In their famous book, the millionaire next door, Thomas Stanley and William Danko did extensive profiling of people whose net worth defined them as self-made millionaires.
They found the surprising truth, what most people think about millionaire is quite false.
They found that many people who earn high income are not rich because of their spending habits, they spend everything they earn.
In fact, most high-income earners are just couple of paychecks from being broke because their net worth is close to zero.
An interesting statistic they talk about in their book is the percentage of millionaires who own an expensive wristwatch.
About one half of the millionaires surveyed never in their life spend more than 235$ for a wristwatch.
About 1 in 10 never paid more than 47$ while 1 in 4 spend 100$ or less.
Certainly, some millionaires purchase expensive watches. But they are the minority.
Even among millionaires, only 25% of those surveyed paid 1000$ or more.
About 1 in 10 paid 3800$ or more.
About 1 in 100 paid $15000 or more.
How to join millionaire club?
The authors have discovered 7 common denominators among those who successfully build wealth:
1) They live below their means. In general millionaires are frugal. They don’t live lavish lifestyle. They are willing to pay for quality but not for image.
2) They allocate their time, energy and time efficiently, in ways conductive building wealth. Millionaires begin investing early in their life.
3)They believe that financial independence is more important than displaying high social status. The authors spend far too much time beating home this point: usually millionaires do not have fancy cars.
4) Most millionaires were not financially supported by their parents.
5) Their adult children are economically self-sufficient. The authors clearly believe that giving money to adult children damages their ability to succeed.
6) One of the best ways to make money is to sell product or services to those who already have money.
7) They are business owners “self-employed people are four times more likely to be millionaires than those who work for others.