Through the years, I have interviewed hundreds of millionaires with the goal of learning from their experiences and knowledge.
I’ve published these as Millionaire Interviews, featuring my specific questions and their responses.
After a few hundred interviews, I realized that there was phenomenal wisdom in several of the questions I asked, especially when the responses from different interviewees are read one after another.
I’ve decided to publish these here on ESI Money in my Millionaire Wisdom series.
Note, not every millionaire answered every question and I did change around questions from time to time, that’s why every millionaire isn’t listed below.
Today we continue the series (see part 1 here to start the series) with millionaires addressing the following question:
What advice do you have for ESI Money readers on how to become wealthy?
Here are their responses…
There are many paths to wealth, but a common theme is to live below your means. It helps if you have the right partner who shares your financial philosophy.
Earn: Chose a profession that you enjoy, but that also pays reasonably well. Continue to invest in your education. Although not for everyone, if you have the itch, don’t be afraid to start your own business as I did.
Do not spend your time doing something you don’t like, just to make more money or climb the corporate ladder. Life is short — do something that matters and that you enjoy.
Save: Live beneath your means! Start saving young — even if just a few dollars a month. Take advantage of tax deferred accounts, and never pass up free money from an employer.
If you have debt, pay it off aggressively. The exception being a mortgage, but don’t over buy a house, and don’t buy expensive cars and other toys. A dollar today is worth many dollars in the future. Just ask Warren Buffet.
Pay yourself first — donate to charity — spend the rest with thanksgiving.
Invest: Keep is simple, and invest regularly. Don’t continually tweak your accounts.
If you decide (as I did) to use a professional advisor, check their credentials and use a fiduciary who bases fees on your portfolio performance.
I realize a financial advisor is anathema to many readers, but I learned years ago that professionals often make or save more money than their fees. And they can save time better spent on doing what YOU do best. It has worked for me.
Get and stay out of debt, except for perhaps a personal mortgage and save and invest at least 15% of your income in mutual funds and or investment real estate.
Earn, save, and invest all you can.
Plan, budget, and stay out of debt while wisely investing and you too can retire to a life of financial freedom where your time is your own!
Don’t try to become wealthy.
Jim Carrey, the famous movie actor, said that he wishes that everyone could receive all of the fame and fortune they desire so that they could see that it absolutely does not produce the happiness you are seeking. The happiness you are seeking is in the journey of discovering the unique purpose that God created you for.
For some of us, that unique calling and purpose leads to great wealth and that is wonderful! We need people with the gift of wealth building to build wealth, and build great companies, and provide generously for their employees, and to give generously to those in need. But if your God-given calling is to be an elementary teacher in an inner-city school, or a hospice social worker, or any other were the calling that makes a difference in the lives of people, and reflects your God given gifts and passions, go for it! Don’t worry about wealth building. God will supply what you need.
One of my powerful breakthrough discoveries is how the Bible defines riches. It certainly can include financial riches, and the Bible, surprisingly to some, affirms wealth. But if I am wealthy and have a crappy marriage, or kids who don’t talk to me, or can’t sleep at night because of anxiety, or am having health issues because of my poor diet, I am not rich at all.
A rich life, I found, is surrendering all areas of my life to Christ – my mind, my emotions, my body, my work, my relationships, my money, and my health. That’s what I think about when I consider what it means to be wealthy.
And so nearly every morning, I take about an hour or so to do a process called resurrection morning. When most people think about resurrection, they may think about Jesus rising from the dead on Easter morning. And that is true. But resurrection is also something that we can all experience on a daily basis. The entire message of the Bible is bringing dead things to life.
And so every morning I go to God, seeking his wisdom and strength to bring dead things to life in me. Negative thinking. Negative emotions. Negativity in my relationships. Hurtful habits in my life. I look to God’s living word and the power of prayer to create a daily resurrection in all areas of my life. And I found that when my life lines up more and more with my creator, and the people he’s put in my life to encourage and to serve, and his will and desire for me and how I think and feel and act, I find that then and only then do I build true wealth.
In my case, it certainly includes financial wealth. But it is so much more than that.
The turtle does win the race to retirement.
Automatic paycheck to paycheck deductions into your 401K will get you to be a millionaire. We did not use real-estate or any other investment methods to become multi-millionaires.
Spend an hour, every day reading about how to be wealthy.
It could be blogs like this one, magazines or quality books, especially biographies or memoirs of people you can emulate.
ESI has spelled this out as well as it can be said…Earn, Save, Invest. It is really that simple. (That doesn’t mean it is always going to feel easy, but it really is that simple). Persistence wins every time!
My daughters already get so excited when they look at their accounts. I get these wonderful, “…Hey Dad, look at this…” messages from them as they see their own FIRE numbers compounding now. It’s so freakin’ awesome! It’s really about persistence in those three fundamental areas.
Also, don’t be afraid to try something new like real estate investing. It’s not for everyone, and that’s OK. But for those who can wrap their heads around it, it can be a phenomenal investment over time.
Earn-Save-Invest of course!
The earlier you start the easier it is, but never give up hope. I am proof that success is not immediate and can be attained later in life.
I always knew I would be successful, though it seemed absolutely impossible at times, so my heartfelt advice is to never lose sight of your goal. Maintain your focus, expect to conquer a very bumpy road, and remember it’s not too late to start today.
Only invest in what you feel comfortable with, and always save more than you are comfortable with.
Value yourself and seek to discover where, how and who might value the unique profile of skills and talents that you bring to the table.
And never settle, keep sharpening the saw as Covey said in The Seven Habits of Highly Effective People.
Don’t be afraid of change or taking on a new challenge.
Use your resources wisely.
Educate yourself…whether in college, trade school or on the job. It will pay for itself in spades.
Don’t mind what others are doing/buying and live within your means. Nobody really cares if you carry a Gucci purse or drive a Lambo. Pick the things that bring you joy and spend more on those and less on the other stuff.
The same advice found on the ESI Money blog which is:
- EARN and increase those earnings
- SAVE by paying yourself first
- INVEST in knowledge and then in whatever investment vehicles you understand
- Start Investing early and regularly
- Do not try to time the market
- Live below your means
- Pay off ALL your credit cards in full each month
- Purchase a home and try not to move frequently (big benefit as we “stretched” ourselves when we purchased our home in 1996 and have never felt the urge to move).
Never stop learning. Read, read, read. There is so much free information out there to keep your mind growing in the area of investments, wealth management, asset protection…etc. There is really no excuse to not keep leveling up your knowledge and expertise.
Also, make sure you are protecting the downside. As your net worth grows make sure your insurance coverages follow suit. High levels of liability coverage are relatively cheap. There is no reason to risk your nest egg to some erroneous event outside of your control.
Start your own business. It will usually take leverage to grow it beyond the first couple of employees but there are so many opportunities out there.
Invest heavy in yourself and your employees. When there are opportunities to either put the fruits of your labor back into your business or to spend it on personal expenses make sure you’ve grown it as much as you want to grow it or it’s an opportunity lost.
Take care of your business first and it will take care of you.
The biggest purchase you will ever make is your home. Buy wisely based on your needs, good location, and stay there a long time.
Pick a career in an industry segment that has lots of immediate and long-term potential growth that will pay you well with benefits, provide stability, and still offer a good work life balance.
Little things do add up over time. Think of investing earlier rather than buy that awesome car right out of college.
Learn how to cook, meal prep, and good nutrition early on for it will be friendly on your waistline and purse strings. You have no idea how much I spent eating out in my 20s and 30s.
This may not be attractive to ESI audience. I’m not very good with my hands and do not enjoy mechanically building things. I wished I outsourced frustrating, mundane, and time consuming tasks earlier on in my career so I can recharge and focus on my career rather than spend 6 hours on weekends doing housecleaning, yard work, or YouTube video on how to’s and etc. I now gladly pay for these services and I gain extra 6 hours per week.
I use online shopping with no shipping fees for almost everything but groceries to save me time.
Be sure to read the book The Millionaire Next Door
.
Live life to be enjoyable to yourself, your family, and friends.
Pick a job and industry that you love, not just like.
Excel at your job so the promotions and money will follow you. If you pursue money first, you will never be happy.
Find 1-2 successful family member or friends, preferably the ones that started an earlier retirement, that can mentor you on personal financial planning.
We use two different levels of service in a large financial investment company. First, we use “robo advisor” accounts for 2/3 of our money that charges us 0.3% and secondly, we use “private client relationship” accounts for 1/3 of our remaining money that charges us 0.5%. This hybrid approach has worked well for us the last five years with a blended expense of 0.4% between the two types of service we use. This helps us manage our expenses better without hindering our growth in our portfolio.
Take advantage of the 529 Plans for your children’s college education. The day my daughter was born, I opened a 529 account and put in $5,000 plus started making $400 monthly contributions to it. The plan was to continue until she started college, however the growth was so good that we stopped funding it when she was a sophomore in high school.
We paid 80% of her college and she paid 20% through scholarships and loans. The thought process was, if she has skin in the game, then she will get up for those 8:00 AM college classes instead of sleeping in and be motivated to graduate college.
Read lots of books and web sites on Personal Financial Planning.
Use a reputable Certified Financial Planner (CFP), not a financial consultant or advisor that anyone can call themselves. A CFP is a boarded role and has fiduciary responsibility to you as client. This reduces or eliminates any conflict of interest.
We prefer using a large public national financial service investment company that has different levels of service during our journey that could match our needs instead of working with a small private wealth management firm to help us with financial planning.
Everything in life is a risk, even investing in the stock markets and for sure, starting your own business. Understand your risk tolerance and act accordingly.
Work to grow your income, live below your means to allow you to save and then invest it for the long haul.
There are many ways to become wealthy and any one way is no better than the others. Do whatever works for you.
If you are a saver, invest early and often. If you are young, time is your greatest asset. Invest in a low-cost index mutual fund and then ignore what the stock market does. It will crash – likely several times during your life – but it will come back. Just stay invested and don’t panic sell, which locks in your losses.
If you have an entrepreneurial spirit, look into starting a business. The internet has provided lots of ways to bring in additional income at little to no expense, often while still working at a “regular” job.
Focus on your career and find ways to increase your earnings. As your earnings increase, increase the gap between your income and expenses then save and invest the difference.
- Spend less than you earn.
- Don’t increase your lifestyle just because you got a raise. If you get a raise, start first by saving more (because it hurts less to save money you weren’t used to having, than trying to reduce your spending to save more).
- Optimize the largest costs in your budget (like housing) and if you do, you don’t need to sweat the small stuff as much (like lattes).
- Don’t pay interest if you can help it, especially if it’s not tax-deductible, like credit cards. It’s throwing away money.
- Be patient. It’s probably going to take decades.
- Increase your earning potential. This isn’t necessary but makes everything go faster. If you can’t or don’t want to make more money (because it means a lifestyle change you are not willing to make), that’s fine – you just need more of that patience above.
- Keep learning (this helps you with earning potential).
- Get therapy. (A lot of issues I see that people have with money are about non-money problems, like insecurities or fears).
- Being married helps. Being single doesn’t have as good economies of scale as being coupled. Not getting divorced helps also as it’s a big drain on wealth and also makes you single again.
- Gain basic financial literacy. You cannot manage what you do not understand. Although writing this last one feels like preaching to the choir because if you are reading this, you are probably already doing this one.
Career:
- Acquire an education in something that has worthy job prospects. It’s going to be difficult creating personal wealth without surplus income.
- When you do your job, strive to do it well. If one works hard & smart, they don’t necessarily have to be the sharpest knife in the drawer to stand out.
- Confidence is a weird thing. If you have it & exude it, it will work well for you. It also allows you to bet on yourself. Just be careful to never let it come across as cockiness.
- Learn from what you do professionally, maybe there’s a side hustle opportunity that can be exposed.
Budget:
- In your early days, create a budget that allows you to live well within your means such that there is ample money to be saved.
- Remember, sometimes it’s okay to do without. If all you can afford to eat is a pb&j, then that’s not the time to treat yourself to a steak dinner.
Invest:
- Start investing early without worry over how big or little your investment is.
- Invest in a way that you don’t miss the money.
- Have faith in time. Investing is a long game that the tortoise always wins.
- Maintain an emergency fund for that unfortunate rainy day.
- Strive to diversify where possible.
For us, it was “slow and steady wins the race”. Not everyone will inherit a boatload from an eccentric rich uncle. It’s always someone else that wins the lottery. I’m a horrible gambler, and the one of the largest unexpected windfalls I have received was a ten-dollar bill I found in a parking lot. Only a few are blessed with rich parents. For the rest of us, building towards financial independence is done one brick at a time. Eliminate debt, plan for the long-term. Save and invest consistently.
Years ago, we took our two young boys “up north” and kayaked to a small island in the middle of Grand Traverse Bay. It was 3.5 miles one way from where we put in. While we were out, the wind picked up and was directly against us as we were paddling back. Two-foot swells may seem small but they are enormous when you are sitting in a kayak. We lashed the kayaks together with lengths of rope and paddled furiously towards shore. For a long time, we seemed to be getting nowhere. The boathouse we were aiming for remained stubbornly small in the distance. The only real way to check our progress was to look behind us and see the island slowly receding. Finally, the boathouse began to get bigger. And bigger faster. And then we were there.
You may question the wisdom of taking young children on that kind of adventure, but it illustrates the principle perfectly. If you are building wealth a little at a time, the goal will seem distressingly far away and will stay that way for quite a while. The only way to check your progress is to look behind you and see the debt getting smaller. Or your 401k or investment balance start to grow.
At some point, however, you will notice the goal, your net worth represented by the boathouse, is slightly bigger. And then it gets bigger at a faster rate. And then, for the last little bit, you may be even able to coast. For the last 10 yards or so, we were able to ship the paddles and coast, using the momentum built we up, until we heard that welcome sand grinding against the bottom of the kayaks. We made it, and you can, too.
Whoever walks with the wise becomes wise, but the companion of fools will suffer harm. Proverbs 13:20
The same could be said for wealth. Whoever walks with the wealthy becomes wealthy. Surround yourself with friends and mentors that will help you on your path towards financial independence. Join the Millionaire Money Mentors forum. Plenty of wealth wisdom to go around there.
Start early! Compound interest is amazing. But if you didn’t start early, then start today.
Take advantage of any free money from your employer (e.g. 401K matches and college tuition).
Pay yourself first…only allow yourself to spend what is left over after saving.
If you are reading this, you are doing the first thing and that is to take an interest in your finances. Following the ESI model is an easy concept, but hard to do in practice because it requires discipline. It is the same as any other goal in life (e.g. exercise, weight loss, eating better, quitting smoking), you need a plan and discipline.
Once you get started and your actions become habit, then it really becomes much easier. Then compound interest kicks in and it becomes even easier.
Luck is more important than skill, so spend effort in an area where it’s easier to get lucky. For me that meant tech and real estate.
Especially if in a slower growing field (i.e. real estate) put yourself in a position to capture as much of the upside as possible. Otherwise it’s easy to forever be helping others profit off your labors.
There are products that men and women buy that definitely lead away from wealth and toward poverty.
For men, it is automobiles. Our twenty-six year old niece and her husband have a very successful business. He drives a $200,000 Bentley; she drives a $125,000 Porsche. They’ve just purchased a Tesla SUV. They have $100,000 shoe and handbag collections. But, they rent a home – and this is in So. California!
We buy only used Japanese vehicles. For many years, Japanese automakers saw what was going on in Detroit in the 1970s and 1980s and determined that if they made a reliable vehicle, they would be able to enter the US marketplace. It worked. For the most part, our cars are high-mileage cars – I drive a 2006 Honda Pilot with 211,000 miles on it. My wife drives a 2015 Honda CR-V and expects to hold it for at least 10 more years. Our one “new” vehicle is a 2016 GMC pick-up, used to haul camper and boat.
For women, it seems to be clothing and beauty aids. The drive to be stylish can cause huge expenditures on clothing and all the grooming. I tell her often how beautiful she is and that she doesn’t need garments and makeup to convince herself.
Align yourselves with a team of advisers with whom you can have long-term relationships. These advisers are: CPA, attorney, financial planner and banker. Pick people about your age so that they don’t die and leave you having to find a new relationship.
Ask older men for advice. When I was young, I always talked with older men. Now that I am one of them, I realize that I have gained some wisdom – largely through the mistakes I’ve made – but no one asks.
Our advice is free and you don’t have to follow it. It’s not like with your dad, with whom you have history.
The culture values the young who make foolish expenditures and de-values the old who would caution against foolish expenditures.
Saving as much as you can early is key and then growing your salary and continuing living beneath your means. I’ve seen many say that asking for a raise is key for growing your salary. I can’t say I’ve done that even once in my career. Maybe I am leaving money on the table by not doing so.
I’ve always led as a servant leader, I’m constantly learning, challenging and growing myself. I’ve always worked, aligned, partnered and hired folks who were all great leaders and way smarter than me who filled in my weakness and/or complimented my strengths. I think those have been the key to growing my career and salary.
As for Investing, I think I’m still trying to figure that out myself. As I’ve said, I’m taking a risky approach and maybe not the best one. I think as long as you are doing something and you are comfortable with the approach that’s the best thing you can do. Learn from it, adapt from it and adjust if you need to.
——————————
Lots of good stuff, huh?
To read more on this series, check out part 11 here.
Thank you, Millionaire 223.