How the self-made millionaires did it
Categories: Personal Finance
Despite the general consensus against greediness, money certainly makes life easier. It’s only natural that when we see self-made millionaires (and the bank accounts that accompany the status), we yearn to be one as well.
What’s the secret behind being a self-made millionaire? While there’s no tried and tested method, there are quite a few common traits. The most important, however, is being financially disciplined. After all, a household wealth survey released by the Australian Bureau of Statistics pointed out that more than a million Australian households boast a net value exceeding $1 million ”“ and those millionaires got there all on their own.
Are you millionaire material?
Visionary
All self-made millionaires have visions. They know what they want and they go after it, making dreams a reality. Being committed to a savings plan is one thing ”“ what you choose to do with your money is another. Millionaires don’t have an “earn and spend” mentality. Instead, they see the value of their dollars, opting to save and invest.
Hard work
The saying “you don’t get something from nothing” rings true. Making money is hard work, though anyone can make it if they stay focused. Facebook founder and billionaire Mark Zuckerberg wasn’t born with a silver spoon is his mouth, but he is now worth $14.7 billion thanks to launching the social networking site from a Harvard dorm room.
Determination
Self-made millionaires are able to persevere with their goals, even when others tell them it’s not possible. They’re focused and many live well below the life they can afford to ensure their bank balances continue to grow. You may be surprised to know modern millionaires live in middle-class suburbs, shop frugally and go to work every day.
Staying in
Many self-made millionaires would have stayed in on the weekends instead of socialising with friends. This doesn’t necessarily mean you should avoid any entertainment, but staying in and working on business and investment plans can pay off. And you’ll be saving from not having to spend!
Money-smart
Being money-savvy tends to be essential for self-made millionaires. Just look at Ingvar Kamprad, who is worth a whopping $36 billion today. At just 17, he used the cash his father had rewarded him with for excelling at studies to create IKEA. At a young age, this budding entrepreneur learnt that it’s possible to make a profit from selling bulk goods at a low price. The same can be applied to savings ”“ put a little away each week and watch your savings grow quickly.
Fast learners
Self-made millionaires don’t tend to view their mistakes as failures, but rather as opportunities to learn from and improve. American business mogul Donald Trump, for instance, lost everything in the 1989 recession. While he declared himself bankrupt, he quickly got back into the money. Today, his estimated net worth sits at $2.9 billion.
Embrace risks
Taking risks when necessary can generate profitable lump sums to significantly boost the bank account. Millionaires do this, as they can afford to take more risks if their funds are fine sitting in an investment for a longer period of time, since they don’t need to access them. If this isn’t feasible, you can always park your savings into an account that reaps the snowball effect of compound interest.
Term deposits and high interest online savings accounts are ideal products that can help you raise the capital needed to fund a bright idea. There are plenty of financial products available that can make achieving your savings goals a reality.
I wanna be a millionaire
maybe – I relate to the attributes of frugality and financial self-discipline and learning from mistakes
I inherited, if I recall correctly, something like $15k as a teenager when my parents died which sounded like a lot then and enabled me more freedom of choice including overseas travel. But I also inherited frugality from my depression-raised parents, and have carefully managed and tracked my spending for decades.
Result – pending retirement, my net worth is significantly over the $1m which I guess sounds like high net worth – maybe the top decile in Oz – I think I read Oz median was around $220k – and way above the median in US I read was like $50k.
I tell my students – the common mistake – encouraged by advertisers after your money – shiny new products and new suit = rich ?
uh uh – many commission sales people in leased shiny new cars have net worth in the negative.
When you see smartly dressed staff inside a shop and someone in shabby shorts, t-shirt and thongs sweeping the footpath outside – who is that guy ? Students typically guess – the cleaner ? I say no – more often than not – the owner !
Why – because the suited employees don’t want to soil their manicure doing ‘dirty’, ‘unpleasant’, ‘menial’ tasks – the owner sees what needs to be done, picks up a cloth/tool, and fixes it without a second thought.
‘The Millionaire Next Door’ – interviews with hundreds of self-made millionaires – identified the typical such as living quietly and frugally, unrecognised in a moderately-priced suburb driving an older car. [I drive a 20 year old car - worth $2k - money in the bank]
Many first-world people like to complain about not having enough (to buy a new iPad) – forgetting perhaps that according to http://www.globalrichlist.com any income over US$47,500 (say AU$45,500) puts them into the top 1% of richest people in the world.
But high incomes are easily frittered away if you don’t pay attention. Spend more than you earn – result=misery. Spend less than you earn – result=happiness. (Charles Dicken’s Micawber)
Rich people are not rich because they spent their money on shiny new – they are rich because they Didn’t spend it – they kept it – in the bank !