One of the most common traits of millionaires is that they live well below their means. I think one of the biggest causes of the current housing crisis is that people were trying to "live like the Joneses" and bought a lot more house than they could afford. If you are making $100,000 a year, you probably should not be buying a $300,000 home. Surprisingly, as a whole, more millionaires live in a $300,000 home than those that cost over a million.
Believe it or not, most millionaires are actually frugal. They saved money and became millionaires by making cost-conscious decisions when it comes to big ticket items. They don't always buy the biggest home, the most expensive car or send their kids to the most expensive schools. Most millionaires don't drive a Mercedes, BMW, Porsche, or other expensive cars.
As a society, we are so quick to equate wealth with possessions. I admit that I am guilty of doing this myself. Consider this: the next time you are sitting at the traffic light and there is a BMW or Mercedes to your left and a Toyota Camry to your right, don't be so quick to assume that the person driving the BMW is the one with money. The person driving the BMW probably has a car payment the size of a mortgage payment and may be struggling to make the payment whereas the driver of the Toyota Camry may own his vehicle free and clear and is using his money to build real wealth and not just an appearance of wealth.
Let's start living like millionaires in 2009. Let's start living a frugal lifestyle and use our money to build wealth. If you are about to purchase a home, think about what you can truly afford, not what the bank will lend you.
I'm not saying you should deprive yourself of the occasional splurge. If there is something that you want to buy (excluding a house or car), go for it. Just make sure you've saved the money and are not relying on a credit card to finance the purchase (unless you pay in full each month).
I can vouch for how the "true" millionaires live. My best college friends' families were millionaires a few times over and they all lived rather frugally.
One insisted on flying "coach" rather than first class. Several paid cash for their cars and drove them 'til they wore out.
They made sure they saved money first, and the interest they earned to send their sons and daughters to college.
The kids... well, they lived "higher on the hog", went into debt, spent money like a "drunken sailor", etc.
I love that book. It is great inspiration for someone to live below their means. I also thought the trend among the millionaires in the book was that they were mostly business owners.
More often than not, the big house and fancy cars are indicative of a huge mortgage and a lot of debt. One of my best friends lives in the fancy neighborhood with the $3 million homes. He always tells me that having things doesn't make you wealthy. Things usually mean debt. He owns his home free and clear and has a huge business that he built over 25 years.
Living below your means def is a huge trait of people who have money, as you said, its the reason they have money.
I really believe that this is going to be the motto of 2009, "Living below your means" and the more we share our stories about these types of things the more prepared people will be to live such a way!
That is a great book to read. Think Sam Walton for a more accurate image of a "true" millionaire. I always have to smile when certain relatives look down their nose at us. We have no debt, a paid for house, 2 paid vehicles, and a nice savings plus working on our retirement. I am a SAHM since we can easily afford to live off one income. Yeah what a horrible lifestyle.
Yup, my all-time favorite book in the whole finance world!!! Living below means = True Frugal Rockstar.
Interesting, because I know a local man who is the owner of a roofing company that employs a crew of men and has a fleet of trucks. He's often seen in work clothes, and climbs up the roof with the men, and answers his own phone in the garage. A very modest millionaire who lives in a small house.
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As an accountant, I'd have to say that 9 times out of ten, the people with the nice cars are usually broke.
Most of the time they're leased, too.
It's funny what they consider to be 'assets'
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I love it. It's exactly what I was saying (in a way), about the whole idea of living beyond your means.
My article: "I met Mr. Jones" touches on the same principles of what you're covering, but more along the lines of how unrealistic people are when they imagine what a normal North American life should be.
Fabulously Broke in the City
Just a girl trying to find a balance between being a Shopaholic and a Saver...
My Uncle is a self-made millionaire. My family has always considered him cheap… they would rarely go out to eat, and when they did it was to a buffet joint, or a cheap fast food joint. They only shop at places like K-Mart and JC Penney and only buy things on sale. They lived in a very small house. It always disgusted me a little, but now I see the value in it. He sent 3 kids to college with no loans. He decided to take 6 months off work to travel with his wife. Now that I'm older and earning my own money, I can completely appreciate living well under your means.
You're dead right. Most of the wealthy people live amongst us as just as any another regular person would, except they're the people who have old beaten up car, maybe some older clothes but I bet they have an immaculate bank balance.
Of course, if you did live like a millionaire, you could afford to buy a 300,000 house on 100,000 if you wanted to. :)
Great great stuff - I really believe what you wrote about here - the millionaires that are born into money are few and far between - most are self made - and this is how!