Personal finance author Thomas J. Stanley interviewed over 1,000 millionaires in researching for his book, “The Millionaire Next Door.” In his research, he found that about 80% of millionaires are self-made, and he also learned that many millionaires have similar spending habits.
Most people who are millionaires didn’t get that way by chance — they saved, invested, and worked their way to millionaire status.
1. They spend according to a budget
After interviewing hundreds of millionaires, Stanley found that most millionaires budget religiously, and know exactly how much they have to spend in different categories. “In our latest national survey of millionaires, we found that for every 100 millionaires who don’t budget, there are about 120 that do,” he writes.
Millionaires parse out their budgets to prioritize saving, with many opting for the “pay yourself first” strategy, which uses automated savings to save for retirement and other goals before accounting for spending. “These people invest a minimum of 15% of their annual realized income before they pay the sellers of their food, clothes, home, credit, and the like,” writes Stanley.
Millionaires tend to have a strict budget, and for many, the budget is a key way they built their wealth in the first place.
2. They spend on good financial planners and accountants
Most millionaires put significant time and money into growing their wealth. But, Stanley found that millionaires tend to also have help with their financial decisions.
They tend to choose financial advisors and planners like they would employees. “Your ability to hire high-grade financial advisors is directly related to your propensity to build wealth,” Stanley writes.
While some millionaires hire the convenient professionals who contact them, Stanley notes that those who are best at accumulating and managing wealth take the time to interview several financial planners and accountants like they would any other employee before hiring them.
3. They own their homes and live in them for a long time
Millionaires tend to own their own homes; according to Stanley’s research, just 3% of millionaires are renters. Millionaires tend to live in homes that are below their means, too, where they find it easy to live a comfortable lifestyle without overspending.
These home-owning millionaires also live in their homes for many years, and Stanley says that’s a part of their strategy. After living there for a long time, they’re able to see large gains in their homes’ value.
4. They invest a higher percentage of their income than the typical person
Stanley found that the average millionaire invests 20% of their income each year. Among non-millionaires, that figure is much less — 48% of Americans save less than 10% of their income each year, and investments are only part of that figure, according to data from Bankrate.
Millionaires tend to invest more of their income than the typical person, and Stanley notes that’s likely how they achieved their status in the first place.
5. They drive cheap cars
Most millionaires surveyed drive used, American-made cars. Rarely do millionaires who are good with money lease new cars, nor buy luxury cars. In his research, Stanley found that “50% of the millionaires we surveyed never spent more than $29,000 in their entire lives for a motor vehicle.”
6. They’re always on the hunt for a deal
Most everyday millionaires aren’t big spenders. They’re often driving affordable cars, living in affordable homes, and wearing items they bought on sale, and the same typically goes for their partners.
According to Stanley’s research, few millionaires actually spend on expensive things. Rather, they opt for quality over quantity, and look for deals.
In conclusion
- A survey of over 1,000 millionaires found that they tend to have similar spending habits.
- Millionaires tend to be thrifty, opting for cheaper options like used cars. They also tend to have strict budgets that they adhere to.
- Millionaires also tend to invest large portions of their income, and spend on financial planners and accountants to help grow their wealth.