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Read about the simple things rich people do to keep their Financial situation strong. |
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Read about the simple things rich people do to keep their Financial situation strong. |
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The Secret to Accumulating Wealth Did you know that the typical American millionaire bargain shops for used cars, lives in a typical middle-class neighborhood and wears inexpensive clothing? Is it possible there could be a millionaire living right next door to you? Do you believe an expensive home, several luxury cars and a lavish lifestyle is the life of the rich and famous? We've all seen that show "Lifestyles of the Rich and Famous." Some of us have probably even drooled at the houses they've shown wishing it was us. Then again maybe not. There are a lot more millionaires then we you and I may think. Being rich is not just for the famous basketball players, rock stars, movie actor/actress. Many ordinary people are millionaires too. So what's the difference between being rich and wealthy? Is there a difference? It's easy to associate We may think (in the back of our minds) that in order to be successful in life, we need to look successful by owning a nice home, nice cars and all the other things which create the outward appearance of success. While we're achieving financial wealth in actuality we're accumulating very little. The typical myths about American millionaires are untrue and authors Thomas J. Stanley and William D. Danko prove it in their study of millionaires. Their book "The Millionaire Next Door" profiles/study average people like you and I who have achieved millionaire status yet do not live the life of the "Rich and Famous." In fact, they tend to be people like our next door neighbors, just average folk who go to work day to day, drive a used car and take advantage of all sales, clearances and coupons.
For example, the typical American millionaire bargain shops for used cars, lives in a typical middle-class neighborhood, wears inexpensive clothing (odds are they were purchased at Sears, not Lord & Taylor), and works a normal job. These millionaires, for the most part, are NOT doctors, lawyers, accountants or politicians. Most of them did NOT inherit or win their wealth nor did they acquire it with advanced degrees or above-average intelligence. They do, however, share one trait-they have chosen to live below their means. Consider the case of the physician who is now in his fifties and is earning several hundred thousand dollars a year. He lives in a home worth over half a million dollars, has another home at the shore and a cabin in the woods. He has a yacht at the bay, belongs to the country club and has several luxury sports cars in the garage. Most of us would consider him to be rich. Yet, he's a nervous wreck because he doesn't know how he's going to retire. True, he appears wealthy, but he's spending practically all his income and putting away very little. As long as the money keeps coming in, he and his family will be fine, but he knows the day will come when he doesn't want to work anymore or can't. Still he persists in living an extravagant lifestyle, forsaking his future security for the temporary pleasures of today. On the other side of town (could be your neighbor) lives a man who owns and manages a mobile home park. He drives a beat-up old pickup truck and wears jeans and sneakers most of the time. His wife clips coupons, oversees the finances and helps out part-time keeping the books for the office. Oh, did I mention they're worth millions. This couple doesn't earn a huge income or possess several degrees. Their secret to accumulating wealth is simple: No matter what your income, you need to live below your means, spend less than you make and invest the rest for your future. Simple in theory but not so simple in practice. When your income increases, it's very easy to increase your spending in direct proportion. Learning to take your current income and live as if you earned considerably less requires discipline and commitment. Unless you're willing to spend less than you earn, you may be able to create an illusion of wealth but real wealth will never be yours. So what's the secret of accumulating wealth? Spend less than you make and invest the difference. With a little bit of self-discipline and determination, that's something every one of us can achieve. Are you up for the challenge?
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