Craig and I were interviewed recently concerning our philosophy of Wealth Management. Craig said something I had completely forgotten. When asked who our typical client is – he responded, “the millionaire next door.”
Please listen to the entire interview on our home page.
It led me to reread “The Millionaire Next Door” by Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D. They state the reason that millionaires are economically successful is that they think differently. They know what they can control and what they cannot.
- Cannot control the stock market— can control the amount I save.
- Cannot control the value of a stock – can control my diversification.
- Cannot control the price of gasoline— can control the costs to maintain my portfolio.
- Cannot control the business environment – can control how hard I work.
- Cannot control outside influences on my children – can control how much time I spend with them
Most millionaires live a life that may seem not very exciting. Over half of the millionaires in the United States do not live in upscale neighborhoods. Wealth and excessive consumption do not seem to go hand in hand.
Over 80% of the millionaires in the United States are self-made. To them, the journey was more satisfying than the destination. According to Dr. Stanley, they come from various backrounds— 19.5% German, 10.3% English, 9.6% Irish, 4.8% Italian.
According to Dr. Stanley millionaires...
- Think differently
- Set Goals
- Live below their means
- Did not receive a lot of economic help from their parents
- Their adult children are economically self-sufficient
- Chose the right occupation (unique ability)
They think differently
Financial independence is more important than displaying high social status. According to Dr. Stanley the predominate car – Ford// predominate suit worn – 5 years old from JC Penny // predominate watch – Timex.
They have traditional values and know how to target opportunities. They know that “we always did it this way” is a dangerous motto and they are not afraid to change. They know their unique abilities and use them to their fullest extent surrounding themselves with smart people to do the things they are not a genius at. They are in businesses that some would consider dull and uninteresting— Contractors – Trucking – Wholesaling – Grocery – Sales – Manufacturing.
Their spouse is a meticulous planner and budgeter. They believe education is very important to them and their children – they spend heavily on their children’s education.
They are fastidious savers and investors. An average savings rate of 15 to 20 %. One told me he lived by the 50/25/15/10 rule. Live on 50% – give the government 25% – save 15% – give the Church 10%.
Meyer Wealth worked with a professor at Columbia University to develop The Evolve Planner to help young people establish good habits in saving, budgeting, and goal setting. We presented 50 planners to the Marketing Club at Aurora University. Please go to our website www.meyerwealth.com under BLOG and see the presentation.