Lesson #1: Income Does Not Equal Wealth
So true. Yes, people with higher incomes have a better opportunity to become wealthy, but many waste it by spending all (or more than) they earn. Example: After 40 years, someone making $1 million a year but spending $1.1 million a year will be worse off (assuming the spending is on consumables) than someone making $75,000 a year but only spending $50,000 a year.
Lesson #2: Work That Budget
Most millionaires have budgets. Those that don’t have developed the ability to spend below what they earn throughout the years.
We had a budget for the first 10 or so years of our marriage. But after that time, we were able to control our spending so much that we haven’t needed/used one for years now. That said, I do check out actual spending versus past years in Quicken to make sure we keep ourselves under control.
Lesson #3: Know Where Your Dough Doth Go
Basically, millionaires know where their money is going. To me, this is really a restatement of lesson #2.
Lesson #4: Know Where You Want Your Dough to Go
Do you let your money go where it wants to go or do you tell it where to go (savings, investments, etc.)? If you do the latter, you’re much more likely to be (or become) a millionaire.
Lesson #5: Time Is Money
How much time do you spend on your finances? Millionaires spend a “lot” relative to those who are not millionaires. That said, you don’t have to spend 30 hours a week obsessing over your finances to become wealthy. If I don’t count this blog, I spend maybe two hours a week managing my finances.
Lesson #6: Love the Home You’re With
As we’ve discussed, millionaires are much more likely to have an affordable home than a multi-million dollar one. And when they buy a house, they apply my formula for purchasing a home.
Lesson #7: Love the Spouse You’re With
Two points here: 1. Divorce is expensive. 2. Spouses must work together to make a wealthy couple. In particular, if one is a spendthrift, it can sink their finances quickly.
Lesson #8: Don’t Drive Away Your Wealth
Lots of car stats here for millionaires:
•The majority of millionaires own their cars, rather than lease.
•Approximately a quarter have a current-year model.
•Another quarter drives a car that is four years old or older.
•More than a third tend to buy used vehicles.
•Toyota is the most popular car maker among millionaires.
Catch me honey
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