The Millionaire Mindset
Do you want to be a millionaire? I certainly do! But winning the lottery, an inheritance from a yet unknown relative, a trust fund, or random stock tip from the next big tech stock that you have money to buy and hold till you are rich are not the usual ways millionaires accumulate their wealth. Believe it or not, 80%-86% of millionaires are self-made. Not trust fund or lottery winners, just hard working Joe’s who use the tactics below to make – and keep – millions of dollars!
Millionaires soar financially because of their daily habits. As we reviewed in Episode two our habits are the reason why you’re rich or poor. It’s often two or three habits that separate the wealthy from those who are financially challenged.
So if you’re one of the motivated individuals who has a dream board with dollar signs all over it – then you will be interested in this week’s tips.
I’ll be honest. There were definitely several times throughout my life when, although I dreamed of becoming a millionaire, I didn't feel like I deserved it. I felt like that was meant for other people, not me.
After years of perseverance and changing my habits, I was able to start a successful company and worked my way towards that millionaire statues. The thing is, I’m not an exception. Those thoughts of self-doubt that I had are very common. There are plenty of people just like each one of us that have become multi-millionaires.
Here are a few habits that I've noticed that average people like you and me do on a daily basis to change away from negative thoughts to positive thoughts and become millionaires.
1. They read for self-improvement.
I’ve always been an avid reader. In fact, when I was a teenager I read the entire 1972 set of the Encyclopedia Britannica one summer. I love, love, love to read. I’ve noticed, however, that reading wasn’t just something I enjoyed. It was probably one of the biggest influences on why I became successful.
For example, as an entrepreneur, my reading habits helped me become a stronger and more effective business owner and leader. For the average millionaire, reading can help you grow and learn. In fact, 85 percent of self- made millionaires read two or more books per month.
While there’s a time and place for leisurely reading, millionaires read books that encourage self-improvement. This includes topics like how-tos, biographies, self- help, leadership, or current events. Rich people would rather be educated than entertained.
If you don’t think you have time to read, there are audio books for you to listen to. Between audio books and reading, I consume three to five books a month.
2. They create multiple streams of income.
The average millionaire doesn't just rely on one source of income. They have multiple streams of income. This way you can handle any economic downturns, as well as make even more money. In most cases, this involves having a passive income. This could be in the form of interest from loans, dividends from investments, capital gains, royalties, or rental income. Other types of multiple sources of income could be from starting a side business that doesn’t involve active work, such as running a website or selling information products.
I have five different sources of income. My primary business as a CPA, my side business of organizing and hosting mastermind groups, interest on money in the bank, dividends on stocks I own and income from rental property.
We discussed earlier there are many, many ways to create active, passive and residual income. If this interests you, then go back to that blog and find your best choice to add multiple streams of income.
3. They live on a monthly written budget.
Millionaires didn’t earn their money by luck. They’ve taken the time to
understand what’s coming in and what’s leaving their bank account every month. In other words, they create and stick to a monthly written budget.
Budgets can eliminate unnecessary expenses and keep full-control of their financial future. Additionally, monthly budgets prevent overspending allow millionaires to achieve financial goals that they’ve established.
If you have followed my for any time at all, you know I am a very big fan of the budget. I gave you some very specific budgeting tools in earlier blogs.
4. They save or invest.
Perhaps my personal favorite habit of self-made millionaires: they save or invest at least 20% of their income. What percent of your income do you save?
5. They don’t leave money on the table.
You can’t accumulate wealth by “leaving money on the table.” That’s why millionaires, no matter what their salary is, are aware of tax-savings strategies. If you work for a company or organization with a 401(k) or similar tax-deferred retirement plan, chances are your employer makes matching contributions.
So if the employer matches up to five percent, it means that if you contribute five percent of your pretax salary to your retirement account, the employer will also put in five percent. Boom -- you just realized a 100 percent gain on your investment during the first year, and set aside the equivalent of 10 percent of your salary.
It’s not enough -- 20 percent total savings per year is more like it — but it’s a start, and if you don’t make a contribution of at least the maximum match, you’re simply losing a lot of money. Over time, you should also work to maximize the annual 401(k) contribution.
In 2018, the IRS allows for a basic limit of contributions of $18,500 a year, with an additional $6,000 once you reach the age of 50.
6. They avoid debt.
The wealthy avoid debt at all costs. They live a frugal lifestyle and only make purchases for items that they can actually pay for. They don’t book a vacation and use their credit card to pay for the entire trip. This way they’re not paying those hefty interest rates. They prefer paying with cash because it has zero percent interest.
If they do use a credit card to make a purchase, they’re certain that they have enough money to pay off that bill when their statement arrives. The financial mastery course gave you the roadmap for debt reduction and elimination.
7. They create to-do lists.
Millionaires create to-do lists while consistently crossing off tasks at the top and adding new ones to the bottom. 81% of the wealthy, who do plan their
day, maintain a daily to do list. Less than 1% of the poor use a daily to do list.
The key here is making a prioritized list and sticking to it. We all know how easy it is to get sidetracked, particularly around 2 p.m., but if that list is next to you at all times, it’ll remain at the forefront.
We learned about the magic of the Pomodoro in the blog– Finding your focus.
8. They set daily goals.
Whether they’re setting financial projections, planning weekly tasks, or looking for ways to have multiple streams of income, millionaires are known for setting daily goals. This helps keep them focused and build momentum.
When establishing daily goals, make sure that you prioritize. This means doing the most important thing first. For example, if you want to make more money, then you should pursue activities that can make you thousands, instead of chasing actions that earn you hundreds.
Goal setting is one of the primary elements of my lifetime success. I will be doing an entire series on goal setting next quarter. Stay tuned for that one!
9. They don’t act rich.
Most prestige makes of cars — 86 percent -- are driven by non-millionaires. Yes, people with very high incomes, high levels of wealth are more likely to drive status automobiles. But in sheer numbers, the largest consumer segment for pricey cars, vodkas and homes is not the millionaire population, it is the want-to- be people. The people who think they are acting rich via their adoption of prestige brands, but in most cases they are only acting like each other.
Researchers from Experian Automotive found that “61 percent of people who earn $250,000 or more aren't buying luxury brands at all. They're buying the same Toyotas, Hondas and Fords as the rest of us.”
The reason? They’re not willing to spend the money on a premium vehicle that is going to drop up to 70 percent in value within the first four years. It’s also why they avoid leasing cars because it ultimately costs more money. Instead, they invest in items that increase in value.
I buy assets not liabilities. I just read that the oil change on a Lamborghini is $2000. Yes, you heard right $2000 for an oil change that is $50 for my fully paid for 2014 Lexus 350 SUV.
10. They love their job.
There’s more to caring about money than counting it as it comes in. You have to genuinely be interested in what you’re doing to climb the ladder. If not, it’s never too late to switch ladders. Over 80% of millionaires said caring about their vocation is what ultimately built their wealth.
Ask yourself if you truly love the position you are in at work. If the passion and fire beneath you is lacking, consider setting time aside to explore your true calling.
Bottom line: You need to care. A lot.
11. They’re entrepreneurs.
According to the “Millionaire Next Door”:
“Twenty percent of the affluent households in America are headed by retirees. Of the remaining 80 percent, more than two-thirds are headed by self- employed owners of businesses. In America, fewer than one in five households, or about 18 percent, is headed by a self-employed business owner or professional. But these self-employed people are four times more likely to be millionaires than those who work for others.”
Even though it’s completely possible to become a millionaire working for someone else, millionaires would rather earn their wealth doing something they love. After all, life’s too short.
I can attest to this fact. Even though I had some great gigs previously, I wasn’t able bring-in the money that I am as an entrepreneur. It was risky, and there were times I stumbled, but it’s been worth it both financially and personally.
12. They network.
Millionaires do not work in silos; they get out and talk to people, expanding their pool of resources and wisdom. Face-to-face time with people goes a long way.
Just like professional athletes, musicians, and brain surgeons have learned from their predecessors after them, the wealthy learn from the wealthy. 79% of the wealthy network five hours or more per month.
If you don’t have access to your favorite successful millionaires in your direct circle, watch their Ted Talks, read their books or listen to their podcasts.
13. They use a mentor.
One common theme among millionaires, almost all of them had a mentor guiding them in the right direction and teaching them successful habits. 93% of millionaires credited their wealth to receiving mentorship.
Take a look at the people around you. Perhaps there is someone in your company, your neighborhood, or your social group who could lend some strategic guidance. You never know, perhaps it will be your mentor who invites you to your first millionaires-attending networking event.
14. They’re patient.
Even though we hear those stories of the person why became a millionaire overnight, the reality is that that’s few and far between. The average millionaire lives by the motto that patience is a virtue. That’s why the millionaire next door doesn’t achieve that status until they’re 50 years old. They earn a modest salary, invest wisely and focus on living below their means instead of searching for get rich schemes.
15. Finally, and most importantly, they take care of themselves.
They get enough sleep. Millionaires aren’t so into those Netflix-all-night binges. They make sure to get enough sleep so their creative juices can steadily flow throughout the day. They sleep a respectable average of 7-1/2 hours a night.
To make sure you’re getting adequate sleep each night, try drawing your evening bath an hour early, setting your coffee pot to automatically turn on in the morning, and the prepare next day’s outfit the night before.
They wake up early. Only in the movies do millionaires sleep in all morning to find breakfast served on a silver platter. Early to bed, early to rise. Most millionaires hit the alarm clock at 6 a.m.
I get up at 5 a.m. every day. While the rest of the world is still sleeping, I’m getting in a few extra hours, without distraction, to have time to focus on the goals and tasks to move me forward.
They exercise regularly. It’s easy to imagine millionaires working in their cherry- wood offices all day and night, making deals over the phone, leaning back in their chairs with their legs crisscrossed on their desk. However, millionaires do have interests outside of work, and they understand the importance of “working” their bodies just as much as their financial portfolios.
However, the reality is that most millionaires exercise for 3.5 hours a week. Having a steady exercise routine, recreational activity, or sport, takes endurance, time, commitment, and sweat -- coincidentally, the same characteristics it takes to achieve 7-figure financial goals.
Millionaires see their money differently than most. Although everybody views money as a way to purchase things they desire, millionaires view their money as a vehicle to gain more wealth.
Still not convinced? There is a cause and effect associated with habits.” They also influence, “happiness, sadness, stress, good relationships, bad relationships, good health, or bad health." Your successful habits, including your financial habits, play a huge role in everyday life, so paying attention to them will have big benefits.
Cross-check this list with your own habits. Which habits are you already practicing? Which can you adopt? Then, take action. Position your to-do list front and center, start that side business you’ve always had in the back of your mind, or gain more financial knowledge by reading more articles about budgeting and spending, listen to my series on building wealth and financial freedom. I can’t guarantee you’ll become a millionaire, but who knows what potential you will unlock when you start to think like one.
Until next week, #LiveRich
April 9, 2018
Join me every Wednesday on my podcast “Unlocking the Secret to Living Rich”.
If you have questions or comments you can contact me at my email email@example.com or find me on Facebook, Twitter or Instagram @cindybbrown777
Who is Cindy B. Brown? Cindy is a CPA, MBA, CFO, and board member of public and private companies, business consultant, entrepreneur coach and a foremost expert in the field of business mastery. Cindy’s purpose is to motivate, educate and inspire people to live their richest life. She is the host of “Unlocking the Secret to Living Rich”.