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…
Live below your means. Invest the rest simply.
You can’t do anything but become more wealthy than you were before.
Becoming wealthy is very straight-forward:
- Start with picking an area that you love to work on
- Figure out a niche in that area that is underserved due to lack of skilled professionals
- Grow your skills in that area
- Negotiate your pay hikes as you become more valuable to your company
- Change jobs if you have to. In most places, it seems to be relatively easier to negotiate a better title and salary with a new job rather than in an existing job.
- Keep saving a minimum of 30% of your pay. My target would be to consistently save 50% or higher. It becomes easier to achieve this target as our pay keeps increasing.
- Start investing early even if it is with a small amount. A small investment compounding over a long time period can turn into a decent chunk of money
- Invest consistently from every paycheck. Investment automation takes emotions out of investing and anyone can become wealthy over time.
Start investing when you begin working, invest 20% of your compensation, save your bonuses if you are fortunate to qualify, focus on increasing your compensation through promotions, bonuses or transferring to a new company.
Track your net worth regularly.
Either create a group of like minded investors and meet frequently, or join an outside group that already exists. The sooner you focus the faster you’ll achieve the goals you desire.
Have a partner that is on the same page, this will also help in accelerating your wealth.
Use tools to forecast your goals in the future and be consistent.
Educate yourself on where you put your hard-earned money and trust but verify that it’s going how you intended.
The best life advice I could possibly give is to marry the right person. If you are not better with them then they may not be the right person for you. Gray Divorce, or divorce later in life, can kill retirement plans.
Invest in yourself. High earnings with the ability to pay yourself and save and invest is an amazing combination. You can become a millionaire by saving and investing a low or modest salary but the scale and speed with which you can do it is undeniable with a high income.
Work hard early, before kids. Lay the groundwork and that effort will pay dividends for years to come. This means picking a career that you feel has long term potential. Late career changes can have an adverse impact on earnings.
I chose a career with high income potential, was in demand and I enjoyed it for the most part. What I enjoyed about work changed over the years but where I really found joy was in the life that work allowed me to live.
I do adult personal finance training and money coaching classes on the side and have been blessed to look at a lot of people’s finances. I would say there are only three fundamental money questions you have to get right, and you can teach them to a 7th grader:
- Will I save money?
- How much can I save?
- What do I invest it in after that?
If you commit to saving money regularly, save an above average portion (at least 15-20%), and invest it in Low-Cost Index Funds like Vanguard offers…if you live long enough, in this country you’re probably going to end up wealthy.
Most people are either house poor or vehicle poor, or both. Avoid silly vehicle and house purchases.
My wife’s grandparents lived in the same house for 51 years. While we might not follow their example completely, ideas like “starter homes” only enrich the real estate industry. You see the exact same problems with cars. If you can’t buy a car and pay it off in four years…you can’t afford the car. Vehicles should be kept for ten years, minimum. Whether you drive a rust bucket or a Ferrari, it is still used to get from point A to point B. Plus, you save a ton on car insurance with older cars.
Having a good realtor and property manager plays a big role if you want to invest in real estate. We found a phenomenal realtor who had over 30 years experience. Some people want their realtor to be energetic and working 24/7. Remember that older people with experience in a given field can be far superior.
For example, two of the rentals we purchased never even went on the market. Our realtor had a lot of connections with older sellers who were ready to cash out and give young investors a chance to get started. We will be forever grateful to that man, and his wife who was our property manager.
Not having children, or waiting until you’re older to have children can be a big factor. Children are a blessing, but can slow down the wealth accumulation process by several years. However, I have former students who became teen moms – one had two kids by 19 – yet they are on their way to financial success. It just takes a little longer with kids.
The only other things that matter are your moral code, and who do you trust enough to let into your inner circle? You can make a truckload of money and save and invest with the best of them, but if your morals and/or the people you trust (especially a spouse) are questionable – it can all be for nothing. Look at all those broke athletes and entertainers for examples.
Every millionaire interview says this because it’s true: marry well. If your spouse doesn’t have the discipline to become wealthy, you probably won’t become wealthy. Also, your day is always better if you marry your best friend.
Other than that, treat people well, negotiate your compensation, save 10% of your income for short-term goals, invest 10% for long-term goals, and invest in index funds. I’m sure other investments can work too (such as real estate). Also, be open minded about switching jobs or industries.
Having a large emergency fund gives you more confidence to negotiate your salary and take risks in your career. You don’t have to worry about how you’ll pay your mortgage if things don’t work out right away.
I don’t think it can be summed up any better or more simply than the title of this site: Earn, Save, and Invest!
Look for ways to grow your income (there are many paths), beware lifestyle inflation and how you are being marketed towards, and do your best to balance your investments to not take on extreme risks.
Follow the simple and plodding path to success that most ESI interviewees have already explained far better than I could.
Focus on the big things – affordable housing, reliable autos, staying out of credit card debt.
Automate savings, especially retirement savings.
Never leave a cent of matching contributions on the table – contribute at least enough to get all the match! And do that right now!
Follow a career path in something you’re passionate about. Consider sales as a path to turbocharge your earnings while also helping your customers become successful with your products or services.
- Focus on earning, saving, and investing, just like ESI says!
- Automate your savings and invest in the stock market.
- Set financial goals and stick to them.
- Don’t spend money to support a certain lifestyle; live below your means and save the rest.
- Save your bonuses and raises.
- Don’t take on unnecessary debt and if you do have debt, pay it off quickly and at zero interest if possible.
- Maintain a high credit score; it opens doors to favorable lending terms, better prices on insurance, etc.
- Invest in low-cost index funds and stay the course; don’t try to time the market.
- I am also focused on maintaining my health. I exercise, eat right (mostly), and have almost no health issues. Being healthy is key to being wealthy because no matter how much money you have, life is quite diminished if you don’t have good health.
Continue learning. Intellectual curiosity and satisfying that curiosity have always paid off for me.
Take risks in your career and don’t be afraid to step outside your comfort zone. And keep stepping outside your comfort zone because most people won’t. That’s how you will distinguish yourself and earn more money which, as I said, is a significant component of the ESI model.
You can only pinch so many pennies to reduce expenses and sometimes investing rates of returns won’t go your way. But increasing earnings potential depends upon only one thing — you!
Educate yourself. There’s lots of online content that can help you learn enough to make informed decisions on investments as well as tax loopholes.
Have a number. The napkin math I referred to earlier is a simple calculation that I never heard of until I was in my late 40s. You’re getting a concrete number FOR YOU versus hypothetical scenarios like can I retire with $X? The number might change but at least you know how you arrived there and what tweaks need to be made for you. Example you need $100K a year to live and plan on living till you’re 90 with a retirement age of 65. 90-65=25 years and 25*100K=2.5M.
Don’t boil the ocean. Don’t overwhelm yourself. Break things down into smaller manageable chunks. You’ll get things moving in the right direction and have small wins that will keep you motivated to continue on your journey.
If you’re like most people in the U.S. who have a salaried job, the biggest factor you have control over is your spending.
The challenge of spending often comes down to mindset more than strategy, and unfortunately changing a mindset is much more difficult than changing a strategy. Every loud voice in American culture is pushing you to be someone who wants to spend, and we usually try to be the person others want us to be.
If you truly wish to become wealthy, I know you can achieve this by becoming a person who wants that wealth more than the things money can buy. If you achieve that mindset, the path will become much easier than you imagine.
That said, I wouldn’t encourage you to hoard money at the expense of doing what you truly care about in life. Becoming rich in pocketbook and poor in spirit would not be a victory.
As I say above, align your spending with the things that bring you the greatest joy or fulfillment. Invest the rest after you’ve paid off any outstanding debts.
Also, avoid extreme sports or other activities that can result in significant injury. As you age, injuries can become a major drain on both your wealth and your ability to enjoy life. It may seem out of place to mention this, but it’s a concern that is wildly undervalued in the marketplace of ideas due to the fact that most people, myself included, prefer not to speak publicly about their own experiences with it.
- Always pay yourself first. Save money and invest for long term.
- Learn how to invest (stock, crypto, real estate…)
- Find something you really like to do and also can pay you.
- Be teachable. Most people are overly confident and think they know a lot. That prevents them from learning new ideas and seeking new opportunities.
Enjoy your life, and spend time with your friends.
Money doesn’t have to play a role in that. Invite them over for a potluck or go on a bike ride together. Think of the simple things we used to do as kids.
We don’t need to go to a fancy brunch or ostentatious dinner party to keep up with the Joneses. Life is nothing without good company, and having good people around affirms that you have enough and don’t need to compensate for it by buying material things or appearing wealthy on the outside.
There are no shortcuts in building wealth. Earn, save and invest. It’s simple but not easy.
Don’t wait to start saving even if you don’t make a lot. The power of compounding interest over time is truly incredible.
Play the long game. Much of my story revolves around “delayed gratification.” With the power of compounding, there’s so much more gratification if you are patient.
Keep an eye on who’s making money. If you’re hearing a radio advertisement for gold/silver/crypto/real estate/etc., know that the ad cost them money. They didn’t buy that radio spot to share their secret with you out of the goodness of their hearts.
Similarly, there are plenty of professions that make money from your “churn.” If you move to a new house every 5 years, there’s a line of people profiting: agents, title company, inspector, surveyor, movers, etc.
If you really like that new car smell every 3 years, there are lots of people making money off you as well. Be deliberate – pursue without apology what’s important to you, but constant change is expensive.
For me it’s been straight forward. Try to increase your earnings every year and save until it’s uncomfortable. Invest that saved money and continue to invest the returns.
Delay purchases where it makes sense. Always work to be learning something new. Find a niche and make yourself valuable.
If you decide to start a business, make sure that it’s something that can scale.
Study and try to integrate into your professional life the links on this page.
These contain powerful tactics and strategies to achieve wealth. Follow these as closely as possible.
- Don’t get caught up in the hype of too-good-to-be-true investments.
- Never underestimate the power of compounding. Why spend $100 on a restaurant meal every week when you could spend $10 for a nutritious home-cooked meal and invest the difference? It isn’t “just” $90. Compounded over 25 years, that $90 weekly savings would become over $200,000 at a 5% return.
- When you do make mistakes on the road to wealth – and they will happen – learn from them. Try not to repeat them.
Educate yourself about the tax code and know how to plan a tax strategy.
Consider your mental health, level of happiness, free time as an asset too, I’d add those to “wealth” definition.
Try to be able to live “small” if needed without feeling restrained, there are ways to spend less without feeling like you have to save all the time.
Examples from my experience – a seasonal job that you like will keep you busy, very basic options prevent from spending money on stuff you don’t need, and feeling tired physically is better than feeling empty emotionally.
When you tired physically a glass of beer or wine or just being able to sit or lay down comfortably feels like a luxury, but if you drained emotionally you go for luxury vacation, fancy clothes or expensive car.
As cliche as it sounds, “wealthy” is a mindset. If you’re cognizant of your financial inflows and outflows and manage these with intention, you’re already way ahead of most people!
Everyone is going to define an absolute net worth definition of wealthy differently. I personally believe it’s all relative.
Someone who has steady reliable income and is socking away even 10-20% and has a 3-6 month emergency fund is a whole lot wealthier than 90% of the population. Many people with very high incomes have very little real wealth outside of whatever equity they have in their primary residence.
Many of my former coworkers and friends were one layoff away from scrambling to make enormous mortgage and car payments.
My biggest piece of actionable advice would be to pay yourself first, no matter what. Figure out what your long term goals are, make sure you’re taking the right steps to get there, and enjoy the rest of the fruits of your labor.
As you make more money and find success, celebrate that but also use it as a tool to reach your goals faster instead of locking yourself into higher and higher consumption patterns. Learn what “enough” is, to you.
Invest in yourself first. To increase your earnings, it’s imperative to excel in your field. Continuously improve your skills by learning from books or others who excel in your industry.
Set specific objectives for where you want to go and what you hope to accomplish. Without clear goals, you’re essentially wandering aimlessly, risking the potential of remaining stagnant or ending up somewhere you never intended to be.
Live below your means and invest the difference. It’s very tempting to succumb to lifestyle inflation especially when witnessing extravagant spending on social media. However, those kinds of lifestyles may not be sustainable if you don’t prioritize financial prudence.
Start investing early; time is your friend when you are young. Consistently contribute to your savings and allocate those to an index fund. Tune out the distractions and ignore the market fluctuations.
Choose your life partner wisely. Seek someone who shares your values and has an equal or better financial mindset. Divorce can be expensive and set you back significantly for years.
Educate yourself first and foremost, but make sure you’re doing so from a reputable resource. I asked an older coworker about a retirement savings account once when I was younger (this was before the internet made everything so easy).
He explained it as the company taking some of your money from your paycheck and then giving it back to you when you’re old. He’s like you don’t want to do that, you want your money now.
I was like that’s right! Wrong!
There’s also a lot of “gurus” out there who will teach you to get rich quick, but really just drain you of money and time. With the internet out there and sites like ESI it’s easier than ever to get good advice and information.
Don’t fall for the get rich quick schemes, or the negativity of some people who are like the market’s gonna go to zero and we’ll be in a dystopian society soon. We can’t control the future, all we can do is plan for a better one.
Build wealth slowly, consistently, and don’t be afraid to be boring in your wealth building. If it takes you 30+ years to get there, you’re probably still ahead of 80+% of the population as I think less than 10% of the US population are millionaires.
Just keep earning, saving and investing. We are so fortunate to live in a time when many people with a good education and a lot of determination can chart a path to wealth. But it is a long-term commitment.
Write down your goal and the plan to get there, and when obstacles arise, re-read them, and re-commit.
I think of “wealthy” as more of a state of mind than a number in a ledger. Strive after “contentment” with an eternal perspective and I think you will be “wealthy”. For me, trusting in God and His providence has given me more wealth than any of my possessions.
The Bible (1 Timothy chapter 6) says:
But godliness with contentment is great gain, for we brought nothing into the world, and we cannot take anything out of the world. But if we have food and clothing, with these we will be content.
Know your “why” and what you want your money to do for you. Compared to 20 years ago there are so many free resources that you can literally become extremely knowledgeable with relative ease.
I’ve always learned things well by having 3 things or less to takeaway so my suggestions would be:
1. Own it: how you got somewhere is something you have to own good or bad. Don’t make yourself a victim or blame others for what happens.
Mistakes are not bad too if you were knowledgeable on the subject and took on an acceptable risk that you could live with. Use your experiences to make you stronger vs letting them be a reason you can’t move forward.
2. Build it: You get to decide how much of a shovel you want working for you and as well you get to decide how much of what you bring in you will save. You need to build to what you “want” though as earning a mountain of money and being miserable is not the way to achieving happiness in your life.
Some may be perfectly content with lower expenses and working longer while others go for a high income low career span. It’s yours to decide!
3. Direct it: Automate things where possible to force scarcity yourself to some extent. Meet your objectives by properly spending/giving/investing your inflows.
You do not need to be a genius or have paid for financial advisors to have a strategy that works for most people.
Maximize career earnings by creating opportunity to advance in your profession as described above.
Invest as early as possible in your life, ideally in your 20’s, aggressively in your 30’s. Forgo the big incremental purchases as your income increases, instead invest your earnings growth. Let it multiply, spend it later. Many will say “What’s the point in having money if you don’t enjoy it”. This is a tradeoff.
There is joy in not having stress about how I will get my kids through college, being able to retire at 49, etc.
Learn to delay gratification or instant equity to reach your goals. Educate yourself on financial issues and make goals with achievable steps.
It is ok to slowly accumulate wealth. Seek a mentor or financial advisor if you are not comfortable managing the minutiae of stock, real estate or other accounts.
Know where your next dollar will go. Have a detailed plan that you review often.
As your wealth grows, stay consistent and hungry. Always reflect on where you are and where you want to be.
Pursue your goals with focus and dedication. As you’re on the journey, don’t be afraid to celebrate your successes.
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Lots of good stuff, huh?
To read more on this series, check out part 17 here.
So good! The advice never gets old for me!