You might not realize that the guy in the cubicle next to you owns a sweet vacation house right on the beach, or that your next-door neighbor just paid the down payment on her daughter’s first home. That is because there are a large number of invisible rich in this country — ordinary people who have accumulated extraordinary wealth through a combination of hard work, dedication and delayed gratification.
Chances are you already know at least one millionaire, but it is probably not the person you think. The guy driving by in a brand-new Porsche may not be a millionaire, but your neighbor with the 10-year old Saturn just might be. That is because Mr. Porsche is funneling his paycheck into the payment on his fancy car, while Mr. Saturn paid off his wheels years ago and put the money in his 401(k) instead. You can learn a lot of valuable lessons from their examples, and follow their path to a lifetime of economic security.
Work for Yourself
Entrepreneurship and business ownership are two things most self-made millionaires have in common. While working for yourself is not a guarantee of success, it does put you in charge of your financial future.
If you are not ready to quit your day job or give up your steady paycheck, look for ways to turn your interests into a part-time business. If you love to fish, think about starting a fly tying business or leading guided tours down the local rivers. If you love to garden, set up a roadside stand to sell your extra tomatoes or sell your wares at the local farmers market.
Running a part-time business while working full-time is an excellent way to test the waters and assess risk. Self-made millionaires are not afraid of taking chances, but they are good at avoiding unnecessary risk.
Live Below Your Means
One of the most important things the invisible rich have in common is the ability to live below their means. While their coworkers moved on to ever larger houses and ever higher mortgage payments, they remained in the same small but comfortable house they always enjoyed. While their friends moved to more exclusive neighborhoods and bought the same expensive toys as their new neighbors, they spent prudently and enjoyed their lives to the fullest.
The millionaire next door is also not afraid to buy used goods when it makes sense. Whether they are buying a car or a piece of furniture, they look around for the best value and choose accordingly. They do not worry that the neighbors will scoff at their second-hand living room set or 5-year old car; they just enjoy them and invest the savings.
Surveys of self-made millionaires are very informative here. Those surveys reveal that only a small percentage of millionaires are driving a new car – most are driving a vehicle that is at least a few years old. The percentage of millionaires sporting Rolex watches and drinking $100 bottles of wine is even smaller – most millionaires rarely spend more than $20 for their favorite vintage.
Putting Savings First
Chances are the hidden millionaires in your life did not inherit their wealth or win the lottery. They know that get-rich-quick schemes are rarely successful. They take the get-rich-slowly approach instead.
That means they prioritize saving and investment over spending and conspicuous consumption. They take advantage of tax-advantaged programs like 401(k) plans and IRA accounts, and they diligently put money aside month after month and year after year. The results of all that hard work may not have been apparent right away, but their accounts continued to grow and they continued to save.
It may not be easy to live like the millionaire next door, but the rewards can be well worth the effort. You may crave that brand new sports car, but putting the money into a good mutual fund can give you something you will enjoy for a lifetime. Saying no to immediate gratification and keeping your eye on the long-term goal is not easy, but it is important.