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Monday, March 31, 2014

14. Would You recognize a Rich Person?

Warrant Buffet once said of his modest home, “For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories, with more to come.”

Buffet could've invested in a multi-million dollar home but instead focused on the value that his family gained by keeping the same house. The house is now worth over $350,000 and his portfolio is over 40 billion!

There are a lot of books out there on what it takes to become a millionaire. One that stands out is The Millionaire Next Door by Thomas Stanley and William Danko. The book is based on years of studies, interviews, and case studies of millionaires. It can also be found at as well as your local library for free!

There are many people who earn high incomes yet fail to accumulate any lasting wealth. These people spend their money as fast as they earn it. They don’t invest money and think of the future. One finding by Stanley and Danko is that a person must not only have a high income but also develop frugal spending habits. Most people and even financial literature focuses on one or the other: earning more or spending less. This book suggests and gives evidence for the need for BOTH to be present for a person to succeed. 

Here’s some interesting finds in the book:

*80% of America’s millionaires are first-generation rich. This is contrary to those who would have you believe that wealth is usually inherited.
*20% of millionaires are retired
*50% of millionaires own a business
*97% of millionaires own their own home

“In the course of our investigations, we discovered seven common denominators among those who successfully build wealth.”
The seven characteristics are: 

1. They live well below their means.
2. They allocate their time, energy, and money efficiently in ways that are conducive to building wealth.
3. They believe that financial independence is more important that displaying high social status.
4. Their parents didn’t support them financially.
5. Their adult children are economically self-sufficient.

6. They are proficient in targeting market opportunities.

7. They chose the right occupation.

For details continue reading by clicking this post with a more thorough bookreview of the Millionaire Next Door… Otherwise, thanks for stopping by! 

What do you think? Do you agree with characteristics above? Leave a comment!