A recent article in Money Magazine listed four simple strategies that many millionaires use to get rich. While I have nothing against being wealthy, I believe that finding meaning and purpose, achieving happiness, and discovering our unique rightsized lifestyle is far more important. But interestingly enough, the four tips offered by Money Magazine actually translate into four keys for living SMART 365. So, even though my examples won’t be the same as those shared in the magazine, the similarities are remarkably close. Ultimately, these four lifestyle hacks can help to make each of us more financially secure regardless of our age. Even better, they can lead to a more stress-free and right-sized life at the same time.
One thing I especially appreciated after reading the article was the emphasis on how wealth building boils down to having the right mindset more than anything else. Sure, it would be nice to win the lottery and have a couple of million bucks in the bank. But as most of us have heard before, nearly 70 percent of people who win a lottery or get a big financial windfall usually end up broke in a few years, according to the National Endowment for Financial Education. Obviously, a big chunk of money does not make a person wealthy, let alone happy. If we want to stay rich or just money-secure, a SMART money consciousness is necessary.
With that awareness, author Sarah Fallaw explains that the right mindset or money awareness leads to a “greater wealth potential for people of all ages and incomes.” In fact, according to Money Magazine, the majority of millionaires in the world today came from middle-class households, and one in five grew up poor. Few had their wealth handed to them; instead, they developed a wealth mindset somewhere along the way. Ultimately, the richness they craved, (and most of us do as well), was the financial freedom to pursue the life they wanted. Here’s how.
Four key traits that build wealth potential.
#1 Frugality. I don’t know about you, but I hated this word until I hit 40. When young, most of us don’t like to be told “no” for any reason, especially when it comes to money. But until we learn to control our present-moment desires in order to enjoy future benefits, we will always struggle just to live within our means.
Something millionaires learn early on is that one of the easiest ways to build wealth is to compound their resources as much as possible. Until any of us can learn to delay our gratification, we will never enjoy the benefits of compounded good—be it money or anything else.
Fortunately, in my life, my husband Thom and I learned to invest in real estate. When you put your money in a non-liquid investment like real estate, it forces you to hang on to it and let it “compound” naturally. Once we saw how our equity grew by just leaving it alone, the next step to saving money was easier. Now we live far more frugally than we ever did at a young age, even though our resources have grown exponentially. Not only is frugality a habit we embrace, half of our current income goes into investments.
Remember, true frugality doesn’t mean that you never spend money. Rather it means that you only spend/invest your money with awareness, intention, and mindfulness.
#2 Confidence. People with wealth potential trust themselves and come up with a plan that fits their lifestyle. While this might seem obvious, far too many people second-guess themselves or turn over their financial future to someone else to handle. That passive strategy is a huge problem for those who, like lotto winners, end up with massive amounts of cash or a large income, and not only don’t know how to hang on to it, they often find the wrong advisors.
In the beginning, Thom and I didn’t have much of a plan either. We routinely spent more money than we made and loosely followed the advice of others we thought were wiser than us. Fortunately, we woke up at some point and realized that we had gained as much or more knowledge than others, what we lacked was the confidence to follow our own guidance. Of course, it did take a learning curve, but at some point, it’s time to trust your personal choices, even if that decision is about who to trust with your money.
#3 Responsibility. Most millionaires take full responsibility for both their wins and their losses. Anytime a person blames anyone else for mistakes or even roadblocks, they give away their power and make it external to themselves. Instead, by approaching every circumstance or challenge as though you are entirely responsible, you maintain the “ability” to move forward no matter what. Not easy. But a far more powerful advantage.
Thom and I have certainly made mistakes along the way. But we both came from families where personal responsibility was a priority. Even when it is tempting to blame others like the government, the economy, our parents, or a boss the responsibility for our choices, good and bad, lies squarely on our shoulders. Then, and only then, do we each have the ability to move forward in a positive way.
#4 Social Indifference. This strategy may seem to be misplaced but in some ways, I think it is the most important. Unless and until a person can stay true to himself or herself, regardless of what others think, they put their strength and power external to themselves.
In many ways, discipline is a corresponding word. Avoiding the need to seek approval of others, developing the strength to take risks in spite of trends, and ignoring the need to be loved, or even liked, is critical. Any time any of us does what we do to “buy” love or approval we put our life and our financial future in the hands of others.
A small example of this was when Thom and I stopped buying gifts for family members and friends at birthdays and Christmas time. We did it for three reasons:
- We were unwilling to spend money we often didn’t have to buy presents just to appear loving and generous.
- We felt strongly against the commercialization of holidays and the overabundance of mostly junk.
- We refused to compete with others to see who could buy the best or most expensive gifts.
Just taking that strong stance with the people we loved and we hoped loved us back was a huge statement to ourselves about our willingness to live according to the four traits we were learning to embrace.
- Responsibility and
- Social indifference.
Since making that decision so many years ago, similar choices have presented themselves where we had to be faithful to ourselves and our intentions. Looking back, I can see where each of these strategies link together.
The Money Magazine article offers more ideas about how millionaires save money and orchestrate their lives. But like four corners of a building, these four ideas provide a strong foundation that each of us can use to create more wealth and financial security in our lives. And when you think about it, before anyone can offer us ways to save money or make more, we’d better have these cornerstones in place. Once they are present, the SMART path to a wealth mindset is ours to keep.