Interested in becoming a millionaire? I’ve recently been re-reading and have been listening to the audiobook “The Millionaire Next Door: The Surprising Secrets of American’s Wealthy” by Thomas J. Stanley and William D. Danko. This is the final part of a four part series.
I’ve gone in a more in-depth book review here. But basically the book is based on the work of the two researchers named above who interviewed millionaires over several decades to find out how they got rich and how they stayed that way.
The book eliminates the myth espoused by media and marketing companies that rich people live extravagant lives. If you want to become a millionaire a good place to start would be to see how many of these “millionaire traits” you have and adjust your lifestyle accordingly.
What the Millionaire Next Door does NOT Pay for: Part 4 – 5 Final Categories
16. Invest Money Unwisely By Putting All Eggs Into One Basket
The millionaire next door takes evenly weighted, calculated risks on long-term investments. If you go “all in”, you’re gambling, not investing. It’s important when considering investments to diversify your portfolio. This reduces risk in case of a down turn in the market. Here is a great article from Fidelity on the value of diversification.
17. Buy Tickets to Fly Business or First-class
Would you pay an additional $400-600 to sit in a leather chair for a couple of hours? That’s exactly what you do when you fly first class on a domestic flight. It can be thousands of dollars difference between economy and first class on international flights. In this article, there are three comparisons between the cost of various airplane tickets. An airplane ticket from New York to Sydney cost at the time $1734 in coach, $5,760 in business, and $12,678 for first class. Huge waste of money! The cost of a trans-atlantic business class airplane ticket can be 10 times more than that of economy.
Do you typically fly coach? Or do you pay for business or fist class tickets?
The millionaire next door has a long-term mindset. In the long-term, owning something is generally more cost effective than renting it. The key is to purchase quality products for long-standing use. The millionaire next door doesn’t participate in rent to own scams and typically owns his or her home. See this calculator from the New York Times to see if renting or buying your home would be better for your situation.
Are you renting or buying?
19. Earn Every Dollar He or She Makes at His Day Job
Two words: Passive Income. Have you heard of the term? You can be sure the millionaire next door has and invests his money wisely. These investments create a solid passive income stream that grows over time. Food for thought: If your money isn’t making you more money, you’ll never be wealthy. Read Forbe’s article about Pat Flynn’s success story with passive income here. This article from Huffington Post also gives practical ideas on how to generate passive income
Do you earn every dollar you make at your day job?
20. Focus His or Her Attention on Negative Obstacles
If you focus all your attention on negative obstacles, you will lose sight of the finish line. You can’t get there if you can’t see it. Negativity can be costly. It can hinder you from taking calculated risks and attempting what might be your calling in life. Wondering how this relates to personal finance? For more information, read this article from US News about how positive thinking can improve your finances.
Do you view your life through the lens that your cup is half full or half empty?
Imagine yourself having financial freedom! Being able to allocate your resources towards what matters most to you and your family. Imagine yourself being able to give like never before. This is all attainable for the average person if you learn from those who have lived frugally, built wealth, and practiced self-discipline!
Think you’d like to read The Millionaire Next Door: The Surprising Secrets of American’s Wealthy? Join us for the book club discussion on Facebook in Book Worms – Book Club. We are currently on chapter 4 of the book discussion!
On a more personal note in ending this series I’d like to thank those who have participated in all 4 of these threads. Check out the book from the library or buy it today. Don’t like reading as much? Try the audiobook. It’s great for telecommutes or workouts. Thanks for reading!
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So, how’d you do on these last 5 categories? Are you following the habits of the millionaire next door?