How Millionaires Think – What separates successful millionaires from you? Is it a certain mentality or a way of looking at the world? And if it’s the latter, can they share their perspective? Thanks to selfmade millionaire David Bach, we can. In this article, I discuss how millionaires think differently and provide an overview of some of his best ideas for becoming rich. This article will show you how to think like a millionaire , and shape your thinking for wealth.
Most millionaires are not overnight successes. They earn their fortunes through little-known secrets, hard work, and an eye for opportunity. Many of them even come from middleclass or blue-collar backgrounds; but they all had one thing in common: how they thought about money, saving money, spending money, and doing whatever it took to achieve the financial freedom they desired.
Millionaires think long term
Wealthy people don’t only think about the present. They also consider the potential of the future. That means setting goals that might span years or decades, not just weeks or months. According to Smith, the longer you can stretch your thinking into the future, the richer you will become.
That’s because long-term goals force you to grapple with big-picture questions such as, “How can I double my income this year?” instead of short-term issues, such as, “How am I going to pay my bills this month?”
Smith finds that millionaires are willing to put temporary comfort on hold to seek out long-term financial freedom. And that mindset speaks to an important trait many millionaires share: patience.
“Middle-class people want instant gratification,” Smith writes. “I was like that for many years. Whatever I wanted, I charged to my credit card or put a little bit down and made payments on the balance. Now I wait for the things I want because my goal is more freedom, not comfort.
“Rich and very rich people have developed the discipline of delayed gratification.”
Millionaires never stop learning
Walk into any millionaire’s home and you’re likely to find an abundance of books, if not an entire library, Smith observes. That’s because millionaires know that learning doesn’t stop when you finish school.
“Success is a process,” Smith says. “If a percentage of your income isn’t going toward a financial education, you will stay trapped in the middle class. The more money you spend on financial knowledge, the more money you will make.”
The cheapest and easiest way to start investing in your financial education is through books. “Are you aware that you can learn a concept in only a few hours from a book that took someone years to develop?” Smith writes.
“I feel like some of the $20 books I have read were worth $20,000 because of what I learned from them,” he adds.
Looks Are Not Always What They Seem
Remember that being wealthy doesn’t mean looking wealthy. One of the most surprising findings of Thomas Stanley and William Danko, authors of the bestselling book Millionaire Next Door, is that our mental image of a millionaire (looking something like the monocle- and top hat-wearing millionaire on the Monopoly board) is completely wrong.
In point of fact, millionaires are much more likely to be frugal, follow a budget, and live within their means than they are to fill a swimming pool with $100 bills. Most American millionaires drive practical used cars, live in modest homes, and avoid wasting money on status symbols. What many non-millionaires get wrong is the feeling that you must ostentatiously spend money in order to prove your worth—whether it’s your net worth or your emotional worth.
I can remember a meeting I had with a retired couple that I was trying to bring on as clients. They lived in a modest home, drove Lincolns, and were very humble in their ways. The wife was a retired school teacher, while the husband spent most of his days in a tire factory. The amazing trait they shared was that they both like to save and save they did.
Prior to meeting me they had no idea what their net worth was. After completing a financial plan for them, they were shocked to learn they were in fact millionaires.
If you have trouble separating the idea of wealth from the trappings of wealth, take the time to think about why the high cost status symbols are important to you. Who are you trying to impress with your new car or expensive watch? Wouldn’t you prefer to have the money in the bank rather than a new Jaguar and an empty account?
Learn to Embrace Risk.
Many years ago, a woman I know named Helen took out a personal loan to start her own business. Her mother was angry at her for taking such a risk, when Helen could safely collect a paycheck every week for the rest of her life by working behind the cosmetics counter at Macy’s.
Today, Helen is a multi-millionaire.
Helen and her mother really embody the difference between rich thinking and scarcity thinking. Yes, working at the department store was the safe option, but Helen not only wanted more wealth than what she would ever earn as a Macy’s employee, she also wanted to do more with her life. By starting her own business, she took a risk—one that not only paid off, but it helped her to create meaning as well as wealth.
It’s tough to let go of the fear of what could go wrong. Keith Cameron Smith, author of The Spiritual Millionaire suggests you ask yourself three questions in order to overcome the fear of risk:
“What’s the best that could happen? What’s the worst that could happen? And what’s most likely to happen? If you ask those questions when an opportunity arises, the answers can give you some insight. If the most likely thing to happen will get you closer to your goals and if the worst thing that could happen does happen and you’re OK with that, you’re willing to live with it or go through it, then you go for it and you take action.”
This was a similar fear that I had to face when I started my own financial planning practice. I had no reason to go out on my own. My clients were happy. I was still independent and could run this blog although with great restriction. Even though I knew I would be giving up a significant amount of income ($36,000 per year to be exact), it was a risk that I knew was necessary if I wanted to achieve the growth I knew was possible.
Living with scarcity thinking means you feel any risk is too high, which means you will never get to a point where you are building wealth for yourself.
Focus On What You Want – And Take It!
So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.
Millionaires play to win, not to avoid defeat.
This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!
Don’t Spend Your Money – Invest It
The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.
Stop working for your money and make your money work for you.
Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.
There’s not just the stock market — there’s also property, and your own education.
Think Big
While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.
There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.
Aim for the stars, if you fail you’ll still be over the moon.
Conclusion
There is a difference in mindset between rich and poor people. That’s not to say that all poor people are the same and that there aren’t any rich or successful people who grew up poor; however, the vast majority (90%+) do tend to think and behave differently.
You get what you think about. Whether it’s positive or negative, what you focus your attention on, your money will go there too. It may sound cliché, but it is true. What you think about is not just some “woo woo” self help idea. It’s backed by science.