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…
Get out of debt. It’s really hard to not take on any debt when stating out – school, marriage, house, etc. But once you get out of debt, you will feel free as a bird.
Be a little weird. We have a few stranger habits to keep us grounded. I hate buying new cars, and when I do, we drive the wheels off of them. My current car is a 13 year old SUV I got for free when my dad passed away. Every year we do a No Spend Month, where the family radically cuts back in discretionary categories: no dining out, no movies or going out, no new clothes or things… We are never 100% compliant but it reminds us of our “wants” vs. our “needs”.
Start early, stay the course. I saved tiny amounts when I was young and felt like I could not spare it. This set a lifetime habit of building wealth.
Money is not about the stuff. For me it’s about securing the future and being able to be generous. My parents immigrated to the US and they were terrible with money. I promised myself I would be an extraordinary money manager, and I made it happen mostly though self-study.
I’ll start by saying that even now, I’m uncomfortable labeling ourselves as “wealthy”, although by any objective measure, we are.
We grew up with a Hollywood view of what wealth looks like: private jets, mansions, butlers, etc. We obviously don’t have any of that.
Even the idea of being a “millionaire” seemed exotic until it happened. So I think the first thing to do is to shed the classic notions of what wealth looks like, and to shed the mindset that wealth is unattainable. This is where a book like The Millionaire Next Door is helpful.
A quote I heard recently, and I can’t remember the source, is: “You can act wealthy, or you can be wealthy. Very few people can do both.” That resonated with me.
There’s a lot of great content on the mindset differences between wealthy and non-wealthy people on popular financial blogs, so I won’t try to repeat all that. Some of the key points I’ve internalized are:
- Think long-term. You need to have at least a rough vision for the life you want ten, twenty, thirty years from now. Do not expect to become wealthy quickly. Wealth favors the patient.
- Marry the right person. I’m very fortunate in this regard.
- Avoid a victim mentality. The world doesn’t owe you anything.
- Expect to become wealthy. Don’t view wealth as something that happens only to lottery winners, cheaters, or people with big inheritances. Create a plan and execute it.
- Be willing to be different. The average person is not wealthy. The behaviors that lead to wealth are also not average.
Finally, realize that wealth is not all about money, or even mostly about money. Other aspects of life – relationships, health, a meaningful vocation – matter more.
Read a lot, be curious. Put time into deliberate practice, be creative.
Learn how to learn, how to think, how to write, how to speak in public. Soft skills like critical thinking and emotional intelligence are becoming more valuable than technical skills.
Get so good that can’t ignore you. We live in a meritocratic world, and that’s a blessing.
If you want some technical advice: focus on what’s coming next, make some bets with your time if you’re in your 20s.
Next decade is the Machine Learning decade. If you’re picking a career right now, go for AI.
The following one will be the Life Science decade. If you’re teenager, go for it now.
Ah, last but not least: avoid debts. At any cost. I never had one, not even a mortgage for my apartment. I’m invisible to credit scoring companies 🙂
Time is your friend. If you start investing early, you can amass a large nest egg. Invest in growth mutual funds when you are young, and keep investing regularly, especially when the market is down.
Pardon my use of an aviation analogy, but put your investing on auto-pilot. If you invest for the future automatically, and don’t even see the money, you can spend the rest and enjoy your current life.
Another piece of advice . . . don’t buy new cars.
Choose your spouse wisely. Marrying someone who isn’t frugal, demands a lot of your time and attention, or has lots of insecurities about your relationship makes it incredibly difficult to accumulate wealth.
Once you’ve figured that out, I personally believe the best path to wealth is to consistently earn more money, save the increase, and invest it wisely.
The philosophy of most of the blogs I read in the financial independence arena tend to place much more weight on saving by cutting expenses than anything else. In my opinion, this is misguided.
There are very dwindling rates of return on your time focused on cutting your spending down to the bare bones. If you’re focused instead on how to grow your earnings, there’s an endless amount of money that you can make.
All three components are important, but of the three, earning gets emphasized the least. And the fact that ESI emphasizes all three components is one of the reasons I’m a big fan of the site, so keep reading ESI Money. 🙂
Make a plan! The most powerful first step anyone can take is to create a plan.
State your purpose up front – why do you want to become financially independent? Then make a commitment to saving as much as you can and learn to live off of whatever is left over. Slow and steady wins the race.
The single most epic piece of advice here is to own your own company. There are so many advantages such as leverage and taxes, too many to list here.
How you accomplish this is the hard part.
I think it’s important to manage the money that you already have/make and to try to increase your income, unless you’re already in a high paying field.
Saving money and living within your means is great, but increasing your income will usually have a bigger impact and allow you to grow your net worth faster.
On the other hand, it doesn’t matter how much you make if you don’t manage it well. Both aspects are important.
My wife and I learned to live within our means when we had average to below-average incomes. We budgeted, tracked our expenses, avoided debt, and saved what we could. Then, after our income increased we very slowly increased our standard of living and saved the majority of what we made. When the income has been good we’ve taken advantage of the opportunity to save.
So my advice is to live within your means, and then work to increase your income.
If increasing income at your job isn’t an option, or isn’t something that you want to do long term, I think starting your own business is a great option.
Side hustles can be a great way to save, and in my case it turned into a full-time business. There are a lot of ways to make money with side hustles, so no matter what your interests are and no matter what experience you have, there’s always something out there.
The other big thing is to start saving as soon as possible. The younger you are when you start saving, the better off you’ll be later.
As a couple, we are lucky that we are geared the same way when it comes to finances. We both avoid debt and keep spending under control while not feeling like we’re misers.
That’s probably the biggest component in allowing us to save and invest on a regular basis without friction.
The critical foundation is saving.
Yes, investing and earning are important; these are more of an output or result of saving.
After all, if no savings occur or do not exist, then investing cannot occur and (future) earnings are more difficult.
To expand on this and take a slightly different path now, I believe “wealth” is more than money; time / free will contributes to “wealth,” and living a life and feeling fulfilled are (arguably) important than cash.
For example, all my jobs have been and are stressful and time consuming. However, in all cases, I was always present in our lives; I allotted or gave time for things that mattered to our family.
I volunteered in my kids’ schools; I went to just about every school performance (yes, even during the work-day). I went on vacations even though there were “deadlines”, or I did not “have sufficient banked vacation time.”
From a job perspective, I completed my responsibilities and kept projects moving forward, but I did not volunteer for additional responsibilities. I wanted the time for my family, not the job.
Specifically along these lines, after our second child was born, some issues came up, and my wife needed me. I left meetings / took the time to help her and be with her – no matter what was happening at work.
Yes, my bosses questioned my commitment and being a “team” player. Yes, they threatened to fire me or place me on a PIP.
Each time, I invited the opportunity, but they never followed through. These were all empty threats. The work was completed and no delays occurred. This is how I learned early what the “real” work world was like.
In these cases, I delivered whatever my boss / the project needed. I fulfilled my promises, but I did it on my time and terms.
I did not volunteer for the “extras” – knowing that I would not advance up the org chart. However, I worked with people that did volunteer extra time, lost vacation time, got sick, and at one job, actually died from a heart attack.
Mostly, these people also did not advance up the org chart, and in one case, an entire family’s life was destroyed. Interesting.
I have never had second thought or regretted how I did things. I am proud of my work accomplishments, but these accomplishments do not define me.
What defines me and what are my clearest (and dearest) memories?
Seeing my kid’s face light up when they saw me at a performance or seeing the relief in my wife’s face whenever she needs or needed help.
Even now, I still go to most of events for our kids. My kids do not overtly hug me (as previously) or do not acknowledge me (they are teen-ager / near teen-ager after all), but I do see their faces. The expressions show appreciation.
These are the things that really matter to me. Our memories are what matter to me.
When I die, I may be the person who thinks maybe I should have spent more time at the office, but I doubt it.
- Live below your means — We did not live like millionaires. We but modest clothes, our home is not furnished with high end furnishes. We don’t have expensive tastes. I fix a lot of stuff around the house and try to be self-sufficient unless it absolutely requires a professional.
- Education – This is very important in our minds that really propelled the wealth. Being educated about everything from – what you eat, where the food comes from, where you invest and why, generally about life is also important. We are misinformed so much and make so many wrong choices that I am not sure how one can survive without good education.
- Hard work – no cliché, goes for everything one does in their life
- Save – Need I say more? How can one accumulate any net worth without this important component? I mean every penny should matter.
- Learn a lot about investing – Again education. Never depend on someone else to tell you about your money and future.
- Don’t depend on financial planners — If you have to, fee only (never % of investment). Still learn on your own and do the homework.
- Patience – It takes time and no short cuts.
- No debt – This is very important. Pay off credit cards every month and don’t pay interest. If you have to buy cars as an example, look for great low interest avenues such as credit unions instead of high rates. Pay off you home as soon as you can. People say that you lose mortgage & interest tax deductions, you could earn better in the market, etc. I have done the math many ways and I truly believe that one should pay off the house as fast as you can.
It may be cliché but like everyone says, start early and stay steady.
Always, always maximize your contributions to 401Ks to at least get the full company match if available.
If you are fortunate enough to have access to a company stock option plan find a way to fund it to the max! One of the companies I worked for had a great program that allowed you to purchase stock at 15% below the stock price and the beginning of a purchase period or at the end- whichever was lower. It was a guaranteed 15% gain if you sold the stock immediately. Some people didn’t take advantage of that.
If I were to do things all over again I’d take all my savings (or most of it) and invest it all in Vanguard index funds — mostly S&P. Most funds over time won’t match the performance of these funds.
Sadly I still have some funds that aren’t in Vanguard yet (not available in company portfolio).
Get smart with investing. It’s not hard to figure out returns of funds over periods of time- don’t keep putting money in bad investments.
A little extra…bonus material maybe:
I’m fairly handy so I’m somewhat disappointed that I never invested in real estate. I was always too concerned about dealing with tenants. I wish I had ventured into that area, as I truly believe it’s a great source of major potential income.
I know so many people that have done really well in real estate. Many bought a 2 family as their first house and lived in one apartment and rented the other for a while — until they were able to buy something else and have two rental incomes and so on.
I also wish I ventured more into doing more of my own home repairs early in life. Saving thousands of dollars doing things yourself allows more money for saving…and buying cool tools.
I’m doing more as I get older and braver but aches and pains deter me from doing some of the bigger jobs.
Life is a delicate balance. I would NEVER want to spend the best years of my life working my butt off and saving every possible penny only to retire in poor health. I also wouldn’t want to spend everything I’ve earned only to have nothing in retirement.
I want to live life as it comes and hopefully enjoy many years as I get older with my family and hopefully grandkids some day. What would my life have been if all I did was work my fingers to the bone amassing millions only to potentially die shortly after I retire? Or earlier. Every day above ground is a blessing- got to enjoy it!
I’ve read most of the millionaire interviews and it’s clear that many people have done well by saving at the ‘expense’ of what I’d consider living a very controlled and managed lifestyle.
Others have made incredible money and lived somewhat beyond their means expecting that income to keep coming in.
I’m probably somewhere in the middle. There are some expenses that I’ve always allowed my family — they could always buy any books they wanted (wish they got more from library though), we never skimped or budgeted for good food and the kids got plenty of opportunities to travel, study abroad, live at college, etc. If I wanted to stop to get a coffee I would do so without thought.
On the other hand one of my biggest pet peeves is wasting food in the refrigerator! Waste makes me insane.
Most of the time I’m happier going to a family owned pizza joint for a good dinner rather than spending hundreds on a fancy dinner. But I do splurge on occasion.
I wish there was one recipe that fits everyone but there is not. I know some millionaires drive old beat up cars and think others are foolish to buy expensive cars. If that is what they are willing to give up that is great — but that’s not me. I don’t drive $100,000 cars but I buy new every 6-7 years or so.
On the other hand I don’t have a desire to live in a 15-room mansion — my 2500 square foot house suits me fine…although my wife might think otherwise.
I guess each individual has to determine his/her own goals in life. Sometimes you need to come to grips with reality and make some trade offs — sometimes not.
Wealth is akin to freedom and flexibility to me…but wealth without health is nothing.
I know this blog is mostly about money but money is just ONE piece of the equation. Along your path of accumulating money don’t forget to take care of yourself.
All those crappy meals during busy days without getting enough exercise will compound just like your money — but in the wrong way!
You don’t want to be that older couple with lots of money but can’t travel with your kids/grandkids. Ok…off my soap box now.
The biggest thing for us is to know what you value in life.
You can spend years buying the biggest house, the nicest cars and the latest electronics. But all this could mean nothing to you and you don’t realize it.
Once I understood what I valued, it was easy to stop wasteful spending because I knew the item wouldn’t bring me any long-term happiness.
I freely spend money on things that I do value and enjoy every single day. And by cutting out this wasted spending, it allows us to save a lot of money without much effort.
Mind your marriage and family.
Maintain your health, both physical and emotional. Health = wealth.
Remain steadfast to a higher code of conduct whether you learned it through your faith, your family, the military and build on it.
Work as hard as you can (especially when you’re young) even if you don’t feel appreciated. Someone will notice.
Read and learn without ceasing your entire life. The internet is a treasure trove of information. No need to pay a financial adviser – with enough self-education you can know much more than they do.
Do not follow the crowd but develop your own informed conclusions and decisions. When the crowd’s in panic, buy quality stocks/funds. When the crowd’s unrealistically euphoric, take a step back and take profits.
Choose your friends wisely and welcome constructive criticism.
Do not let your stubbornness or political bias prevent you from learning what to do (and what not to do) from somebody else.
Avoid falling into the trap of criticizing someone who is more accomplished than you. They found a way to make it and at some point they were where you are. They likely did not receive “special treatment”.
Let the little things go. Do not burn bridges. Do not hold grudges. If you do this with others you will do it with your loved ones, and one day your kids will become their parents.
Know your strengths and weaknesses. Know what you do not know and ask someone with expertise for help.
Do not let any addictions control your life and do not worship the false god of money. It’s just a tool.
For those who are younger, make sure the possessions you want are truly what you want and realize your wants and needs will most certainly change over time. This helps to minimize costly mistakes.
Be yourself and not what society wants you to be. Self-confidence invites focus which in turn invites wealth.
We all have these unforeseen challenges in life that can cause emotional and financial bankruptcies, I just kept trying with my very best every day.
Slowly things got better and kept getting better and easier.
I think what happened to me, made me stronger and more determined to achieve.
I am grateful that I had the time to recover and I know in my heart, I have help from “ABOVE”.
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Lots of good stuff, huh?
To read more on this series, check out part 7 here.
I love the more personal development suggestions. Don’t hold grudges or burn bridges, great advice but hard to implement in a world where people hide behind screens and are afraid to have deep, hard conversations. It’s true that your network matters, and I hope people recognize the idea of paying it forward as they meet new people in life.
Like it all but the following speaks a lot at the moment, “Money is not about the stuff. For me it’s about securing the future and being able to be generous.”