payments.

4. Millionaires have a healthy financial background.

“Their parents did not provide economic outpatient care.”
I’m so thankful this was included in the book. Your parents have a tremendous influence on how you turn out financially. I know in my case, I had solid financial education at home. In so very many ways, I am who I am because of my parents (thanks, mum and dad). The book goes a different direction with this characteristic by highlighting that the parents of millionaires allowed their kids to be independent and learn important life lessons. Who is going to be a financial mentor for people who didn’t or can’t learn these lessons at home? When we think about issues of poverty, we need to recognize that what the poor need are examples and mentors – not just money. Education is important. We also found these 9 Millionaire Success Habits that you may find interesting: Which of these four habits do you think are most important to wealth-building? Leave a comment! I interviewed a millionaire about 10 years ago and took some great advice away from our conversation – I wrap up those thoughts and takeaways in this quick video so take a look if that’s your thing!
https://youtu.be/K_p0ghLBvF4?rel=0&showinfo=0

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Comments

  1. While I think they’re all important, I believe you said it best when you stated that education is important. Learning about financial literacy and independence should result in not relying on parents for assistance.

  2. I think people should not worry so much about what others think and we need to train our kids to think this way too. It is amazing how much we allow ourselves to be persuaded by others.

  3. I agree with Darren. Financial literacy is something that definitely needs to be emphasized, especially since a lot of households don’t teach it because they don’t know it themselves. If financial literacy is taught on a more widespread level, there just may be more millionaires walking around 😉

  5. It’s hard to pick just one as being most important, but I’d have to go with building wealth, not status, since doing that pretty much encompasses all the others 😉

  6. I haven’t read the book yet but I am confused. “Here’s the deal. Millionaires don’t mind driving older”

    According to that table 74.8% of millionaires have a car that is less than 3 years old?

  7. Yep I agree, Knowledge is the best thing, So being educated on this is very important.
    I will say this, I wish my mother sat down and taught me these things. I would be able to handle things a lot better.
    Now I am working on teaching myself, it helps to have these resources on hand.
    Thanks so much for this post. I am very encouraged.

  8. I have been taking the Financial Peace University class with some ladies from church and this article goes along with what we have leraned. Your Newsletter is very helpful and encouraging. Thank you for your input.

  9. I think any book by Thomas Stanley is a real good one. He was the first author that showed what millionaires actually really live like. Pound for pound, most millionaires spend less on consumerism than those that aren’t and save more to boot.

  10. Thanks for the post

    Finanical Education is very important and necessary. As far as the millionaire habits, I like #2 – spending time with your money. Most people spend maybe 1-2 hours a month during bill paying time reviewing their finances, but it has been noted that millionaires spend 2-3 hours a week studying their finance. What you focus on magnifies or “As a man thinketh so is he”.

  11. Craig, I think the lack of concern with status is such a huge point. So many folks can’t wait to show off the status symbols, but those don’t build wealth. They are like a mirage!

  12. The most important thing for me was modeling. Financially, my mom is my plumb line and quite a good one. She was a single mother with no financial help from my father. J didn’t only not go hungry, but we both thrived when it came to practical needs being met. The importance of emulating her didn’t hit me til my mid twenties, and unfortunately I’d already done some damage by then. But, as I enter into a new marriage, saving in many ways, living below our means, and financial conversations and planning are non-negotiables for me(and him!).

  13. Thank God I have parents who are frugal and taught me by example. Out of their three children, two are very frugal and the third (baby) lives paycheck to paycheck. Her attitude is “tomorrow may never come” and my attitude is “when it arrives I want to live comfortably”. For me and my lifestyle, number 3 is most important with number 4 close behind. I care not what someone else thinks of what I’m wearing or driving. When I see a woman or young girl with a $65 manicure and cheap shoes, it tells me more about her than she realizes. I’m trying to be a good steward with what God has entrusted me; what people think, doesn’t matter. Where our treasures are, there lies our heart.

  14. Definitely in the right direction, only need to work harder on few desires of today to live like no one else tomorrow, great article Craig look forward to read the book.

    Thanks

  17. My 2 cents ~

    No 4: Healthy financial background (being educated) is the most important, because it will instill the rest.

    You can teach people to:
    – Practice frugality (no 1) by example and application
    – Manage finances through family exercises and activities (no 4)
    – Not care about status (no 3)

    I wasn’t taught this at home, and as a result “life” had to teach me some hard lessons. For the most part, I was an A student, and excelled in math…if you put a compound interest problem in front of me…I would get it right every time. Why then, did I max 3 credit cards before leaving college? Even after paying them off (before graduating – whew)… I had another card maxed 2 years after that?

    I’m not placing blame….my mom taught me what she knew and instilled what she knew. She taught me about Christ (the greatest gift she could have given me), and always said “grow up…get an education…so you don’t have to struggle like me”

    This “pep talk” usually came after a major sacrifice, financial crisis, or robbing Peter to pay Paul. And you know what….I listened. I excelled in high school and college. Got a decent paying stable job and all that.

    So I thought I was entitled to the “things” I didn’t have when I was younger. Frugality didn’t exist in my vocab. I wasn’t taught to save for retirement, about credit cards, or how to invest. Those were not things my mom was exposed to and she didn’t know how to teach them.

    So again to answer your question…I think education is important, because it will be a gateway for everything else on the list.

    • This is so very true MomCents, I had a bunch of unwise habits from watching others. Today my eyes are on the Lord instead. 🙂

  18. Thank you for sharing this and looking forward to learning more from this blog.
    Keep blogging.

  19. That is so interesting about the age of millionaires cars! I think practising frugality is KEY to wealth