17 Things Millionaires Do Not Spend Their Money and Time On – Each of us has our own set of advantages and disadvantages, but self-made millionaires are people who have amassed significant wealth without relying on a large inheritance or trust fund. Self-made people start from the ground up and build their wealth over time, starting with basic money skills like budgeting and then moving on to saving and investing.
The money habits of the newly wealthy, as financial planners who work with self-made millionaires know, are practices that just about anyone can learn from, regardless of their financial situation when they first start out.
Self-made millionaires did not become members of the two-comma club without deviating from the norm.
Hundreds of self-made millionaires were studied for several years by various researchers, who discovered that many of them have different habits or heightened traits that help them build wealth. Many millionaires, for example, allocate their time differently, spending more time on personal growth, investment planning, and working and less time sleeping.
They also favor similar wealth-building strategies, such as saving as much as possible and diversifying their sources of income.
And when it comes to investing, millionaires love low-cost index funds and real estate. Millionaires also tend to be frugal, conscientious, and resilient — all traits that help amplify their wealth-building actions.
While some of the behaviors above may also ring true for non-millionaires, millionaires often exhibit them at a stronger level and with more consistency.
They also gravitate toward similar wealth-building strategies, like saving as much as they can and bringing in multiple income streams. And when it comes to investing, millionaires love low-cost index funds and real estate. Millionaires also tend to be frugal, conscientious, and resilient — all traits that help amplify their wealth-building actions.
While some of the behaviors above may also ring true for non-millionaires, millionaires often exhibit them at a stronger level and with more consistency.
Here’s what sets millionaires apart from everyone else — besides a seven- to nine-figure net worth.
Frugality — a commitment to saving, spending less, and sticking to a budget — is one of the wealth factors that help millionaires build wealth, according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute and an author of “The Next Millionaire Next Door: Enduring Strategies for Building Wealth,” for which she surveyed more than 600 millionaires in America.
Many of the millionaires Stanley Fallaw interviewed stressed the freedom that comes with spending below their means.
“Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar level of income,” she wrote.
Alan Crowhurst/Getty Images
A prime example of frugality is that millionaires typically live in a home and neighborhood they can easily afford, according to Stanley Fallaw.
She said that most of the millionaires she studied had never purchased a home that cost more than triple their annual income. The median home value for millionaires in her latest study was $850,000 (3.4 times their current income), with a median original purchase price of $465,000.
Jamie Squire/Getty Images
Being frugal and living in an affordable home enables millionaires to save. They recognize that income isn’t enough — they have to save what they’re making.
John, who runs the personal-finance blog ESI Money and retired at 52 with a $3 million net worth, has interviewed 100 millionaires over the past few years and found that the median millionaire spent $90,000 a year while earning $250,000 in income — a 64% savings rate. Saving it, he said, allows for investment.
While this savings rate might be slightly off because of things like not counting taxes as spending, the main takeaway, he said, is that millionaires “save a large portion of their income.”
If you make $250,000 and spend $250,000, “you are no better off at the end of the year,” he wrote.
Andrew Boyers/Reuters
But millionaires are able to be frugal and save without budgeting. Many of the millionaires John spoke with said they didn’t have a budget.
“While it was not expected, the reasons millionaires don’t need a budget makes sense — they make a lot and have self-control,” he wrote in a blog post. “In other words, they make a ton, spend only a portion of it, and have plenty left over. Who needs a budget?”
He added: “A budget is great for the early phases of a financial plan, but if you can grow your income and develop self-discipline not to spend, it’s not vital to your success later on.”
Alberto E. Rodriguez/Getty Images for Veuve Clicquot
Many millionaires favor moonlighting, or taking on a side hustle, according to Stanley Fallaw, who said it’s a good way to explore options while remaining employed full time.
“Those who are able to create multiple opportunities to generate revenue, who can translate hobbies into income-producing activities, will be successful at becoming millionaires next door in the future,” she added.
John also found that millionaires develop multiple streams of income, enabling them to grow their net worth exponentially, he said.
Vince Caligiuri/Getty
One side hustle they’re prone to taking on once they’ve built wealth is investing in real estate, according to John.
“Investing in real estate seems like a natural result once the basics are covered and excess cash is generated,” he wrote.
According to Dana Bull, a real-estate investor, the financial advantages of investing in real estate are plentiful: positive cash flow, appreciation in terms of housing values, leverage, and tax advantages.
Tristan Fewings/Getty Images for Cartier
According to John, millionaires also tend to use the same simple investing strategy: investing in low-cost index funds.
“The high returns and low costs of stock index funds (I personally prefer Vanguard as do many millionaires) are the foundation that many a millionaire’s wealth is built upon,” he wrote.
Experts agree that investing in index funds is a winning strategy when playing the stock market for two reasons: They’re broadly diversified, eliminating the risk of picking individual stocks, and they’re low-cost. Even Warren Buffett champions the strategy.
Charlie Crowhurst/Getty Images for Ascot Racecourse
Millionaires’ preferred investing strategies might be fueled by their research. Millionaire investors spend more time — an average of 10.5 hours a month — planning for investments, according to Stanley Fallaw.
That’s nearly two hours more than under-accumulators of wealth, defined as those with a net worth less than one-half of their expected net worth based on age and earnings, who spend 8.7 hours a month doing so.
“Their literacy in financial matters means that they are more tolerant of taking investment-related risks,” Stanley Fallaw wrote. “Future outlook and financial knowledge typically relate to taking greater financial risk, so the time they spend in managing and researching investments helps in decision-making.”
Charlie Crowhurst/Getty Images
Millionaires also spend more time focusing on personal growth. They spend roughly 5 1/2 hours a week reading for pleasure and nearly six hours a week exercising, while the average American spends two hours and 2 1/2 hours on those activities, according to Stanley Fallaw’s research.
“Successful individuals are keenly aware of how they spend their resources, including their emotional and cognitive resources,” Stanley Fallaw wrote.
Similarly, Thomas C. Corley, the author of “Change Your Habits, Change Your Life,” spent five years researching the daily habits of 177 self-made millionaires and found they devoted at least 30 minutes every day each to exercising and reading. Millionaires tend to read three types of books, he said: biographies of successful people, self-help or personal development, and history.
Alan Crowhurst/Getty Images
But millionaires make a few sacrifices to make the most of their time. They sleep nearly eight hours less a week and work six hours more a week than the average American, according to Stanley Fallaw.
That might be because many wake up at least three hours before their workday actually begins — a strategy to deal with inevitable daily disruptions, according to Corley’s findings.
“Getting up at five in the morning to tackle the top three things you want to accomplish in your day allows you to regain control of your life,” Corley wrote. “It gives you a sense of confidence that you, indeed, direct your life.”
Nigel French – PA Images/Getty Images
Corley also found that self-made millionaires are thinkers. The rich tend to think in isolation, in the mornings, and for at least 15 minutes every day, he said.
“Thinking is key to their success,” he wrote. “They spent time every day brainstorming with themselves about numerous things.”
He said they asked questions such as “What can I do to make more money?” “Does my job make me happy?” “Am I exercising enough?” and “What other charities can I get involved in?”
Cameron Spencer/Getty Images
According to Corley, millionaires don’t follow the crowd.
“We so desire to blend in, to acclimate to society, to be a part of the herd, that we will do almost anything to avoid standing out in a crowd,” Corley wrote. Failure to separate yourself from the herd, he said, is why most people never achieve success.
Instead, successful people create their own new herd, he said.
“You want to separate yourself from the herd, create your own herd, and then get others to join it.”
Michael Dodge/Getty Images
Millionaires seek feedback to help improve themselves, according to Corley.
“Fear of criticism is the reason we do not seek feedback from others,” he wrote. “But feedback is essential to learning what is working and what isn’t working. Feedback helps you understand if you are on the right track. Feedback criticism, good or bad, is a crucial element for learning and growth.”
It allows millionaires to change course and experiment with a new career or business, Corley said. “Feedback provides you with the information you will need in order to succeed in any venture.”
Jason McCawley/Getty Images
According to Stanley Fallaw, self-made millionaires use resiliency and perseverance — characteristics of early retirees and entrepreneurs — to build wealth.
“To build wealth, to build one’s own business, to ignore critics and media and neighbors, you must have the resolve to keep pursuing your goals past rejection and pain,” she wrote.
She added: “Millionaires and other economically successful Americans who pursue self-employment, decide to climb the corporate ladder, or strive to create a financial independence lifestyle early do so by perpetually pushing on.”
Ben Pruchnie/Getty Images
But millionaires can’t build wealth without the help of others.
Chris Hogan, the author of “Everyday Millionaires: How Ordinary People Built Extraordinary Wealth — and How You Can Too,” studied 10,000 American millionaires — defined as those with a net worth of at least $1 million — for seven months and found they achieved their seven-figure status with four key relationships: a coach, a mentor, a cheerleader, and a friend.
Corley emphasized the importance of having a mentor in particular.
“Finding a mentor puts you on the fast track to wealth accumulation,” he wrote.
Charlie Crowhurst/Getty Images
Millionaires take personal responsibility, practice intentionality, are goal-oriented, and work hard, according to Hogan. While those are qualities of many people, regardless of net worth, millionaires recognize that these traits can’t work together without consistency, he said.
“You can take responsibility, you can be intentional, you can set goals, and you can work hard,” he wrote. “But, if you don’t do these things repeatedly — year after year, decade after decade — then you’ll never get the results you want.”
Millionaires, he added, “know from experience that wealth-building is a long-term frame, and they’ve seen that sticking to the plan over decades leads to millions at retirement.”
Michael Cole/Getty Images
Most millionaires’ traits and habits tie into conscientiousness, which has a strong correlation to net worth, according to Stanley Fallaw.
“Many of the behavioral components that impact net worth, regardless of how old we are or our income levels, including frugality, planning, and responsibility, tie into this personality characteristic, and help us understand why it is so critical in the creation and maintenance of wealth over time,” she wrote.
Similarly, Jude Miller Burke studied 200 self-made millionaires for three years and found that they tended to be conscientious and displayed the trait at a higher level than less successful people.
6 Money Mistakes Rich People Don’t Make
Inequality of income. 1% of the population. The wealth disparity. You’re probably familiar with these terms—and the implication that true wealth in America is too exclusive for most of us to ever attain—unless you’ve been living under a rock recently (or you avoid network news like the plague).
Well, the truth is that you don’t have to start a multibillion-dollar tech company, have the surname Buffett, or work in a field that could be featured in a Michael Lewis book. (Though, let’s be honest, those things aren’t painful.)
What is it that you absolutely must have? The right financial mindset, as well as the habits that go along with it.
“The primary difference between the wealthy and the rest of us is that they have control over their money—they don’t let money control them,” says Jaime Tardy, a business coach and author of The Eventual Millionaire, who has interviewed over 150 millionaires about how they built their fortunes.
“They’ve taken the time to learn how to work with money successfully, and as a result, they’re the captain of their ship,” she says. “On the other hand, approaching your finances from a place of fear or ignorance will leave you floating around in the ocean without a motor.”
And that type of aimless attitude is what can lead you to make serious dollar-sucking mistakes—unless you learn to adopt some key good money habits of the wealthy.
So with that goal in mind, we rounded up the biggest financial blunders many people make—but prosperous folks avoid at all costs—so you can start to put their strategies into action to boost your own net worth.
Money Mistake #1: You Refuse to Face Facts
If you’re not a numbers person, it can be tempting to mentally cut yourself off from your finances, whether it’s neglecting to stay on top of your investments or blatantly ignoring your bank statements. But that’s a huge no-no—and those with sky-high bank accounts certainly don’t amass big bucks by being blind to their balance sheets.
“If you don’t have the facts about your financial situation, money will stream through your hands like water,” Tardy says. The consequence? You could land in debt, make poor investments—or end up flat-broke when you retire.
The Get-Rich Fix
“Some people assume that you have to be an investment banker to understand money, but the wealthy weren’t born with some secret know-how—it’s a gradual learning process,” Tardy says. “If you’re procrastinating about facing money because you’re scared of what you’ll find, you have to dive in. Even if it’s not what you wanted to see, the truth will allow you to make decisions and move forward.”
If you’re starting from scratch, the first step is to gather some basic information from your bank account, like how much you earn and what you spend, so you can figure out what you’re netting each month—and gauge whether your fiscal position is improving or getting worse. Once you have all the facts, you can start making thoughtful decisions about what you need to do in order to start growing your money.
On the other hand, if investing is your money blind spot, facing the facts might mean building up your knowledge base by listening to podcasts, signing up for a seminar, or hiring a financial adviser.
“Just make sure it’s a trusted source,” Tardy says. “Learn from people who are already where you want to be.”
Money Mistake #2: You Overspend
When you think about the type of lifestyles the rich can afford, you probably picture luxuries like a ski chateau in Chamonix or a closet full of Manolos. But wealthy people are more down-to-earth than you might imagine.
“Millionaires aren’t out there buying Lamborghinis,” Tardy says. “They make purchasing decisions based on their current financial status and their goals. They’re rich because they’re good at keeping money—not spending it.”
The Get-Rich Fix
Have your eyes started to glaze over from having the importance of proper budgeting hammered into you repeatedly? We get it. Despite their best budgeting attempts, some people still find it difficult to keep tabs on their spending.
Unfortunately, we can’t give you a free pass to throw this crucial money to-do out the window—but Tardy does have a solution for making it a bit more bearable.
“Make budgeting a game by giving yourself an interesting new challenge every week,” she says. “See how little you can spend on groceries, or even skip food shopping one week and invent meals using what you already have in the cupboards.”
The key is to identify the system (or mind trick) that you’re most likely to stick with—and then do it.
Money Mistake #3: You Neglect to Adjust Your Finances Following a Big Life Event
When you get married or a parent passes away, your bank account is probably one of the last things on your mind. But if you postpone adding your spouse to your will, canceling your joint account after a divorce, or signing on to your new company’s 401(k), your bottom line will take a hit.
“Successful people understand that every transition you go through has a financial implication—and they make sure to build a plan for those turning points,” says Pete Bush, a CFP with Horizon Wealth Management in Baton Rouge, LA.
The Get-Rich Fix
Whenever your life takes a turn in a new direction, find time to sit down, look at your finances, and adjust them accordingly.
“Think about it like football,” Bush says. “The coaches have a game plan heading in. But let’s say the quarterback, running back, and linebacker get hurt in the first quarter and are out of commission. Their original intention is now irrelevant, and they have to come up with a new blueprint.”
Money-savvy folks understand that even when you’re in the midst of a big event—like sleep-training your 6-month-old—it’s still important to consider your balance sheet … and open that 529 college savings plan that will help you save up thousands of dollars for the big financial burden coming in 18 years.
“Life transitions have many different components to them: logistical, emotional, spiritual, familial, and, yes, financial,” Bush says. “Count the financial piece among the others and give it equal weighting. It may not be the most urgent, but at least if you recognize up-front that it’s in the mix, you can make a plan to deal with it.”
Money Mistake #4: You Waste Cash on Fees
It’s one thing to burn through $100 on a fantastic meal at your favorite restaurant. Hey, at least you enjoyed yourself! But it’s entirely another to trash 100 big ones on overdraft fees or missed payments.
“The difference between wealthy people and everyone else is that the rich watch where their money is going, and they protect their wealth by making sure none of it slips through their fingers,” says David Bach, vice chairman of Edelman Financial Services and author of Smart Women Finish Rich.
“Rich people will rarely be caught paying their bills late, bouncing checks, or carrying a high-interest credit card because they hate to waste money.”
The Get-Rich Fix
Automate, automate, automate. We’re only human, after all, and we’re bound to miss a payment or overlook a bill at some point. So put safeguards in place that will lower the risk of those inevitable blunders.
“Set up auto-pay features to take care of your key bills—mortgage, car payment, insurance, credit cards,” Bach says. “Late fees can add up to a fortune.”
Of course, that also doesn’t give you license to simply coast. “Rich people read their statements, checking regularly for mistakes,” Bach adds. “They know that if they catch errors on their bills, they can call their provider and get them fixed ASAP.”
Money Mistake #5: You Focus on Saving More—but Not Earning More
If you’ve decided that you need to scale back on your spending, and your first inclination is to sacrifice your daily Starbucks fix or unplug every electronic item in your house when you’re not using them—stop right there.
Millionaires aren’t in the business of wasting money, but they also recognize the greater importance of earning additional income as a way to attain financial goals faster. “[Wealthy people] understand that while there is a limit on how much you can save, there is no limit to how much you can make,” Tardy says.
In other words, even though slashing your expenses by $50 or even $100 a month will boost your bottom line a little bit—raking in thousands more from a salary bump will have a much greater effect.
The Get-Rich Fix
If you’re feeling a pinch, invest your time more wisely by seeking out ways to earn more. An obvious place to start is by examining your current salary. If you haven’t asked for a raise recently, and know you’re delivering value to your company, schedule a meeting with your boss to make your case for earning more.
Another strategy? Use the hour you would have spent researching the cheapest online purveyor of dish detergent to brainstorm ways to bring in a side income.
“The key is figuring out what skills you have that can be of value to others and then determining how to charge for that value, whether it is a side venture, helping a friend with a project, or some other way of plugging into an opportunity of trading your value for [someone else’s] money,” Bush says.
Money Mistake #6: You Obsess Over Price—and Sacrifice Value
Sometimes our frugal intentions end up sabotaging us: You buy cheapie $50 shoes instead of a good-quality $200 pair that will last longer. Or you make repeated repairs to your gas-guzzling, circa 1992 Volvo station wagon rather than spring for a new model.
But rich people know better.
“Wealthy people understand that the cheapest route isn’t always the most valuable,” Bush says. “They are able to take the long view and consider how what they pay today compares with the worth over time.”
The Get-Rich Fix
Part of the solution is changing your mind-set from “find the rock-bottom price” to “find the best value.” Then do the math.
“Take the ‘bargain’ and ‘value’ options of whatever you’re looking at—a mortgage, car loan, etc.—and run the cost out over a reasonable time for that transaction,” suggests Bush. “Compare them both ways, taking into consideration your cash flow, and see which works best for your situation.”
So let’s say a car dealership offers a low rate or 0% interest if you finance a vehicle over three years versus a higher rate for five years. If you plan on keeping the car for seven to 10 years, what is the total price of owning it over that time frame? The longer you finance something, the lower the monthly payments—but the more it costs over time. So it’s not as much short-term pain, but it gives you less to build savings with over the long term.
Also, remember that enlightening experiences are inherently more valuable than material goods. “Once you have an abundance of stuff, you quickly realize that you don’t need more of it,” Tardy says. “Millionaires understand that valuing the experiences that change you as a person—be it travel or skydiving—will do more for you than just getting the iPhone 6, when the iPhone 5 worked just as well.” (By the way, Tardy knows several millionaires who still have the iPhone 4!)
So start paying attention to what you are doing when you feel happiest and most alive—and put your financial efforts into creating more of those moments.
You May Also Like:
No Comments on 17 Things Millionaires Do Not Spend Their Money and Time On