The Importance Of Perseverance
Most of us work hard at earning our income, and on figuring how best to save and invest it.
We all want a better future, for ourselves and our families — and especially for our children. Achieving financial security is an important milestone on the path to making this ambition a reality.
And so, day after day, we head off to work and put in another day’s labor, hoping we’re one step closer to the moment when we finally have “enough” money socked away.
There are literally thousands and thousands of books that have been written on how to amass wealth. Some excellent, some less so; and too many not worth the paper they’re printed on. Each posits its own special strategy, promising a future of riches to the reader. Of course, were there a sure-fire recipe for making millions, it’s a safe bet that the last thing the guy who figured it out would do is share it with the world.
But as mentioned, some of these books have real value. One whose lessons have stuck with me in the decades since I first read it is The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, first published in 1996 by two PhD researchers, Thomas Stanley and William Danko.
Unlike most personal finance books that pitch a particular model for “becoming rich”, this book is the summary of a scientific profiling of people who have successfully amassed wealth. Rather than push an ideology, it simply reveals: These are, statistically, the factors wealth-accumulators have in common.
The book is fun to read, as many of the authors’ research results defy our conventional image of a “millionaire” (and, remember, when the research was conducted over 20 years ago, $1 million in net worth meant substantially more than it does now):
- A frugal lifestyle is the #1 reason people become millionaires
- Despite the popular caricature, most millionaires don’t buy new-model cars, McMansions, expensive clothes, or luxury goods
- Most millionaires are self-made (80%), vs. having inherited their wealth
- Most are self-employed businesspeople or professionals
- Less than 20% of the workers in America are self-employed, compared to 2/3 of millionaires
- Most of these self-owned businesses are not “sexy” (welding contractors, auctioneers, rice farmers, mobile-home park owners, pest controllers, etc.)
- Most don’t have outlier income – but they save more of what they make than most
- The average annual realized taxable income (different from gross income) for most millionaires is near the 50% median
- They manage to invest 20%+ of this income each year
- 97% are homeowners – but they remain in the same home for decades vs. trading up or ‘flipping’
- Most are married and consider their spouse to be even more frugal than they are
- A minority attended private schools growing up
- They value work/life balance and are not “slaves” to their businesses
- 2/3 work less than 55 hours per week
Many of the specific mindsets and behaviors of these Prodigious Accumulators of Wealth (PAWs) will likely resonate well with readers of PeakProsperity.com, Zero Hedge, and other similar websites. Pragmatism, practicality, and discipline are big hallmarks of the PAWs’ success.