It is currently estimated that there are approximately 3,000,000 millionaires in the United States today. Considering that there are about 300,000,000 Americans according to the latest census data, that means about 1 in 100 are millionaires.
What’s even more surprising is that you probably know someone who’s a millionaire, and you probably live a stone’s throw away from other millionaires you don’t know.
The truth is that many millionaires have very specific habits. Traits that make them successful – both personally and professionally.
Along with inspiration, here are five essential habits your millionaire neighbor has but probably isn’t telling you.
1. Start small and don’t go wrong
Many millionaires start at a young age. It’s much easier to start young than older. You have more time – it’s simple math.
Plus, the younger you start, the longer it will take to see your money build up over time. Just think about this – the amount you need to invest annually to reach $1,000,000 by age 62:
If you start at age 25, you have 10 extra years compared to age 35. You can debate the rate of return all you want, but younger is always better than older.
However, the second part is not to mess up. This means avoiding student loan debt and credit card debt and not getting into financial trouble. Some of the most common causes of debt and financial problems include: increased expenses with low income, unemployment, gambling, poor money management, lack of financial communication skills, and banking with windfall profits.
If you stick to a balanced budget and start early, you’re already on equal footing with your millionaire neighbor. Remember, focus on loading your financial life up front.
2. Do not move or release
There’s messing around, and then there’s avoiding big, avoidable expenses. Two of life’s biggest expenses are moving and divorce.
First, transportation may be necessary, and it does not have to be expensive. However, for many people, it is. The cost of paying moving companies can run into the thousands of dollars, so the more you do, the more it costs. Second, if you have to sell a house, the transaction costs are enormous. The more you do it, the more profits you eat.
Now, moving can be a good thing – a better job with higher pay. Or perhaps you are moving closer to work to reduce expenses. You can also use inexpensive moving tools to reduce costs if you are moving far away. Just remember that constantly moving is a constant strain on the budget.
Plus, if you own a home, moving is really expensive. In fact, the math puts renting on par with owning a home unless you move often — it makes more sense to rent.
Next, we have to address the issue of divorce. Divorce is one of America’s leading wealth destroyers. Now can this be avoided? Not always. But there are real things you can do to reduce the likelihood of this happening and the financial costs that come with it.
The first is communication. Communicating about money is essential, because finances are the main cause of divorce. Divorce never stems from a lack of money – it comes from a failure to work with money. You need to put systems in place that allow you to work as a team using the money you have to improve your future. Common goals and common understanding are essential.
There are much better resources than these when it comes to money and family, but you have to realize that divorce destroys wealth. That’s why your millionaire neighbor has probably been married for years.
3. Invest slowly over time
In addition to starting small, you should also invest slowly over time. I’m not saying you should do dollar-cost averaging when investing, but you should start investing early, and continue investing throughout your life.
This is the power of compound interest. The later you start, as mentioned in #1, the more you have to invest to get the same return.
Maybe your millionaire neighbor started investing in his 401k at his first job and has continued to contribute to it at each job. He or she will also likely reach the IRA contribution limit each year.
Over time, these simple investing steps allow you to build real wealth. For most Americans, their wealth lies in their homes, which they have paid off over time, or in their retirement accounts, which they have built slowly over time.
So, if you want to join your millionaire neighbor, start investing now, and keep doing it regularly.
4. Create multiple sources of income
It’s also possible that your millionaire neighbor didn’t just do this while doing his job. Maybe if they were over 65, but even then, there was probably more to it than a nine-to-five job. Most millionaires had a side hustle or shared sources of income. It is very rare for a single-income family to reach millionaire status. If they are a couple and work together, this is possible. If they don’t have children, it’s more likely.
But the best way to reach a million is to not only work a paid job, but also work on the side or have some kind of entrepreneurial venture.
By developing multiple income streams, you can not only create a safety net for yourself as you work toward your goals, but you can also reap the benefits of multiple income streams, especially if some are more passive than others.
If you want some passive income ideas, here’s a list of 30 different sources of passive income.
Your millionaire neighbor might have a secret job besides their nine to five – just look at most of the bloggers out there!
5. Live below your means
Finally, most millionaires live well below their means – so much so that you may not even believe they are millionaires. I know a whole lot of millionaires who don’t frugal. They drive the same car since the 1980s, shop at thrift stores, and never eat out. I even know young millionaires who search for frugal deals online and use coupons to pay for everything online and offline.
Check out this post on how to save $500 a month using simple tricks.
But this makes sense, as many millionaires did not get rich by spending their money. They became wealthy by saving their money and making smart financial decisions. These are habits that they have developed over a long period of time, so they do not change even when there is a lot of money to spend.
Myths about millionaires are holding you back
The truth is that many people aspire to have wealth, to become a millionaire, to be wealthy – whatever your definition of that is. But for many, myths about millionaires, their money, and their mindset hold you back.
Here are some common myths about millionaires that you should stop worrying about on your path to wealth:
Myth 1: Most millionaires inherited their money
It is believed that only 20% of millionaires inherited their money. This means that 80% of millionaires succeeded in achieving this on their own, and most of them are first-generation millionaires. This comes from research conducted by Thomas J. Stanley in his book, The millionaire next door.
So, next time you find yourself thinking it’s impossible to reach the million-dollar level, remind yourself that 80% of people who make it happen did it alone (yes, you could argue there were a lot of socioeconomic factors that helped, from how they were raised to where they were born, but just because the path is more difficult doesn’t make it impossible).
Myth 2: Millionaires drive luxury cars
One of my favorite TikTok channels right now is Daniel Macwhere he chases luxury car drivers through a mall and asks them “what do you do for a living.” The responses are great to hear, but they may also give you a false sense that millionaires drive luxury cars.
The statistics don’t support this. In reality, According to researchers61% of people who earn more than $250,000 a year drive Toyota, Honda, and Ford.
The 10 most popular car brands for millionaires (in order) are:
Myth #3 – High taxes deter millionaires
When people think about taxes on the rich, many people struggle with this because they: 1) don’t like paying taxes in general, and 2) don’t want to see their aspirations dashed.
But the truth is simple: taxes do not prevent anyone from becoming a millionaire. Yes, it’s true that no one likes paying more taxes (although some… Millionaires and billionaires are demanding higher taxes).
But taxes are not a big factor for most millionaires, especially in the wealth-building stages of their lives. Remember, taxes are paid on net income, and most millionaires are simply focused on increasing that number. Once you have your income, it is yours.
Moreover, after you reach the million dollar mark, you still focus on goals and objectives. Yes, you can hack tax strategies, discover huge Roth IRA accounts, and more — but that’s secondary to most wealthy individuals. The key is to earn more, spend less, and live a life they find value.
If you want to match your millionaire neighbor, imitate him and don’t even let him know you have money.
Live frugally, make smart financial choices, and live below your means. You will get the joy of being a millionaire without the hassle of maintaining a hectic lifestyle.
This is how your millionaire neighbor does it, and you may not even realize it.
What other success secrets do you think your millionaire neighbor has?
