It is a fact. The majority of millionaires live below their means, and make it a habit to systematically put their money into places where it will grow.
In this post I’m going to further elaborate on the three primary categories of investments that wealthy people put their money into. Learn what these are, and where you should be investing to live a millionaire lifestyle should you want to.
Use Other People’s Money
To the average person, the old saw that “it takes money to make money” might sound like a tired cliche used to justify irrational spending. For the wealthy, however, it’s a golden rule. The key is leveraging other people’s money to increase your own wealth.
“Trading time for dollars is a loser’s game, especially as technology destroys many jobs that don’t require a highly skilled human being,” Wilson said. “Using money from banks or investors and hiring people to work for you is a time-tested formula for building wealth — not to mention the tax laws, which heavily favor businesses.”
Whether you’re fundraising to start a business or flipping real estate for a profit, relying on other people’s money to do the heavy lifting greatly increases the return. Of course, it’s also riskier than relying on your own funds. But as legendary investor Warren Buffett once put it: “Risk comes from not knowing what you’re doing.”
Have a Saving Strategy
Everyone knows that saving money is an essential part of being rich, but saving is sometimes easier said than done. While the average person might put aside money here and there, wealthy people decide on a fixed amount they will save from every paycheck and put it directly into a savings account.
“Take a percentage of what you earn, no matter how little you earn or how much you earn,” Tony Robbins, a life and business strategist and author of the book “Unshakeable: Your Financial Freedom Playbook,” said in an interview with GOBankingRates. “A percentage has to be set aside that you’re going to keep for you and your family … When you get a 15% (to) 20% savings rate and you put it in a place where it’s compounding, you’re going to be financially free.”
Change Your Thinking
Grant Cardone, an international sales expert, best-selling author and radio show host of The Cardone Zone, said in an Entrepreneur article that “there’s no shortage of money on planet Earth, only a shortage of people who think correctly about it. To become a millionaire, you must end the poverty thinking.”
In addition to banishing fears of scarcity, you have to truly believe you’ll be rich to get rich, Cardone said. “I went from nothing — no money, just ideas and a lot of hard work — to create a net worth that probably cannot be destroyed in my lifetime. The first step was making a decision and setting a target. Every day for years, I wrote down this statement: ‘I am worth over $100 million!’”
Set a goal and focus your thinking on believing that you can achieve it.
Invest In Yourself
Successful people know that it’s worth investing time, money and energy to improve yourself. This can entail reading a self-improvement book, taking a class or learning new skills.
“I invested in sales training when I was 25,” Cardone wrote in a column for CNBC. “That made my income-producing ability skyrocket. Investing in yourself is the best investment you can make.”
Only Take a Job if There’s Potential for Growth
Even if you are not earning a large salary right away, it’s important to be at a company where you can climb the ladder.
“The rich are able to get in with the right company where there is opportunity for growth,” Cardone wrote in CNBC column. “My VP of sales Jarrod Glandt started working for me over seven years ago for $2,500 a month. He wasn’t making anything but he was in the right vehicle. He grew his skillset and was able to multiply his monthly income many times over because he knew I was looking to expand.”
Don’t Pay With Credit Cards
If you want to be wealthy, it’s important to never live above your means. One way to ensure that is to only spend money you actually have, rather than charging purchases on a credit card and getting stuck in a cycle of high interest payments.
“Cut up your credit cards,” billionaire and “Shark Tank” star Mark Cuban wrote in a personal blog post. “If you use a credit card, you don’t want to be rich…Cash is king for those wanting to get rich.”
Buck Trends
When it comes to your investment strategy, don’t be afraid to go against the grain.
Warren Buffet amassed his wealth by investing in companies that he saw potential in — even if they had been overlooked by others. “I will tell you the secret of getting rich on Wall Street. Close the doors,” he said in the book “Buffett: The Making of an American Capitalist.” “You try to be greedy when others are fearful, and you try to be very fearful when others are greedy.”
Millionaire work-life balance is a challenge but often improves with time
As you might imagine, most organizations do not pay $250k per year to people who work 30 hours a week.
Most millionaires are a stereotypical lot with long work hours that eat into family and free time.
Here’s an example from millionaire #61:
As a working mother, married to a working father (he’s a mechanical engineer) work-life balance has always been a challenge.
Five years into my 20 years of private practice, I had a 7 year old and 1 year old, so I changed the office to half day off each Friday. My staff and I all enjoyed having a better quality of life, and as a result we are all very happy.
Now I work 3.5 days, and because of our traffic problems in the area (going 4 miles to work can take an hour) I go in at 7am and stay until 2:30p.m. Getting home early allows me to be there for my teenager as we no longer have outside family support like we did when we were younger. I no longer accept as many networking or professional engagements outside of my office hours, so my husband, daughter and I enjoy dinner together each night. Additionally, we all work out each weekday evening at the YMCA, and enjoy our family time.
We are jealous of our weekends, and other than our daughter’s music performances, we go to the cabin to escape the rat race of Silicon Valley. This allows us to enjoy our time together as we hike, go to the beach and cook together.
It’s typical to see millionaires with significant work commitments early in their careers. They then make adjustments along the way to get more balance when life changes (usually kids). And ultimately they apply even more/better changes as they reach economic security.
Consider this:
1. Many millionaires will not purchase anything new. They get their clothes second hand, buy used cars, and shop eBay and craig’s list. With the Internet in our hand, we have access to all information.
2. There are two parts to becoming wealthy: Earn it and don’t spend it.
3. There is never an excuse to charge purchases that you do not have the money in the bank to pay for. And if you charge as a convenience then go right home and pay the credit card bill on your smart device.
4. Small amounts do matter. Don’t use name brand products, unless they really are a much better value. Shop at discount stores, and if you have to borrow money, every 1 percent counts. Work to get the lowest rates and constantly reassess.
5. Having stuff really has little meaning past the initial high.
6. Keep your ego in check. An ego out of control can cause you to lose more than money. You will lose your respect.
7. Think about all the ways money leaks from our pockets: trips in a car, junk food, use of electricity, dressing up our homes, having pets, car obsessions, collections, purchasing books, instead of using a library, amusements like cell phones, computer games, eating out, movies, and bad habits like drinking alcohol, smoking, and gambling.
8. Think of this: For every penny you keep, you are closer to your million. But more importantly, you are developing the lifestyle, the thinking, and the actions that will sustain that million when you earn it.
Conclusion
Rich people do odd things that the average American wouldn’t dream of doing. Rich people don’t think like most of us and I am going to reveal to you the secret world of what the rich do and why they do it. By changing your thinking and following their habits, you can get rich yourself.