By CAPosts 21 November, 2020 - 07:00am 34 views
Most millionaires have several financial habits in common when it comes to spending, saving, and investing. One key common ground is that they started building wealth when they were young.
Author Thomas J. Stanley spent years interviewing more than 500 millionaires from across the United States. He turned his ideas into his book, " The Millionaire Next Door, " which analyzes the patterns and habits of millionaires. Many of them had similar stories, and most began their wealth-building journeys the same way: from scratch. Here are four financial moves millionaires made when they were young that contributed to their success
© Unsplash 1. They set clear goals for their money and their careers
Stanley interviewed a billionaire who dropped out of high school and started a wholesale business at age 19, which helped him build his fortune. When asked how he turned his experiences into millions, he simply said, “I've always been goal-oriented. I have a clearly defined set of daily, weekly, monthly, yearly and lifetime goals.
While the path to these goals seems different for each person, most agree that accumulating wealth is less a result of luck than a plan.
2. They bought houses when they were young and stayed to live in them
A high percentage of millionaires are homeowners : only 3% of millionaires surveyed by Stanley were renters. Home equity is often a large part of many families' wealth, but for many of the millionaires Stanley interviewed, owning an affordable home is also a way to put other money into investing.
Stanley found that the millionaires he interviewed tended to buy houses at a young age and stayed in those same houses for many years. Stanley's research found that roughly half of millionaire homeowners have stayed in the same home for at least 20 years. At that time, home values tended to appreciate, helping them build their net worth
3. They resisted the temptation to spend generously
In an interview with Teddy Friend, a millionaire who has high income but relatively low wealth , Stanley discovered a connection between life experiences and spending habits. Friend says he grew up a relatively poor child in a community of wealthier families and began equating success with having nice things.
"Mr. Friend never compared 'better' to accumulating wealth," says Stanley. "Being 'better' meant showing my high income through the display of luxurious things." In this case, you developed a mindset about money and how to spend it that did not help you increase your wealth.
The most effective millionaires Stanley interviewed did the opposite of Friend, living humbly. Instead of spending their fortune on a large mortgage, various expensive cars and other expensive items, as Friend did, they invested their money.
4. They began to accumulate wealth very early in life, sometimes at the expense of going to
college In his research, Stanley found that people who spent less time in school had an easier time building wealth. "The longer you stay in school, the longer income production and wealth creation are postponed," writes Stanley. It's also worth noting that since this book was published in 1996, the price of college has risen dramatically.
Stanley gives the example of an entrepreneur with a two-year technical school degree. «He started working and accumulating wealth at the age of 22. Today, 30 years later, he has benefited enormously from the meteoric increase in the value of his pension plan.
Facing a similarly aged doctor who earns the same income, Stanley says this business owner and technical school graduate will have a better chance of building wealth, simply because time is on his side. While the doctor spent his young life raising his debt rather than earning, he is less likely to accumulate as much wealth in the long run.
Stanley emphasizes that it is important to "start earning and investing early in your adult life." While your 20s are about building your life, it's also a time to start building wealth.
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