The Millionaire Next Door // 10 Lessons In 10 Minutes

all right let's jump right into it 10 wealth lessons in 10 minutes from one of my favorite personal finance books The Millionaire Next Door by Dr Thomas Stanley number one wealth lesson we're a millionaires prioritize Financial Independence over anything else over social status over the desire to look wealthy and Rich and over recognition of even their success the honest truth is that in today's world with debt any one of us can look rich and successful if we really wanted to we can buy the nicest designer or close on credit release the latest luxury car and get the biggest Mortgage in a mansion we can barely afford but that doesn't mean we're actually wealthy Contrary we're actually getting poorer because we're spending a little money that we have trying to look the part trying so hard to look rich with other nicest toys and most often individuals who are trying so hard to look rich are just one step away from Financial catastrophe because everything is financed through debt real millionaires understand the true value of money they understand that the best purchase money can buy is in material things but rather Freedom they can maintain their current lifestyle for years and years without earning even a one month's pay don't get swept up by the need to look Rick actually become rich real quick before we jump to the next lesson if you haven't downloaded your free copy of my 10 step guide to securing your family's financial future I highly recommend you do so today not only is this a great free resource for your financial Journey but you'll also be joining my email newsletter newsletter where you can connect with me directly as will be the first to know regarding any new services or products I plan on offering in the future please go to my website at financialtortis.com and download your free copy today I also have a link in the description below alright with that said let's get back to the video number two wealth lesson real millionaires are Frugal they live well below their means frugality gets a bad rep because media presents frugal people as either being miserable or poor based on movies and TV shows the truly wealthy know how to spend lavishly our user told that buying expensive items is normal behavior for affluent people their led to believe that the wealthy have a high consumption lifestyle they learn that hyper spending is the main reward for being affluent in America however contrary to what the mass media might make us believe being Frugal and living below our means is a Cornerstone of wealth building frugality is what enables to say no to social pressure to conform frugality is what enables us to spend money wisely not wastefully and frugality is ultimately what enables us to save money that can compound to grow our net worth there are countless examples of famous people who made tons of money but lost it all because they didn't develop a habit of frugality the story of MC Hammer is one of my favorites MC Hammer was one of the hottest rappers in the 90s when I was growing up with amazing hits at the peak of his career he was earning up to 70 million dollars annually but without good money management habits he spent that all on ridiculous luxury items at one point he owned 17 luxury cars a private jet two helicopters and 21 racehorses you can probably guess where this led him to in 1996 he filed for bankruptcy with over 13 million dollars in debt within just a few years MC Hammer went from earning 70 million dollars annually to being broke with 13 million dollars in debt therefore whatever your income always live below your means number three wealth lesson real millionaires don't overspend on their vehicles most on these instead they own majority on older models not the latest current year more than a third buy used vehicles and guess what is the most popular car maker among millionaires is according to another one of Dr Thomas Downey's book stop acting Rich a Toyota what you see in your neighbor's driveway is indicative of his or her standard of living but it has nothing to do with either his or her wealth or more important his or her income generating ability the sad fact is that the majority of people are driving around in luxury latest model vehicles are actually not really wealthy 86 percent of prestige luxury cars are bought by non-millionaires nice new cars are cool to own you might turn a few heads in the road but that's about it so you have to ask yourself is getting a few random hedgehorns on the road worth your Financial Freedom number four wealth lesson real millionaires don't buy too much house instead they buy just enough housing is one of the most expensive line on most families budget it doesn't matter if you have your food and clothing budget dialed in if you're paying off a ridiculously large mortgage every month if you're not yet wealthy but want to be someday never purchase a home that requires a mortgage that is more than twice your household annual income but how many of us break this rule of thumb because the bank and a realtor tells us that we can afford a bigger home be careful who you listen to your mortgage broker and your real estate agent might be very sweet people but they aren't looking out for your financial well-being that responsibility falls on you and the truth is that it's easier to accumulate wealth if you don't live in a high status neighborhood if you live in an upscale neighborhood you'll always feel the pressure to keep up with the Joneses everyone has the latest Tesla Model in their driveway how do you think you'll feel if you didn't have one everyone is upgrading their kitchen how long can you hold out before you succumb to the pressure make it easier on yourself and think hard about the size of the home and the type of neighborhood you choose to raise your family in number five wealth lesson real millionaires select the right career the right occupation they're proficient in targeting Market opportunities the book does state that the majority of millionaires in the study are business owners however that doesn't mean you have to become a business owner if you want to build wealth because the fact is that most business owners are not Millionaires and will never come close to becoming wealthy because the pathway is fought with so much risk and unknowns the key takeaways that millionaires understood what they were good at and what they want to become expert in and they worked hard to increase their chance of success by stacking the deck in their favor one example of this is when it comes to selecting their business unlike sexy businesses like Tech startups or hip coffee shops most millionaires chose really dull businesses dull companies with steady earning growth may not make up for stimulating cocktail party chatter but over the long term they make the best investments think wallboard manufacturing meat processors and automobile parts definitely not the sexiest business startup ideas but ones with the highest potential in the long run think hard about your occupation don't just pick one because everyone is talking about how cool it is rather take a broader view of the industry existing companies and potential for growth when it comes to wealth building it might be better to be the biggest fish in a small pond versus an average one in the vast ocean number six lesson real millionaires are planners they allocate their time energy and money efficiently in a way conducive to Building Wealth planning is a strong habit among people who have accumulative wealth Dr Stanley found time and time again in his interviews that millionaires invest quite a bit of time in planning the financial future they prioritize managing their financial assets over other activities and they don't just leave it to when they feel like it they have a regimented schedule each week each month each year they review their Investments and make adjustments and maximize returns they're getting on all their assets not many people know this but Arnold Schwarzenegger the seventh time winner of Mr Olympia a movie star and the former Governor of California actually became a millionaire through real estate before his 30s he had invested his earnings from bodybuilding into purchasing real estate in Los Angeles in the 70s and a key habit that enabled all this to happen was that he wrote his goals down on a 3x5 index card and planned out as future Brian Tracy the author of No Excuses assessing this book that only three percent of adults have written goals and plans and this three percent earn more than the other 97 combined if you want to become a millionaire build a habit of writing down your goals and creating intentional time for Planning number eight wealth lesson real millionaires marry well and that doesn't mean they marry into Rich families rather they marry someone who shares their financial values someone who is fully on board with suspending habits and frugality not only are the most religious accumulators of wealth Frugal their spouses tend to be even more frugal when you marry someone who is a hyper consumer this could lead to a world of hurt you might want to save your pay raise for a down payment for a new home however your spouse wants to take the family to an all-inclusive resort in Cancun nothing wrong with other options as long as you can talk through it with your spouse to come to an optimal decision however when your money values are fundamentally different this is really hard any effort to discuss money could naturally lead to an argument and it works a divorce not good for your mental psyche as well as your net worth the majority of millionaires A Millionaire Next Door married and stayed married to the same person for many decades allowing the family to accumulate greater net worth as well as enjoying the benefit of a happy marriage in this regard I hit the jackpot with my wife not only is she way more frugal than I she's a lot more creative when it comes to extracting maximum value from each dollar during one of our first dates she taught me how to get free guacamole at Chipotle by rearranging our orders it was love at first sight number eight lesson majority of real millionaires are self-made millionaires many of the millionaires in the book never receive cash gifts from their parents the study actually showed that adult children receive more dollars the fear they would accumulate while those who were given fewer dollars are committed more basic money would tell us that if you received more money early in your life you would have even more money later in life right however we humans aren't logical beings productivity is a skill that needs to be developed and people who continue to receive economic Outpatient Care have a hard time developing that skill reading this chapter made me think hard about my own kids how could I raise them so they become self-reliant and productive members of society instead of becoming dependent on economic Outpatient Care Dr Stanley gives a few tips based on what he's heard from millionaires one just has to be practiced frugality we must teach them to our kids kids observe everything that we do so if we're living a lavished lifestyle then our kids will follow suit as they get older two we should also create an environment that encourages independent thought individual achievement and self-responsibility third many of the millionaires had a great appreciation for the value of high quality education for me this will be reading with my kids on a regular basis and passing on the value of learning from an early age of course this is much easier said than done I I'll let you know if I can keep this up with my own kids in the long run number nine lesson real millionaires understood the power of enough good health longevity happiness a loving family self-reliance and fine friends if you have five you're a rich man when it comes to money we default to more is better only if I can get a ten thousand dollar raise in my salary I'll be set if my home value appreciated by another 10 nothing would make me happier however when we don't Define her enough we'll spend our whole life chasing elusive pot of gold at the end of the rainbow that we will never reach most millionaires in the book became millionaires not because they were trying to be the richest most famous person in the world contrary they focus on small things such as spending below their means not caring about what people thought about them working hard in their occupation and letting time do the heavy lifting of compounding their wealth very simple on paper but extremely hard to do in execution money is only a tool to help us live the life that we want it doesn't Define us as individuals so more isn't always better so Define are enough and find Ultimate join that number 10 lesson and this really is the biggest lesson from this book that is that real millionaires or ordinary people like you and I majority millionaires aren't the super wealthy living and Richie neighborhoods like Beverly Hills or the Upper West Side of Manhattan yes the super wealthy have very visible signs of wealth big mansions big jets and big luxury cars and because they have so much money a new car is barely a dent in their total net worth however that is not the average millionaire as the book showed over and over again the average millionaire is someone who carefully saves and invests over time remains Frugal and constantly plans for the future I know super boring but that is how they became a millionaire if you ran into them at Costco you'll likely never know that they're wealthy they drive up in a stock Model Toyota they wear off the right generic brand clothes and they're very intentional about what they buy almost to a point of being considered cheap but they aren't cheap they're just smart about their money and if you're smart about your money you can achieve the millionaire status one day as well thank you guys for watching if you like to learn more about millionaire habits please check out my video here on the millionaire habits master in your 30s until next time all the best thank you [Music]

Channel: Tae Kim - Financial Tortoise

Views: 223,218

Keywords: Personal Finance, Money, Finance, Investing

Id: Zmjp2H7MTQY

Length: 10min 57sec (657 seconds)

Published: Thu Jun 15 2023