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[The following is a partial transcript of this episode of The Scott Alan Turner Show. Listen to the full episode to hear this story, listener questions, money hacks, and inspiring stories of people that are changing their financial lives. Subscribe to the free podcast on iTunes or Google Play]
What does it take to be The Next Millionaire Next Door? Is it you? Maybe it is already – we have tons of millionaire listeners, you guys have done amazing!
What’s the path to get there? Ask a bunch of millionaires, and you’ll find some things in common. If you’re there already, you’ll hear these and think ‘yup, I did that.’ If you’re not, then you are like I am right now trying to learn how to braid my 5-year old daughters hair. I have no clue and her hair this morning was a disaster. But I’m going to keep trying until she looks like a character on Game of Thrones. Keep listening, keep reading, keep trying, you’ll get there.
I was at the library this weekend with my kids. Along with Splat the Cat and Fancy Nancy in the new book section was a book on millionaires.
Twenty years ago Dr. Thomas Stanley blew up our thinking on millionaires and wealth with his best seller The Millionaire Next Door. He’s studied millionaires for nearly twenty years.
His daughter, Dr. Sarah Stanley just published The Next Millionaire Next Door – Enduring Strategies for Building Wealth. It’s the book I found at the library that I’ve been reading.
What I love about books like this, maybe it’s because when I wrote 99 Minute Millionaire I did the same thing, is you can’t argue facts. But what’s more important, is those facts will inspire hope.
The path to building wealth requires thinking differently about life and money, as illustrated for example by those in the FI/RE community.
- It requires discipline and hard work.
- It requires knowing one’s own strengths and weaknesses, environment, and markets.
- It takes great skill in allocating resources – financial, emotional, cognitive, and time
For many this means being frugal while building wealth, not being susceptible to fads, and not buying into myths about how to ‘act rich’.
I don’t know how late you watched the Super Bowl, but when they were walking up the Lombari Trophy from the field to the platform, the first guy to walk with the trophy – Vince Wilfork – had a Versace shirt on. In big letters across the front it said Versace. Probably a $500 t-shirt, but Vince has a net worth of over $25 million. That shirt is like buying a happy meal to him.
Most people wearing Versace shirts want to be seen. I make no moral judgements, some of those Versace shirts are wicked cool looking. My shirt of choice when I was a money moron was Tommy Hilfiger.
But they have no money, and haven’t learned what most of us have – the hard way – people can’t spend their way into wealth.
But you can save your way to wealth, and becoming a millionaire. The studies prove it.
The average age is of a millionaire is 61. Wow! It can take a long time to save a million dollars, right? Yes. But if someone doesn’t start they won’t. And if they do start there is a 100% chance they will have more money than someone who doesn’t, right? People can’t have lots of money unless they save lots of money. It takes some people ten years, it takes others forty years. It takes as long as it takes and there are many different ways to speed up the process.
The good news is you’re going to help drag down that average age of 61 over the next decade because you have resources, motivation, and hope that wasn’t so readily available 20 years ago.
What else about millionaires:
- They ‘value their family’s economic success and financial freedom over the consumption of goods.’
- Here’s some of what the average millionaire looks like. Think about these as I read them:
- We are frugal and we budget. 70% know what they spend one food, clothing, and housing each year.
- The most spent on a pair of jeans is $50.
- We drive Toyotas, Hondas, and Fords that are at least three years old. The most recent car was $35,000
- Only 10% received an inheritance or money from relatives.
- We are confident investors. 70% say they know more about investing than the average bird.
We have a choice in our lifestyles and whether or not we pursue economic independence. We can either play the part of mimicking those around us (and be easy targets for marketers and salespeople), or we can pursue our economic freedom quietly.
What does being financially independent – not being beholden to debt repayments, and employer, or a paycheck – allow you to do? It grants you freedom.
You are free to solve problems the way you see fit
Free to volunteer or spend time with family
free to take a job that perhaps pays less but gives you more satisfaction
free to create your own economic opportunities
Add to this list: free to leave behind the cubicle and regular paycheck at age 35 or 40, as many in the FI/RE community discuss in their stories of economic freedom.
What do you guess are the millionaire success habits that will get you there?
- By living below their means
- By being disciplined in reaching financial goals
- By staying out of the consumer arms race
I believe that third one – staying out of the consumer arms race – is a pretty good visual of a lot of people.
- The race to have more stuff.
- The race to have the best stuff.
- The race to have the latest stuff.
- The race for things to make people happy.
- The race to be seen.
Did you have some hope or dream as a little kid and it happened as an adult?
- You hoped to become a veterinarian, truck driver, artist, and you did.
- You hoped to have a family, kids, a house, and you did.
- You hoped to live better than your parents, travel more than your parents, and you did.
See, you have already achieved one or more of your dreams. They became reality. Wealth is no different. Financial freedom is no different. You already know you can accomplish things in your life.
I believe if instead of a consumer arms race, we replaced that with a journey of what matters more to you, imagine would your life might look like?
- The race to have more stuff, would become the journey of noticing the stuff that ’sparks joy’ – in the worlds of Kobiashi Maru
- The race to have the best stuff would become the journey of considering quality vs. quantity
- The race to have the latest stuff would become the journey of recognizing wants vs needs
- The race for things to make people happy would become the journey of understanding things vs. experiences
- The race to be seen would become the journey of knowing how you see yourself is more important than how others see you. Versace shirt or no Versace shirt.
Or maybe you just want to roll around on a bed covered in $100 bills, whatever floats your boat.
Go to your local library, buy it online, check out the updated version of the classic Millionaire Next Door – The Next Millionaire Next Door with all new data backed by 20 years of research on millionaires. The original was the book that sparked an movement of financial independence, and this latest version will continue that trend.
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