Becoming rich is a dream many of us share. We want to stop worrying about money. We want to live the good life. We want to become millionaires. When I first read the book “The Millionaire Next Door” I wanted to know what it took to become a millionaire. What I found out is that it’s not really a secret, it just takes hard work, perseverance, planning and self-discipline.
What I learned from The Millionaire Next Door is that there are wealthy people everywhere. They could be your neighbour, your mechanic, your landscaper, your friends. The key thing about most millionaires is that you’d never know they were that wealthy.
The millionaire next door accumulates their wealth by avoiding many traps that will never make you rich. Instead they live within their means, they invest and they do a few other key things to become millionaires. Here is a quick summary of the key things millionaires do to become rich.
Key Lessons From The Millionaire Next Door:
There are a few key lessons from this book that everyone should know. The Millionaire Next Door is an easy read and I encourage everyone to rent it from their local library. But here is a quick summary of the books key points and how I’m trying to live like the millionaire next door.
1. “Millionaires live well below their means”
The rich don’t get that way by spending money. Most rich people save a good portion of their income. They could easily spend more money but they don’t and this is what helps them to become wealthy. Unfortunately this wasn’t something I used to do. I used to use credit cards and debt to live beyond my means. Now I budget and save a decent portion of my income each month.
2. “Millionaires allocate their time, energy, and money efficiently, in ways conducive to building wealth”
This means that millionaires are spending time on their finances, their income, their skills and knowledge. They spend time and energy on things that will help them earn more money, invest that money or keep this money. For example, I’m learning how to run a website so that I can earn some extra side income and eventually work from home.
3. “Millionaires believe that financial independence is more important than displaying high social status”
Apparently most wealthy people are not easily identified by their spending. In fact, this is why the book is called The Millionaire Next Door. Most wealthy people live an average lifestyle. They don’t by bottles of crystal or dom at the club. They don’t take private jets. They’re just regular folks who don’t spend money to show their social status. They invite friends over for dinner. They go out for dinner only a few times per month (maybe less). They drive a reasonable car.
4. “Millionaires parents did not provide economic outpatient care”
Wealthy people learned about finances from a young age. Their parents didn’t support them with huge amounts of cash or gifts. Although my parents always helped where they could they didn’t go overboard. At the same time I still have a lot to learn about managing my finances. It’s never to early to start learning about personal finance, how to build a budget, how to stick to a budget, and how to save money and invest.
5. “Their adult children are economically self-sufficient”
Most millionaires raise their children to be self-sufficient. Based on #4 they expect their children to learn about personal finance on their own and become independent. They set the expectation that their children should support themselves and they teach them how to accomplish this. My wife and I would like to raise our daughter this way too. But since she’s only 6 months old I think we can still wait for a bit ;).
6. “Millionaires are proficient in targeting market opportunities”
There is opportunity all around us, it just takes a keen eye to find it. This is something millionaires have learned how to do. They take risks. They get lucky. But most of all they are prepared. Millionaires are always learning and this helps them see opportunities that others have missed. I’d like to think this is what I’m doing with this site. Running a website is not something I knew about a year or two ago. But by constantly learning it becomes easier to find opportunities online. I expect this would be the same in any field. As you learn more it becomes easier to see opportunities and evaluate risk.
7. “Millionaires choose the right occupation”
Becoming a millionaire seems to be easier within certain professions. Engineers, business men, entrepreneurs are all more likely to become millionaires. In fact being an entrepreneur is the most common way to become a millionaire. These aren’t exotic businesses either. Just simple small businesses that can exist in any city or town. By own their own business millionaires keep 100% of the value they create. My dream is to work from home and do exactly this. Make money for myself and avoid working for someone else.
How To Become The Millionaire Next Door:
Those are some of the key lessons from The Millionaire Next Door. The book is full of more valuable insights so I suggest you grab a copy from your local library. It’s a great book and a quick read. I would highly recommend that everyone give it a try.
Have you read any good personal finance books? What was your favourite?
Tell us in the comments below so we can all check it out 🙂
Photo by Ted Eytan via Flickr