So, you want to be rich and never have to worry about money again. Well, are you willing to put in the time and effort to get there? Let’s look at the average millionaire and what it takes to get there.
We’re not going to talk about spend less than you earn…that is a given…if you haven’t reached that point then don’t bother going on because that is step one in your finance life. Now we’re taking the next steps.
The Average Age of Millionaires
It doesn’t require a million dollars to be financially free. Many people do it with less and some millionaires have more money problems than those earning $40,000 a year. But we’ll go with $1,000,000.00 because there are more studies that track millionaires.
The average millionaire is 62 years old and 38% of millionaires are 65 and older. West Coast millionaires skew slightly older. Just 1% of millionaires are under 35.
So this shows that you have some time to work on building your wealth. So if you have time ahead of you then there is a good chance you can get there.
The Ethic of the Rich & Financially Independent
Most rich or wealthy people have done a life-time of work. Did you hear that? A life-time of work. It doesn’t sound wonderful right now, but eventually you reach your 50′s and 60′s and you can look back and be glad you put in the time and effort early on or you can look back and have regrets. Those are the only two options.
There are exceptions of those who become instantly rich of course and you mostly hear about those 1% exceptions instead of the other 99% of normal folks, but those 1% not only did what the 99% but they likely sacrificed and put a life-time of work in less time or created multiple avenues of income by taking on bigger risks with bigger rewards. And sometimes you lose it all after forgetting what got you there as well.
Most Millionaires Don’t Live Like Millionaires
Sometimes it is hard to know who is a millionaire. Most of them, that aren’t plastered on TV wasting their money, are pretty down to earth people that would rather you not know they are millionaires.
They still live in their original house which is one reason they made it to be a millionaire. Their favorite car to drive is the one that is paid off. They stay away from debt and the need to have the latest and greatest. They never made more than $150,000 a year and some don’t even make $100,000 and they likely worked at the same place or company for 25 to 30 years. They saved and saved and invested for decades and watched their money slowly grow.
Start Saving As Early As Possible
Millionaires aren’t perfect money managers. They will make mistakes along the way, but they learn from those mistakes and keep going. Most wealthy people got an early start in life because it takes the average rich person three to four decades to get to their goal. Patience and perseverance is critically important with an eye toward the future goal.
Don’t Justify Debt
Sometimes it gets rough when the neighbors come home with the new jet skis, boat, trailer, truck, motorcycle, 4-wheeler, or whatever else they feel they need to be happy. You can enjoy life along the journey to be rich but don’t compromise the end goal. Wealthy people don’t justify poor financial decisions.
Rich People Ask How Much not How Little Should I Invest
It is hard to accomplish your financial goals by doing the minimum in life. Do you realize how long it would take to be a millionaire if you only invest 3% and get a 3% match at work. You would likely be dead before you reach millionaire status or so old that you missed doing anything in retirement.
The minimum isn’t even an option for those that want financial independence. They want to have some time off and to not work forever. Maybe they start out with the minimum but they look for every opportunity to increase and grow their investments.
They look at maximums more than minimums in all that they do in life and especially their investments.
Wealthy People Learn to Invest Their Money
Most rich people aren’t stuffing money under their beds or CD’s. They may have some of their liquid money and emergency funds in the bank or credit union but the rest is in the market, real estate, or other investments. They take the time to learn how to invest because it is necessary to be rich.
Risk Is Not Scary – It is Part of Being Wealthy
Risk doesn’t scare most investors, it is a necessary part of a portfolio. Is anything major accomplished without some level of risk? Marriage is a risk, buying a house is a risk, living in debt is a risk, changing jobs is a risk, investing is a risk but necessary to accomplish long term goals.
If your time frame is three to four decades you will see major market events and many downturns. You will likely live through wars and recessions and market bubbles. Wealthy people don’t overreact to events and continue to push through because time is on their side.
Spending Habits Stay the Same While Their Salary Increases
A life-time millionaire is looking to save when they can. Do they like raises and bonuses, well of course, but they don’t think “now I can finally buy that new boat.” They think of their investments first and number one of the list is their account, then everything else can come after you pay yourself.
Most people become wealthy because they continue to increase their savings and investments over time. They don’t continually increase their spending as their wealth and income increase.
Wealthy People Set Goals and Get Things Done
Most great accomplishments don’t come while you are sitting on the couch or perusing the internet. Wealthy people have a goal in mind and work towards it. They don’t wait for others to make decisions they go out and they work for it. They are proactive and not reactive in life. They want to control their destiny and not have others determine their destiny.
Wealthy people spend less time wasting time. They wake up early. They value education. They value their money and don’t give it away easily and negotiate. They spend more time on investments and finances than with reality TV. They put themselves in positions at work to get raises and promotions . They network and build strong relationship and not just on Facebook.
Rich People Stop the Excuses
Lots of folks complain and do little about it. I had an employee who came in to work yesterday and announced to everyone “I voted today because I like to complain, and you can’t complain if you don’t vote.” Rich people are generally active, engaged, involved and get rich by doing more and complaining less.
Get Rich Habits – Summary
- Understand time frame and long-term goals
- Develop work ethic.
- Don’t live like millionaires
- Start saving early
- Don’t justify debt
- Don’t look for minimums
- Learn to invest
- Keep same spending habits when wealth increases
- Understand risk
- Set goals
- Stop the excuses