This is a follow up to the post Five Attributes of Millionaires, Part 1 which featured information from the book Everyday Millionaires
.
The book conducted a survey of 10k millionaires, discovering their demographics, lifestyles, beliefs, and so forth.
Last time we shared the five attributes of millionaires.
As a reminder, they are as follows:
- Millionaires take personal responsibility.
- Millionaires practice intentionality.
- Millionaires are goal-oriented.
- Millionaires are hard workers.
- Millionaires are consistent.
The last post detailed and discussed the first two attributes, so this time we’ll do the last three.
Millionaires are Goal-Oriented
I know. This one’s a shocker, right? š
Here’s what the book has to say about the fact that “millionaires are goal-oriented”:
Our research found that 92 percent of millionaires developed a long-term plan for their money, compared to 60 percent of the general population.
That means these men and women are always thinking ahead — not just to next week or next month, but well into the next decade. They know what they want to accomplish, and they’re putting their money to work to make it happen.
It’s not a surprise that millionaires are goal-oriented. After all, small steps of progress over time add up to big things, and money is no different. By looking well ahead and planning for it, millionaires almost guarantee their own success.
What is a surprise is that 60% of the general population has developed a long-term plan for their money.
This is either over-stated by the general population (there’s often a large difference between what people say they do in a survey and what they actually do) or the definition of “long-term plan” is rather loose. I just can’t believe 60% have a solid, well-developed plan for their future finances.
The book supports their conclusions with the following:
- Millionaires accomplish their goals. 97% say they almost always achieve the goals they set for themselves.
- Millionaires save consistently. 70% save more than 10% of their income throughout their working years.
- Millionaires don’t live in mansions. The average millionaire has lived in the same 2,600-square-foot house for the past 17 years.
- Millionaires don’t keep their home mortgage for the tax advantage. The average millionaire paid off their home in 11 years and 67% live mortgage free.
My thoughts on these:
- I have been a goal-setter and tracker for most of my life and I believe the studies — written goals work. Looks like millionaires have discovered the same thing.
- Saving 10% of your income seems so low these days, but millionaires save “more than” that. We saved 36.1% over the 22 years I reviewed our data.
- First of all, 2,600-square-feet is a good sized home. Second, the longest we’ve ever lived in a home was 14 years, when we lived in Michigan. Finally, as I’ve stated before, the cost of your house determines your wealth. Buy too high and you’ll cost yourself too much in all the associated costs with big homes (usually in swanky neighborhoods).
- As for the house decision, it’s an example of “get the big-money decisions right and a lot of the other pieces fall into place.”
- We paid off our mortgage in less than 10 years (I think it was actually 7) back when interest rates were 8% or so. Then we lived the next 2+ decades without a mortgage, which made living on 17% of our income much easier.
Overall we again see millionaires doing the basics of solid money management over time. You’d think they knew what they were doing!
Millionaires are Hard Workers
The fourth attribute from the book is “millionaires are hard workers.”
Here’s what the book’s author, Chris Hogan, says on this topic:
I’ve heard excuses from so many people about why they can’t get ahead financially. They whine, “I don’t have enough time” or “I’m not smart enough” or “My job doesn’t pay enough.” Whenever I hear this garbage, I always tell people it’s not about how much time you have, how smart you are, or how much you make; it’s about what you do with what you have and how hard you’re willing to work. That’s usually when someone will come back with the excuse that really burns me up: “But Chris, you don’t want me to become a workaholic, do you?” Oh, please.
I’ve said over and over in this book that anyone can become a millionaire in America today, but I may need to clarify that a bit. I believe anyone who’s willing to work hard can become a millionaire in America today. The average millionaire agrees with me, as 76 percent say that, with hard work and discipline, anyone can become a millionaire.
Ninety-nine out of a hundred millionaires said their friends and family members would describe them as hard workers. This is the behind-the-scenes reality most people never consider when they think about how a typical millionaire built their wealth. The truth is, hard work looks like luck to the outside world. In fact, I’d say that hard work is practically invisible to those who don’t work hard themselves. They can’t picture themselves sacrificing and saving for twenty or thirty years straight, so they think no one else can either. What some people see as luck is just a matter of discipline, sacrifice, persistence, and good, old-fashioned hard work.
You know, the more I read this book the more I liked Chris Hogan.
He has a great no-nonsense style that I love and he doesn’t hold back from the truth-bombs — even if people don’t want to hear them!
Anyway, a few things I want to highlight from the above:
- Excuses. Yep. Seems like a lot of people have become experts at making them. IMO it makes them feel better for not taking action and thus not achieving what they want.
- “I don’t have enough time.” For the vast majority of people this simply means, “I’m choosing not to make the time.” Most people do literally have the time to accomplish something important to them. But they choose to spend it in other ways — mostly entertainment-related (including cell phones.)
- The section above is prefaced in the book with the following headline: “Hard work disguised as luck.” Says it all perfectly.
- Discipline, sacrifice, persistence, and hard work are not popular qualities among many these days. This is why being a millionaire is still relatively uncommon.
To support the attribute that “millionaires are hard workers”, the book lists the following:
- Millionaires believe reaching millionaire status is more about how hard you work than how much you make. 93% of millionaires say they got there by hard work rather than big salaries.
- Millionaires enjoy their jobs. 96% of millionaires enjoyed what they did for a career and 64% say they “loved” their jobs.
- Millionaires exercise regularly. 80% exercise three or more times a week compared to 55% of the general population.
- Millionaires wake up early. 70% are considered early risers compared to 44% of the general population.
- Millionaires don’t retire when they hit $1 million net worth. Only 38% are fully retired.
- Millionaires don’t support their adult children. Only 6% give monthly support to their children over the age of 25. 71% never give financial support to their children over the age of 25.
- Millionaires don’t allow their children to live with them. Only 8% say their adult children live at home with them.
Some thoughts from me:
- The salary issue was discussed previously in this series. Maybe millionaires don’t make outrageously high salaries, but they do make more than average. (The ones I interview have very good salaries.) I think hard work and good salaries go well together, so I don’t think they are mutually exclusive. On the opposite side, I don’t think “hard work” at a low wage gets you far. There are way too many examples of people who work themselves to death but do so at low wages and make little progress financially.
- I’m not sure I would say I “enjoyed” my jobs. I did enjoy my career overall and enjoyed many of my jobs. Some were not enjoyable at all, though. And I wouldn’t say I loved my career, I would say I liked it. How about you?
- I have been exercising for years, decades really, doing a variety of workouts. I’ve done weights and cardio, cycling, swimming, and I’m now back to weights and cardio (six times a week). Being in shape helps you perform better at work, enjoy life, and have a better retirement. For more thoughts from me on this issue see Physical Fitness and Financial Fitness, Health and Wealth, and Being Healthy Can Grow Your Net Worth.
- Regarding getting up early — I TOLD YOU SO!!! š I’ve let myself slip a bit. I now get up between 5:30 am and 6 am whereas I used to be up by 5:30 am at the latest. Staying up a bit later at night is the biggest reason I’m sleeping in a bit more.
- Though some would say $1 million is enough to retire, I wouldn’t say so. I say run the calculations for yourself — it’s probably higher than that for most people.
- I wonder what they mean by “fully retired”. Would I be considered fully retired?
- I wonder what constitutes “adult children”. Maybe 25?
The book The Millionaire Next Door
cautions against what it calls Economic Outpatient Care. It’s described as follows:
Economic Outpatient Care (EOC) is a term used to express when an affluent parent provides money to an adult child. Besides offspring observations resulting in Under Accumulators of Wealth (UAW) children, EOC is a contributing factor to the passing on of the UAW belief. Offspring who receive EOC have 98% of the annual income compared to their counterparts who are not recipients of EOC. In comparison, they also have 57% of the net worth.
EOC gives recipients a false sense of financial security. For this reason they purchase homes in upscale neighborhoods that exceed the recommended value according to their incomes. Thirty percent of American families live in homes valued at $300,000, yet only earn an annual income of $60,000.
These homes then demand nice cars for the driveway, nice furniture for the living room, and a nice plasma TV to complement the furniture.
These offspring also purchase and consume the EOC rather than invest it. If a dose of EOC is given on a regular basis, the EOC can actually be absorbed into the individualās perceived annual income. Expenditures are then calculated with the anticipation of a regularly scheduled dose of EOC.
So millionaires seem wise not to give out EOC.
In the end I would agree that hard work is part of the millionaire equation. Very few gain good levels of wealth by sitting around and waiting for something to happen.
Millionaires are Consistent
Let’s move now to the last attribute.
Here’s what the book has to say about “millionaires are consistent”:
“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Aristotle
Aristotle observed in the fourth century that the secret to excellence is simply doing the same things over and over again. We have a word for that today: consistency.
Consistency is the key that brings all these millionaire attributes together. You can take responsibility, you can be intentional, you can set goals, and you can work hard. But if you don’t do these things repeatedly — year after year, decade after decade — then you’ll never get the results you want.
Millionaires don’t change their plan midstream if it’s working for them and they don’t stop half-way to the goal.
If you want to become one of America’s millionaires, you’ve got to commit yourself to the long, hard work of getting there.
One of the questions I ask millionaires is:
What are you currently doing to maintain/grow your net worth?
Almost all of them answer, “Staying the course.” (i.e. doing more of what got them to millionaire status)
And why not? It’s working, so why not just stick with it? That’s consistency!
Of course if it’s not working, they would adjust. But they are millionaires, so something’s working…
The book gives the following findings to support this attribute:
- Millionaires stay married. 63% of millionaires are in a first marriage compared to 38% of the general population. 75% of millionaires have been married for 32 years on average.
- Millionaires take advantage of their company retirement plans. 79% used their company-sponsored plan to reach millionaire status.
- Millionaires invest consistently. 75% make regular, consistent investing part of their ongoing personal finances.
- Millionaires invest in other ways. While 79% invest in a company plan, 74% invest outside a company plan, meaning most of them do both.
- Millionaires don’t solely rely on themselves for investment planning. 68% worked with a financial advisor.
My thoughts on these:
- No doubt about it — divorce is expensive.
- Consistency in investing is particularly important. If you invest a good amount early and often, then let time do the work for you, you’re almost guaranteed to become a millionaire.
- I always contributed the max to my 401k, then invested outside of it as well.
- Again with the financial advisor note (covered in a previous post). I’m wondering if they would have been millionaires sooner if they had worked alone! LOL!
In the end, Millionaires are consistent — not only in their finances, but apparently in their lives overall. It’s an attribute that serves them well.
So that’s it for the book. We’ve covered the myths people believe about money as well as the five attributes of millionaires.
Now it’s time for you to chime in. What do you think about the book?
Divorce is indeed incredibly expensive as I know firsthand. Too many people prioritize earning money/saving over concentrating on their relationship and in the end will lose far more as divorce is the quickest way to lose half or more of what you have accumulated.
Economic outpatient care in my opinion leads to entitlement and one of the reasons why generational wealth is typically lost by the 2nd or 3rd generation.
That is why billionaires like Bill Gates plan to leave a relatively paltry amount of money to their kids and donate the rest. If everything is always given to you,, you will never appreciate it and learn how to manage/keep it.
One of my favorite points here … āThe truth is, hard work looks like luck to the outside world.ā I wonāt lose sleep over it, but having your career or financial success being called lucky is insulting as it implies you didnāt earn it. Said another way, luck is when preparation meets opportunity.
“Millionaires exercise regularly. 80% exercise three or more times a week compared to 55% of the general population.”
There’s no doubt the discipline and habits one needs to have to stay healthy in our modern junk food and constantly-sitting-in-front-of-a-screen culture will help propel one to riches. It’s no surprise at all that millionaires tend to be healthier.
Its the “how you do anything is how you do everything” principle.
Much as I tend to be cynical about a lot of the financial press (namely that authors seem more interested in lining their own pockets rather than actually offering anything more than common sense) I’d have to agree with pretty much everything that has been stated if the objective is to practice a healthy, responsible lifestyle and reach $1mm NW without killing yourself. Seems like the sweet spot for the FIRE community is in the $1.5 – $3mm range (my anecdotal guess).
Would be very interested in studies targeting folks reaching +$5-10mm NW range at a reasonably early age (say ~50) where I believe a little something extra may be needed, whether its extreme saving, extreme earning, higher risk tolerance, special ability to recognize opportunity, or lotto winnings (or some combo).
But, perhaps I’m barking up the wrong tree since that would be deemed excessive for most (hence would not sell many books or draw enough clicks).
This is a great idea. I would be curious to know more about people that has achieved the 5-10 million threadhold by age 40. I have read every single millionaire articles on esi and I used to look forward to new article every week, but now Iām just getting bored reading them. Itās always the same thing and having networth of 1 million by age 60 is just not that big of deal anymore. I personally believe this website needs to interview people with high networth to keep it more interesting. Just my two cent.
Mi-77
https://esimoney.com/millionaire-interview-77/
$1 million is high net worth if you look at the numbers.
I think that while $1 million might not seem like “that much” to someone who has it, it is a lot for the 90% of people who don’t.
Talking to millionaires gives us an insight into what normal people did to achieve high net worth and provides tips that almost anyone can use to get there.
Those with $5 million+ likely did something extraordinary which the average person can not do and probably can’t learn much from. So while they might be interesting stories, there’s likely not much practical use from them. And you know how I feel about practical use…
So if they are not for you it’s likely it’s because they aren’t that compelling so someone who is already wealthy. But the vast majority get value from them.
Point taken in terms of practical application of +$5mm studies, and I agree, somewhat far out of the realm of the “normal”.
That said, reading some of the +$5mm interviews like MI-77 and MI-27 was very interesting, both for illustrating how its done, but also illustrating two radically different approaches to overachieving on NW. Interestingly, I’m a combo of the two… wealth generated from both years of slogging it out in the land of MegaCorp and MegaBank, as well as RE estate side hustle.
Hard working does not have to translate to being a workaholic. I know I have worked hard (understanding this may be subjective to others) throughout my career. However, I also made a decision to play hard. I made sure I was in a work position that allowed me to earn a good salary but also allowed me to have family time. Some of my peers may have a higher profile job with a higher salary but they are on the road doing business the majority of time. Finding the balance that focuses on family while achieving your financial goals is the sweetspot that is hard to find.
I differ a bit on the mortgage part. When we refinanced at the bottom of interest rates we decided to continue paying the mortgage monthly vs. paying it off. We then automated investments to earn a higher return than the interest rate.
The mindset of an individual plays a substantial part in how that individual’s life will turn out. And I certainly understand that there are life circumstances that the individual may have no control over, however, for the vast majority, your choices are what make you.
I would add that you should do your hard work as early as possible in life. Get that college degree (in the right major) ASAP. If you go to grad school (MD, MBA, JD, PharmD, NP/PA, OT, etc.), do that ASAP. This will give you the maximum entry salary as early as possible. If college isn’t for you, develop specialized expertise, demonstrate your worth and seek employment from those that will pay the full value of your worth (I know techies with only HS degrees that command six figure incomes). Then work hard to increase income as early as possible. As soon as you earn, follow the “S” and “I” principles aggressively to maximize time value of money and you’ll accumulate multi-millions way before you’re eligible for social security. At some point, you will see that your average returns in the market will exceed your salary and realize that your can FIRE comfortably if you want to. Hard work early in life along with delayed gratification pays big dividends.
I’m in this club and can connect with the characteristics. However the way this is written, would indicate these elements are the ‘secret recipe’ towards becoming rich.
An economist, on the other hand, would likely come to the conclusion that most of the characteristics are causational and unrelated to developing wealth. I’m sure millionaires eat more caviar and lobster, while being members of tennis clubs too. Does this help a non-millionaire become wealthy?
For example with divorce rates, of course wealthier people will have a lower divorce rate as it is well known that money problems are a leading cause of divorce. So are the wealthy choosing to divorce less? No. They simply have removed one of the key reasons for getting divorced.
This also relates to education and how that directly relates to health, fitness and salaries. A lack of good primary and secondary education correlates to a greater chance of having a poor diet and not pursuing physical health activities, while being linked to fewer opportunities for a good salary. So do millionaires make the decision to be healthier, or is their education what dictates they will focus on health while at the same time receiving a salary with a higher discretionary component allowing them to save 10% of their wage?
This is not to discount the traits that are critical to creating a high net worth. Self discipline, goal setting, planning, hard work, becoming financially literate and learning how to invest are all essential. Also many of us lack the ability to be humble and buy an affordable house or the Toyota versus the Mercedes, which reflects our mental wellbeing and need for status. No doubt this relates to our upbringing and/or experience through life.
This article/website is a good start towards helping people, however I feel to improve its credibility you must distinguish between what an individual can do to become wealthier, versus what causational scenarios provide an easy path to wealth.
This really sounds suggestive that a person’s own decisions have less impact on their well being than the rabbit hole they have been given. I can speak for myself in saying there were many times I could have made poor decisions and didn’t.
I have a brother in my same house hold that was given every opportunity I was to be what some may deem “more successful”. He made very poor decisions early on – who he idolized (persons not celebrities) was a big factor. He made the decision to “run” with certain people who influenced his decision making and increased his temptations. There were struggles whether he was going to do the right thing in school, get up and make something of his day or life, participate in things he knew were bad, etc.
As a FACT, I made better decisions all day long, all week long, all childhood long, and developed “CONSISTENCY” that has pushed me and now my wife and family into a good rabbit hole. These are conscientious decisions that each and every individual makes. If there is a will there is a way! I think its more important the decisions a child makes and develops habits on is one of the biggest contributing factors to the outcome. Quoting someone further up in this comment thread – “Luck is when preparation meets opportunity”.
I enjoy all of the millionaire articles whether they are 1MM at 60 or 3MM at 35. They each bring about a unique light to one’s decision making that’s extremely interesting to compare to your own decision making. It’s the weekly motivational to mimic those that succeed or do better than those that don’t meet the goal you are trying to attain.
To a degree you are echoing my sentiments.
I think you are missing my point however that many characteristics, like divorce, are a function of being a millionaire not the recipe to get there. The article should better articulate this.
Relating to your point on you and your brother, there are always exceptions and outliers. The reality is that it is harder and less likely for someone with fundamental disadvantages in eduction, health, social network and job opportunities to become a millionaire than for someone who has been handed everything on a silver platter.
I would like to have seen the article focus on hypothetical steps that a disadvantaged or advantaged individual can take to improve their chances. I would put not getting divorced into a category that is in reality out of ones control.
I get your point Duncan. As I noted on another millionaire stats article thread, I often find the personal finance & FIRE press can get cause and effect mixed up which is a hazard when you start profiling millionaires… e.g. the proverbial which came first… chicken or egg.
That said, certainly these forums are a valuable source of inspiration, and as you put it, you can’t really go wrong with developing certain fundamentals which would improve anyone’s chances.
I come from what you would call a disadvantaged background, raised by a single mother once my troubled father disappeared leaving her and three children in a roach and rat infested slum. She, fortunately got back on her feet in her later years, worked and put herself through higher education while raising kids, though never made more than ~$35k/year.
Fortunately she had a pension when she retired!!! IMO, the demise of the pension is the worst thing to ever happen to the American workforce.
When I was young and starting first job out of college, I got it all wrong precisely because I thought emulating the spending habits of people I perceived as successful was the way to become successful. Dumb, but how was I to know any better. I thought the whole point of making money was so you could spend it… all of it… saving it never actually occurred to me.
I’m completely serious that a well-educated, book smart guy could be so utterly stupid, though in my defense, I was in commission sales, and sales culture is often one of excessive consumption (gotta keep em hungry).
Anyhow, it was only through making a bunch of mistakes (like getting some firsthand experience with debt when you lose your job) and learning from my wife, who was raised by ESI parents, that I would have had any hope of ever reaching the MM club.
Awhile before meeting my wife, I had a short-lived relationship with someone equally as well-educated but just as financially irresponsible as I was, and every once in a blue moon, I wonder just how badly that would have turned out had she been “the one”. Interestingly her (divorced) father was a high-income doctor with a big spending problem, so I guess the apple wasn’t too far from the tree. I think I have a pretty good idea the potential outcome… bullet dodged!
Anyhow, I once tried to do some research on how people of my background and starting point get to +$5mm and the best answer I got was… “statistically insignificant”. While it makes me proud to get here, it also makes me very sad and angry that the circumstances of birth, race, region, socio-economic status, etc. really do exert a heavy downward force on life prospects, and our society is not nearly as upwardly mobile as we’d like to think it is.
On the topic of divorce, it is certainly true that this is not entirely within one’s control, but I would posit that the initial choice of partner is very much within one’s control. In the divorce examples I’ve seen, while they are all negative to NW, some are worse than others. Situations where two mature, responsible adults who still respect each other can come to a mutual decision appear to be far less damaging than situations that look more like chemical warfare – usually the financial damage is done throughout the term of the marriage, the divorce just cements it.
Good story. Nice to hear from someone that broke the shackles.
I’m from Australia fortunately, so anyone regardless of background can maintain good health, eat well (i.e. supermarkets aren’t full of sugar filled crap), get a solid primary/secondary education for free, attend university based on merit (or complete a trade certificate) and earn $80k within a few years with minimal effort.
Having worked in Canada and the US, the one main advantage we have (aside from the above) is that the percentage of discretionary income is far greater here (for the average person) than in either of the aforementioned countries. Don’t get me wrong, a superior salary in the US is FAR SUPERIOR than the majority could earn here (95% of people would earn no more than $130k – $150k).
The point of mentioning the above, is that it is incredible how many Australians live paycheck-to-paycheck for the reasons you mentioned. Primarily having parents with poor saving/spending habits that pass on their ‘wisdom’ to their children and the lack of any kind of forced financial literacy throughout our education.
Being in my mid 30’s it is amazing how many people in my network of similar age want the million dollar home and fancy european car right now, either swallowing their net worth or sending them into significant debt (at dangerously low interest rates). Luckily 10% of our gross salaries are mandatory retirement savings, otherwise most would be stuffed on retirement.
My opinion is comprehensive early education on financial literacy would make a world of difference to turning Australia into an even greater Millionaire Factory.
I have had the fortune to travel on 4 luxury cruises (Silverseas, Regent, Viking Ocean) over the past 2 years. Just completed a 22 day voyage from LA to Miami and later this week doing a 27 day Regent cruise from Sydney to Singapore. I don’t know if the fellow cruisers are millionaires or wealthy, but one can assume many are when paying $1k-$3k per day. My observations of these people are:
1. They read a lot. (mostly eReaders or hardcover). Fiction and non fiction. TV is not the main form of entertainment.
2. They enjoy talking with strangers. Engaging, and I would say that many are not just looking for conversation, but also willing to provide advice/help, network, and want to learn from others.
3. They are confident with themselves. No splashy cloths. At ease in dealing with conflict, new situations, and everyday obstacles.
4. They drink moderately. Usually wine. Watch what they eat.
5. Early risers.
6. Remembers peopleās names and other personal information based on even a quick meeting.
7. Job or career does not define them. Instead they discuss experiences.
I have anecdotally observed that it is not just the cost and asset splitting of divorce that damages net worth, but rather being married and being married at a younger age is much better for wealth formation than later marriage or staying single. Once married, couples can set goals, manage their careers and families and lower living expenses (being able to commit to long-term cost efficiencies like high quality appliances, slow home turnover, etc.). My wife and I married at about age 25, eliminated all non-mortgage debt and bought a house before we were 30. Other peers were dating with frequent expensive travel and entertainment while we were instead paying down debt and banking money into our 401(k) accounts. I would also speculate that couples with fully merged finances are, on average, better at cost management and investment focus than those marreid couples (or unmarried committed partners) who maintain separate banking and investment accounts. I do understand that early marriage and merged finances aren’t for everyone, and doing so for the sole purpose of wealth formation is a poor reason to marry, but those who do have a leg up.