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…
Read more on ESI Money and model your behavior after what you read.
Start early, save often, be patient. Let time does its things (compounding).
Try not to take on debt as best as you can, as it acts as an anchor to wealth growth.
Take on leverage with prudence. I wouldn’t say not to use leverage under any circumstances. Just so happens I choose not to use it as a tool (other than mortgage on primary home).
Find a craft in which you can work towards improving upon to build a solid income.
Marry well and take your time in finding the right partner in life.
Time is your friend, be patient and let your money work for you overtime.
Start today! Recognize the value of having time on your side and make some sacrifices for a couple years to jump start your retirement, no matter where you are in the journey.
Trust the process, you don’t need to win the lottery with a meme stock, time the market, or take other unnecessary risks.
Don’t be intimidated or think becoming wealthy is out of your reach! If you are intentional about growing the gap between your earning and spending, the power of compound interest will take care of the rest.
Along the way, make sure you are still enjoying your money and using it on things that bring you joy and value, while avoiding wasting it on things you don’t. As Paula Pant brilliantly puts it:
“YOU CAN AFFORD ANYTHING…But not everything..”
Spend less than you earn and invest the rest in index funds. Know that stock markets can drop 50% and mentally prepare for when that happens. Many investors will start to sell at that time when you should be buying.
Set up an asset allocation you’re comfortable with whether it be 100% stocks (can drop 50% quickly but will provide better long-term returns) or some combination of stocks and bonds (will cushion those drops but provide lower long-term returns).
Don’t chase prices on individual stocks that are soaring and are getting mentioned on social media because while you may win sometimes, in the long run, you’ll get burned. It’s a mental game in the end and that’s why it’s so hard to win against the market in the long run. Buying at the right time and selling at the right time is hard.
Those that set their investments and forget it often end up with equal or better returns than those who spend hours a day watching the ticker and stressing about the ups and downs.
Remember if your timeline is long, you don’t have to worry about what’s happening in the market tomorrow, you just want to make sure your investments are there for you when you need them years away. As you get closer to retirement, you might want to revisit that mindset.
That may mean changing your asset allocation to be a bit more conservative (more bonds or cash) as you get older but beyond that keep it simple and just live your life while you let your money do the work behind the scenes.
You cannot “wish” your way to wealth, it is hard work to get there.
As Dave Ramsey says, “Live like no one else so later you can live and give like no one else” and that is a great philosophy. You have to go against the grain and not be “normal”. Don’t be intimidated by what other people say or do about money, stick to your plan.
I will use my sister-in-law and brother-in-laws as examples. They made fun of us for a long time because we lived off a budget, but I can tell you they are not making fun of us now because they realize they are going to be working until they die, no retirement in sight.
Keep it simple, rinse and repeat, and avoid salesmen (investments and insurance and especially realtors)!
I do meet with financial advisors occasionally if they solicit me. I would work with one; but I find many to be a little “douchey”.
With realtors if you must purchase through one deal with the listing agent yourself and ask for an immediate 2-3% off purchase price since they aren’t splitting commissions with another agent – most can serve in a dual capacity. On a $400k home that’s $8k – $12k off the top before negotiating price — don’t fall for the you’re not paying the commission or it only makes a $25 difference in your payment line it’s still money and it adds up!
Mortgages too are very negotiable. I found in life people get so emotional during the home buying process you have a lot of options just need to be aware.
Also, work on having a FICO of 740+; great credit has a lot of collateral benefits in life that most aren’t aware. After 740 there isn’t a benefit to going higher unless you want it.
Pick a good career. Choose something that you will enjoy and aligns with your passions, but make sure it is something that is in demand, pays well and has opportunities for growth.
Make sure you have the same money values as your significant other.
Invest early in your career and maintain consistency with saving and investing.
Invest in real estate earlier than we did.
Stop me if you’ve heard this before, start saving now. For some people becoming wealthy can happen seemingly overnight. For me, it’s been 18 years of being focused on the end goal and sticking to the plan.
Set goals, short-term goals and long-term goals and maybe even a BHAG (big hairy audacious goal) or two. What is important to you? Prioritize your goals – don’t try to boil the ocean, it is far too large.
Once you’ve done that, create a plan to achieve your goals. Write it down and then make it a priority to check your progress routinely. Be honest with yourself and make sure your goals are realistic. If you’re married or have a significant other, include them in the process. I make most of the financial plans/decisions (it’s more of a passion of mine than it is hers), but I always talk to my wife about it to make sure she’s on board and to ensure she is in agreement.
If you’re not sure where to start, search the ESI archives – there’s lots of good stuff in there.
After that, if you’re still not sure, talk with a financial advisor. Most banks offer “free” financial planning in some capacity. Take advantage of that and at least have the meeting.
One word about financial advisors – they only make money when you give it to them, primarily via fees. While there are good ones out there (I have one) you also have to take any advice they give you with a grain of salt.
Example – when I first began working with my current FA, he offered a suggestion of opening a HELOC, and using that money to invest, with the thought that I could make more in the market than the interest on the loan. I shut that down quickly because that is far more risk than I care to absorb. He understood and has learned about me.
If the FA doesn’t spend 20-30 minutes asking you questions and learning about you prior to offering you advice, you should not work with them, good ones will look to build a relationship and trust with you. If you make money, they make money (generally speaking – pay attention to the fee structure).
I guess my advice would be stay the course.
Start early, improve your skills, pay yourself first, and be greedy when others are fearful – to quote my hero.
I think the big thing is for people to start. You don’t have to save huge amounts of money to start. Starting to practice that muscle of saving and investing will only get better over time.
And then when you start you can learn the ins and outs of investing. But don’t try to reinvent the wheel. Focus on what you can do and it will happen.
Really the best thing for the average person is to dollar cost average into mutual funds over a period of time, and live within your means.
I like Dave Ramsey’s plan and I pretty much follow his plan except I still use a credit card for groceries and gas. I know he says you tend to spend more that way, but I am super strict with myself because I do think he is right about that.
- Invest in your career
- Treat saving like an expense
- Keep learning about the market and about investing. Hear, but don’t necessarily listen to the pundits.
- Maintain focus on your goals: when you’re younger, growth is key so take calculated risks. As you get older, some measure of safety, plus income generation becomes more important.
- Know where you spend your money and spend within your means. Significant debt (outside of a mortgage, of course) that can’t be paid off each month or so is a dark cloud that follows you!
I would automate as much of your financial life as possible. Keep those weekly, bi-weekly or monthly investments moving into your accounts.
Don’t be afraid to take calculated risks as well. Especially, being aggressive when you’re young. Go for it. You have time to make it up with the market dips. And it will dip. It always does. It always comes back too!
The big one is to marry well. Don’t mess that up.
The habits you form are the most important element.
- Saving: This is the foundation. Set aside a portion of your income before you can access it. Do whatever you like with the rest.
- Working: Plan your week, and maintain a disciplined task tracking system so that you develop a reputation for reliability.
- Learning: Spend time every week learning about yourself, personal effectiveness, work related topics, leadership, and investing.
- Exercise: Physical fitness is great for helping to maintain a positive state of mind, and provides the energy to work hard.
- Fun: My wife told me to add this one! Setting aside some time and money for fun is important, and will help to keep life enjoyable and ensure that relationships aren’t neglected and that life is lived in the moment, rather than for some future time of plenty that may never come.
Work in a job that will shower you with money but has no maintenance costs (fancy clothes, country clubs, luxury cars, meal services because you don’t have time to cook) or high entry fees (a degree that comes with six-figure student loans).
Save more than you earn and then invest the difference!
It’s okay to pay off debt for mental health reasons. Being able to sleep at night can be more important than getting an extra couple of % for a year or 2.
I would attribute a great deal of success just on having a strong foundation – I appreciate the value of a dollar and have been somewhat conservative about money my whole life. I’ve never carried credit card debt and I’ve aggressively paid off all my major purchases early (cars, student loan debt, and mortgages).
Secondly, my net worth is largely attributable to being with an equally minded and strong contributing partner, my husband. We’ve been together 7 years and you can see we’ve gone from $0.5M to $2.7M with a path to $4.0M in the next few years.
Though we are not competing, I’ve had a successful benchmark in my husband (5 years my senior) to try to hit earning milestones in line with his career path. We are able to challenge each other to earn what we’re worth and support each other to make career moves because we have the backstop of the other and live on less than one of our base salaries take home pay.
Buy what you need. In my youth I invested in a rental house and later on purchased a condo for my own residence, which was smaller than the rental house. I could have purchased a much larger house for personal use but chose not to do it. At the time of house hunting, my agent told me that I qualified for twice of what I was planning to spend. Each house we looked at got larger and larger until I got a new agent. I stayed the course and now much happier with my choices instead of following the Jones with a purchase of a McMansion.
My total real estate value, condo plus rental house is comparable to my coworkers who purchased a McMansion. My different approach is now supporting my retirement lifestyle with solid rental income each month. With a condo home, wife and I could travel without too much worry, as exterior maintenance is taken care of by the condo association. With a smaller place, utilities and other expenses are lower.
I have three things that rise to the top:
- One is to research what truly brings you happiness and gives your life meaning – then focusing your earning/spending/saving around that. My wife and I do this regularly and have done it with our kids as well. When we list out the top ten, we find very few of them are what most people spend their money on. For us, it’s freedom, time with those you love, experiences, etc. Once we were able to focus on achieving those things that brought us true happiness/meaning, the temptation for other spending melted away.
- The second is to align your goals with your partner. I see this shared a lot in the millionaire stories, and we have certainly lived it. The more aligned we became in our goals, the more progress we made and less strife we had.
- The third is to avoid going with the herd. When we talk to neighbors and friends who are making even more than we do and are still complaining about not having enough yet building new pools and buying new luxury cars, we know we are on the right track. Being different is something we aspire to.
First of all, don’t think that getting a malpractice settlement is the ticket to wealth. LOL.
While this event led to a significant wealth boost for me, it was an absolutely terrifying thing to experience for me or for my family. If I could do things over again, I would have gladly foregone that settlement if it meant not having to go through the medical issues I needed to deal with in the meantime, and especially if it meant that my family did not have to see me in the hospital and barely hanging on for a few days there. It’s just not worth it, no matter what the amount of money is.
Second, I think it’s really important to pay attention to having a good work-life balance. I remember my initial reaction to realizing that I needed a medical procedure (i.e. the minor one, not the major corrective one) was relief that it would mean time off from work. In retrospect I now realize just how awful and unhealthy that is. I mean, if your job is so intense and stressful that you’d rather be in the hospital rather than working, that’s a sign that something is badly, badly wrong in your work-life balance.
While slowing down and pacing yourself may initially mean reducing the rate at which you grow richer, you will eventually burn out which will drop your rate of income to zero. I think it’s better to pace yourself and grow your wealth more slowly, but at a sustainable pace that you can maintain for a longer term.
Again, I think being patient, not trying to time the market, and being humble about your investments is the right strategy.
Don’t try to outsmart the market. Just ride the waves.
Avoid lifestyle inflation.
Hang out with people who you don’t feel you need to ‘keep up with.’
Focus on growing your income.
Keep an eye on opportunities all the time, and take them instead of waiting ‘til they’re in the news!
Anybody can be an expert, all it really requires is curiosity and genuine interest in the topic and the wisdom that results from a reasonable period of time contemplating it. You can cultivate it in any field related to your career, side gig, or hobbies and it will give you joy and economic benefit.
If you can marry expertise with soft skills, and learn to motivate people with a variety of personality types your economic potential is huge. Then the real work starts: what problems to focus on, what type of organization is the best to accomplish your solution, and who do you want on your team.
I think saving rate is the key. Not only does it put money away for the future, but it also means you are spending less (and thus need less of a nest egg).
I know this is boring, but index investing is as well. That is the point – consistent long-term results with low stress.
Have a goal, chip away and do your best not to compare yourself with others. We have seen the biggest wealth destroyers are around ego, which result in messy divorce, loss-making business (restaurants, pubs) and mega renovations and/or houses.
I have my own rules of thumb for spending metrics which I know blogs like Financial Samurai and banks advocate. A few of mine:
- No greater than 3 months NET salary for a car
- Don’t renovate your house beyond 20% of the house capex (excluding land)
- A holiday should be cost neutral for full time employees (i.e., 1 week of net salary is 2500 then a weeklong holiday should not cost more than 2.5k). For something fancier, I allow banking staycation funding. Meaning, for every week we don’t travel when taking annual leave, we can allocate those funds towards a future bigger trip.
Find an extra way to earn money, and save and invest 100% of it.
That could be a recipe blog, or freelance writing, or photography. It can be anything. Just save and invest it.
That one shift is enough to save literally a decade of your life in terms of an early retirement.
When I started reading ESI, I didn’t think I was a millionaire because I had no cash I could spend. When I read the millionaire interviews, I slowly realized I was a millionaire on paper. Having two properties made me a millionaire, but not the kind of millionaire who can go spending money like a millionaire. I didn’t have cash saved either. I had everything in real estate.
My advice is to be true financial partners with your spouse. If you both don’t agree, then it’s much harder to become wealthy. I did most of the investing and tax strategy, but I had my husband’s support.
We didn’t agree on everything. He did not agree on buying whole life insurance but after 10 years of paying into it, he has now come around because he sees that it essentially pays for itself and guarantees the kids an inheritance. He also does not want me to buy any more properties because he’s tired of working for properties. He wants to enjoy them now and I agree.
Building wealth has been a long hard road for us but we stuck with our plan and it’s slowly coming together. Maybe if I had also worked, we could have become wealthy much sooner but we wanted to be there for our children. I especially wanted to be a stay at home mom due to my horrible childhood.
Our best investment has been the time spent with our kids. Everyone who meets our kids see the investment we made in them. The money is a bonus.
Start saving and investing early and consistently.
Grow your income.
Spend money on what is important to you.
Learn, Listen, Apply and Adjust. Start with the millionaire & retirement interviews on ESI and learn & listen to their wisdom. Apply their wisdom where it fits your “life’s journey” and priorities, then adjust or course-correct based upon the tools you use (budget, net worth estimator, investment ROI, etc.) to navigate you back on the right course.
Seek mentors early, because where you start has an impact on where you end up! In the Air Force, pilots use the term “vector” to define the direction one should head – but of course wind speeds, drag and lift all impact the vector immediately upon takeoff. So, one must use and trust the aircraft instruments to constantly make course corrections to keep the vector true. That is how my dad advised me that I needed a financial plan (vector – where I was going) and instruments (budget, ROI, cash flow, etc.) to check and adjust my flight plan for my future self.
In fact, Dad highly encouraged me to join ROTC in college and then go into the military as it would set me up for financial success. He said I’d get taken out of the will if I did not join the military (true story). I told him no, but over time I knew my dad to be brilliant and true to his promises (i.e., no inheritance), so I joined ROTC, which offered a full scholarship. 27 years later I retired with a strong pension and great medical coverage at a fraction of what others pay. I thank Dad for helping set my vector early on – even though I didn’t know where I was headed, but he had a good idea.
Seek timeless wisdom. The greatest advice that helped me in becoming wealthy (not just money but in every area of my life) was when a dear friend told me that there were 31 chapters in Proverbs in the Bible and if I read one a day (i.e., on the 3rd of the month read Proverbs 3, etc.), I would be light years ahead of my contemporaries (his words exactly here).
So, I did, even though it took me over a year before I gained the habit pattern to read one a day in the morning. It changed my entire life and has taught me great wisdom.
Regardless of what you believe, the wisdom expounded is timeless, and the principles are as true today. Just because it is bound in a book called the Bible, don’t let it deter you! Light years!
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Lots of good stuff, huh?
To read more on this series, check out part 14 here.
Now what jobs are those MI 316? Would love to learn about jobs that shower you with money, no debt needed, and not a bunch of maintenance costs..asking for the next generation 🙂