There are millions of millionaires
in the United States and the person you see in the beat up old sedan at your child’s school might just be one of them. While it is easy to peg some people as millionaires, like actresses and pop stars, it isn’t easy to identify everyone that has a net worth of $1 million or more. These are the millionaire next door types that Thomas J. Stanley and William D. Danko described in their 1998 book with the same name.
Here are a few of my favorites:
“When it came time to set his savings goals, he wasn’t afraid to think big. Financial success demands that you have a vision that is significantly larger than you can currently deliver upon.”
Thinking big is good, thinking you’re going to win the lottery isn’t good. It is okay to step outside your comfort zone and set a larger savings goal than you think you can accomplish. I know that when I’ve set lofty but realistic goals, I find that I’m more motivated to meet the goal. In the end, I’ve still managed to achieve more just striving to reach the goal than I would have had I just set a more tame goal.
“He knows that you can’t spend what you don’t see. You should use automatic paycheck deductions to build up your retirement and other savings accounts. As your salary increases you can painlessly increase the size of those deductions.”
I wish I’d grasped this concept earlier in life. As my household salary increased, I found that I was becoming a victim of lifestyle creep – nicer car, larger television, new tech gadgets and more. If you’re young, heed this advice – don’t automatically spend your raises, save them and you can capitalize on the magic of compound interest.
"If you need a lift, well, you’re going to get a ride in his ten-year-old economy sedan. And if you think that makes him cheap, ask him if he cares. (He doesn’t.)"
Sadly, I fail in this arena. I have a thing for cars, I always have. The longest I’ve kept a car is eight years. I hope to break that record with my current vehicle, but I have a long road ahead of me because I’ve only owned the car for about 16 months.
All of the advice that Penzo shares is spot-on and there is something for everyone to work on, regardless of income level. Becoming a millionaire isn’t a material goal, in my opinion; it is more about providing security for yourself and your family.