Money 104: How To Have The Mind Of A Millionaire

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Money 103: Setting Goals & Budgeting

The perceived demographic of a typical millionaire is entirely false

Late 20’s to mid 30’s without children

  • If any children, the adult children are heavily dependent on parental support

Makes a very high income from a professional trade or art

Works 60+ hours a week or less than 30

Later-generation affluent, usually as an heir

Drives the newest cars and has many expensive hobbies

Statistically, most millionaires fit a specific profile

In late 50’s and married with three children

  • Adult children are economically self-sufficient

Self-employed in a practical business that supplies needs for people

  • Typically not retired
  • Works 45-55 hours a week
  • Skillful at targeting opportunities in a market
  • Adequately well-educated, usually with a college degree
  • First-generation affluent
  • Allocates time, energy and money efficiently in ways that are effective in building wealth

Has a high net worth, but acquired slowly over time

  • Invests about 20% of income
  • Median household income of $131,000
  • Average net worth of 3.7 million
  • Owns a home worth approximately $350,000

Lives well below their means

  • Buys older-model automobiles rather than leases
  • Attended public schools, but likely to send children to private school
  • Still clips coupons and looks for discounts
  • Lives in a way that doesn’t show their wealth

Anyone with the determination to change can become a millionaire

Be focused

In some ways, the amount of money you have is a direct measurement of how much value you have added to others’ lives

There is a direct tie between being passionate and being financially successful

  • This passion will show itself in lifestyle choices
  • More on success later

If you have a burning desire to accomplish, you need to make significant sacrifices

Your sacrifices must be decisive and intentional

  • Without making it a priority, it won’t happen in your consuming or in investing
  • Say “no” to your present self and “yes” to your future self
  • Stick to your standards or the planning and budgeting is a waste of time
  • Never skip budgeting and never dismiss the numbers you’ve set for yourself

Be optimistic

“Get rich quick” is entirely possible, but is very difficult

You have to believe that you can attain your goals and that things will work out in the end

You must be optimistic and charming to keep essential people in your life who can help attain your financial goals

You must see the long-term gain as worth the short-term pain

Prayer does work, and God does listen

  • Sales and windfalls can happen miraculously
  • Miracles can also come in the form of improbable circumstances that avert catastrophes and hardships

Be realistic

Stay honest with yourself about your fears and beliefs about money

  • You and only you are the means to acquire your wealth

Avoid overconfidence about vague financial plans or big unresearched decisions

If your health deteriorates as a result of your money habits, you won’t enjoy the effects of your frugal lifestyle

Small numbers don’t make millionaires, especially when saving pennies can sabotage opportunities

Be tenacious

Learn to hate debt, hate instant gratification, love saving money, love investing, and love to give money away

Wealth isn’t an event; it is a process

  • Building wealth is a marathon, not a sprint
  • It takes persistence to attain high financial goals

Spend less time dreaming about the future and more time working towards it

Proper money management can only come from confidence and fearlessness about your decisions

To acquire wealth, you must go on the offensive and not be strictly defensive about risks

Fight against materialism

Materialism is a lousy measurement of success

The more content and happy you are, the easier it is to save money

  • Gratitude is scientifically linked to better spending habits
  • Happiness is a choice, not a financial decision

Become a producer instead of merely a consumer

Learn to live below your means and how to be frugal

  • Avoid “small purchases” or things you feel you “deserve”
  • Look at a small recurring expense based on how it will play out in 10 or 20 years instead of moment-by-moment
  • If you have to think about whether you can afford it, you can’t

Your frugality should work to expand your means by investing into something that is certain to profit

  • When handled correctly, money yields money

Be prepared for high-risk investing

  • Only the rich use interest returns for income and more investing
  • Everyone else has to use their built-up capital to attain wealth

Fight against peer pressure

Stop following “conventional” wisdom about wealth

  • Conventional people aren’t wealthy, meaning their wealth tips are worthless

It’s easy to get distracted by your friends’ or family’s lifestyles, especially when it’s a fun distraction

You can’t compare your lifestyle to anyone else’s, but it’s easy to think it can

You need to be committed to your goals, regardless of what others think

  • It’s easy to be overwhelmed if you care deeply about appearances
  • Have pre-planned responses to what others will say when they see your lifestyle
  • Your family and friends may make fun of you for your drastic lifestyle changes

Be flexible

If you aren’t open-minded, you’ll miss out on many opportunities

Change from being a consumer to being a producer

Stay constantly vigilant for new ways to learn and apply what you’ve learned

Be disciplined

Maintain your habits until they become automatic impulses

Live by guidelines instead of by rigid rules, since you are still human

Work hard in both your career and spending habits

  • Net worth is the measurement of wealth, and high income isn’t high net worth
  • Many doctors and attorneys live paycheck-to-paycheck from bad spending habits

Avoid the cyclical trap of serving your lifestyle

  1. An active job creates income
  2. That income inspires a lifestyle
  3. The lifestyle creates financial obligations
  4. The obligations make working necessary
  5. Get a higher-paying job and repeat

Managing money is managing life, and therefore investing in your personal development is one of the best investments you can make

  • If you’re reading this, you’re investing time into your development, so you’re already on the right path
Next: Money 201: Wise Spending Concepts