Discover The Millionaire Next Door

Discover The Millionaire Next Door

When it comes to wealth some of the biggest misconceptions are that rich people live in big houses, rich people drive fancy cars, rich people take expensive vacations and rich people buy all the best things. In many cases this could not be further from the truth. The fact is that some interesting studies have been done on this topic and point to the exact opposite of the usual assumptions. In the best selling book "the millionaire next door" authors Thomas Stanley and William Danko detail some interesting studies and research they did in preparation for their book.
One of the major points The Millionaire Next Door carrys home is that millionaires do not get rich by spending their money on frivelous purchases. Millionaires get there firstly by consistently saving and then wisely reinvesting 10% to 20% of their income and secondly by absolutely minimizing expenses and staying out of debt. Debt is one of the biggest killers to the promise of financial success, a wise man once said "he that goes a borrowin goes a sorrowin". The fact is that average middle class Americans and Canadians are living beyond their means spending more money than they have and at the end of the day saving little if anything. I know this probably isnt anything new to you, you have probably heard people tell you the same thing many times throughout your life. You need to be reminded!
In our ultra materialistic consumer society its usually the people buying things that get all the attention. The people buying big houses, nice cars or anything else that costs money. Remember there is no such thing as "having more money than you can spend". Certainly there are ultra rich people, people making tens or even hundreds of millions of dollars per year, but even many of these people had to be frugal at one point or another in their lives.
In the United States 80% of all the millionaires are first generation, that means they became millionaires under their own steam. Although almost all of these self made millionaires can be found to be extremely proficient with saving and investing (they couldnt get rich otherwise). They are also generally very enterprising, able to target and exploit income or business opportunities efficiently and effectively. To put it succinctly; self made millionaires are very good at managing their money for maximum return and they are very good at managing their time for maximum results. The simple formula: Work Smart -> Save -> Invest.
Reading the millionaire next door I was suprised to learn that one out of every fifteen households in the USA are millionaire households and the other 14 are no where near that level. Whats even more fascinating is that in the authors research for their book they discovered that many of the people living in rich neighbourhoods are actually not so rich. Mortgaged to the max and debt coming out their ears, they choose fleeting material posessions and flash over security. Conversly as I learned in Millionaire Next Door, many of the richest people in North America live in modest homes, drive volvos or focuses and wear jeans. Smart, simple and cautious.
To be successful you need to be forward thinking and you need to be patient. Dont take the attitude of "whats the point in having it if I cant spend it"- be wiser. Despite all the apparent uncertainty in the world today: war, disease, famine, terrorism, the lesson to be learned is that we as a society move forward, the world will still be here tomorrow. Realize and take seriously the fact that you will very likely live well into your golden years and that 95% of retirees retire into poverty. The direction that things are going economically in western countries there may not be very much social security by the time someone in there 20s today reaches retirement age. In the twenty first century and beyond the government will not be the one to take care of you only 'you' can take care of you.
Realize these facts and make the decision to put security and freedom 'tomorrow' ahead of luxury and pleasure 'today'. I can guarantee you will be far more miserable with the later. Remember: work smart and hard, save 10% to 20% of your income, avoid debt and invest your money for tomorrow. If you follow this simple strategy on even a modest level of income you will be rich in 30 or 40 years, just ask any banker.