Chances are, you know someone who started with nothing and is now a millionaire. If you do not know them personally, you may have heard of their business success or net worth.
Have you ever wondered how they started, toiled and eventually arrived at their current financial position in life? It turns out that there is a method to this ‘madness,’ and it is not reserved for the select few.
Read on to uncover the successful habits of millionaires – whether they were self-made or not, and how you can apply them to your life.
Frugality Vs. Spendriftness Among Millionaires
If you look closely, you will notice a trait shared by a vast majority of successful businessmen. You will also notice another separate trait shared by multimillion-dollar lottery winners. First, let us start with successful business people who did not come by their money through luck.
According to Stanely Fallaw, who studied 600 millionaires both in Singapore and abroad, they shared the following habits:
- They are Frugal. This means that they commit to spending less and living below their means. They are more likely to be committed to savings and sticking to a budget.
- They are Financially Responsible. To manage money smartly involves accepting responsibility for financial outcomes of an investment.
- They are Methodical Planners. Success does not come by slim chance. Rather it is a result of planning and hard work. Budgets play a HUGE role.
- They Have Confidence. With a wealth of experience gained through trial and error, and by learning from others, these individuals confidently invest, lead their companies and households to more and more financial successes.
- Social Indifference. Some of the most successful entrepreneurs are not swayed by the social pressures. They do not try to keep up with the Joneses. Rather, they are often humble and more focused in their ventures.
Now compare them to individuals who win lotteries and did not get their money through sweat and sometimes tears. In the US, an overwhelming percentage of lottery winners are hit by ‘the lottery curse.’
They spend their winnings fast, quickly blowing through millions. Without discipline, they often end up worse than where they were before they won the lottery.
Are you ready for the recession? Take the recession-proof quiz!
How to Escape the Rat Race and (Ideally) Join the Ranks of Millionaires
What is the rat race? It is a repetitive, exhausting lifestyle which does not leave any chance for relaxation. The rat race is self-defeating and incessant – a pursuit with no end in sight. Sadly, many Singaporean adults may be familiar with the rat race, or may even be part of it.
To illustrate this sort of grind, an office worker may wake up at 5 AM to beat the heavy traffic to the workplace. This worker hastily prepares for work, chomps down breakfast and leaves the house in a hurry, arriving at work at the start of business. They will then spend the time between 9 AM and 5 PM discharging their professional duties. They then join the rush hour, often getting stuck in traffic and arriving home at night.
This office worker works weekdays. Through the job, they can afford their rent, food, clothes, the car payment, credit card payment, weekend eatouts, some savings and other expenses.
Does this sound like your life?
If at the end of every month, the worker makes the average S$ 3,861 (the average monthly income), and spends roughly the same amount, that individual is likely stuck in a bit of rut. Apart from the compulsory CPF, is there any other money set aside for financial growth?
Here are some sure-fire, successful habits of millionaires and those who are poised to exit the rat race.
1. Create Long-Term Goals and Tirelessly Work Towards Them
According to Bill Gates, most people overestimate what they can achieve within a year. However, they also underestimate what they can achieve in ten years.
Planning is a critical ingredient for success. If you really wish to experience a profound change in your finances, it is imperative to set long-term goals.
People who set financial goals are ten times more likely to prosper compared to those who do not have any plans. The reason for this is simple – when you set a goal, you put yourself on a roadmap. You become aware of where you currently are.
From there, the rest of the path to your goals becomes clearer. You can comfortably start working towards them.
Having neither plans nor goals would provide no incentive for growth – and no way out from the rat race. This brings us to the next point.
2. Budget Without Fail
A working budget is one of the most underrated tools in personal finance. When you have a budget, you know exactly where your money goes. You also know what you are owed.
Budgeting helps you live within or below your means. With time, you get to save thousands of dollars that would otherwise have gone to waste had they been overspent. Therefore, a good skill to hone now is how to budget effectively.
3. Cut Out the Clutter and Consume Less
Mark Zuckerberg famously wears a specific plain-grey tee-shirt to work daily. It is not the same shirt – just the same style. The Founder and CEO of Facebook said that this approach to his wardrobe helped save him time made on decisions on what to wear.
Unsurprisingly, most successful entrepreneurs also have the same approach to things that take their time or effort. They tend to minimize time and resources spent on things which do not matter.
Over time, in our professional life, having extra money invites the lifestyle creep which causes us to ‘upgrade’ how we live. While we deserve comfortable clothing, nice cars and the best creature comforts, there is a line that has to be drawn between necessities and luxury.
By all means, it is fair and square (and worthwhile) to splurge on shiny new things for the family from time to time. However, this should not take precedence over saving, getting out of debt and investing.
Similarly, things that were bought and never used should be disposed of. You could donate or sell them to cut out the clutter and set you up for a minimalist lifestyle.
4. Create and Develop Several Streams of Income
Another great method of dropping from the rat race is creating extra income to supplement your salary. There are numerous ways of doing so – ranging from starting a blog to getting into real estate.
Some of the streams of income may be active, requiring your presence. Other streams can create passive income, making you money even when you are not physically present.
Also read: 10 Steps To Creating Wealth With Property Even If You Are Not a Millionaire
5. Learn As Much As Possible, Especially from Experts
People who often hit financial independence at some point in life usually have mentors – people who passed down smart money management wisdom to them. There are hundreds of good books about personal finance, getting out of debt, investments and retirement planning. Most of those books were written by really smart people who were experts in the subject matter.
WATCH: The Property Masterclass
The Bottom Line
The road to financial independence can take time and involves personal discipline. However, in the end, mastering the successful habits of millionaires is a rewarding investment. Better still – the earlier you start, the better.
What does ‘better’ mean, in this context? Well, it means enjoying more of what life has to offer, after figuring out how to live well. It also means making the world a better place – perhaps by changing lives and improving the circumstances of the less fortunate in the society. We believe
in giving back – join us as we work to improve the well-being of those unable to afford adequate housing, food and clothes, as well as helping out the animal shelters.
So…., wait no more – start your journey now!