The “millionaire next door” refers to the fact that many of today’s millionaires — and there are now more of them in the U.S. than the entire population of Sweden — aren’t driving Bentleys while they light cigars with $100 bills. Instead, they’re seemingly ordinary, run-of-the-mill-folks who mow their lawns, put up cheesy Christmas decorations, and do other ordinary things. And oh yeah, they also happen to have a massive net worth that most people will never come close to experiencing or enjoying.
So, how did these folks surge — and stay — in the coveted ream of the one percent? The vast majority of them didn’t win the lottery or inherit a fortune. Instead, they made some or all of the following extremely prudent and profitable decisions:
1. They refused to keep up with the Jones’s.
Nothing — repeat, nothing — costs more in life than trying to keep up with friends (and frenemies) with respect to vacations, cars, home furnishings, and the list goes on. Millionaires focus with laser precision on their own lifestyle, and buy things when they truly need or want them; not when they are triggered to do by a boastful neighbor, relative, colleague, etc.
2. They are extreme savers — but not misers.
Millionaires don’t cackle in their unheated basement in the middle of winter as they separate two-ply toilet paper to double the fun, or stare lovingly at their drawer full of fast food restaurant condiments crooning “myyyyyyyy preccciioouussss.” Yes, they are extreme savers and get an even bigger dopamine and endorphin burst when they wisely save money than when they wisely spend it. But they aren’t misers, either. When they want or need to spend, they do so happily (or as happily as they can — nobody throws a party when faced with an unexpected car repair bill). They’re also surprisingly generous when it comes to supporting charitable causes that they believe in.
3. They keep their stuff for as long as possible.
Think that the millionaire next door is obsessed with making sure that the car in his driveway is an envy-inspiring luxury sedan or SUV? Think again! He’s much more likely to have a 10-year old Honda Accord or Toyota Camry than a shiny new BMW or Mercedes. And you can forget about him moving because he’s bored, wants a bigger walk-in closet, or his home needs foundation repair. He’s staying put unless and until it makes very strong financial and lifestyle sense to make a move (e.g. job transfer, baby on the way, etc.), and you can be sure that he’ll stay well within his budget vs. overspend.
4. They focus on paying off their mortgage.
Millionaires don’t believe in what banks call “20-year mortgages” or some other duration. Instead, they focus relentlessly on paying off their mortgage as quickly as possible, which typically means forgoing vacations and other big ticket purchases until they — and not the bank — completely owns their home.
5. They’re not obsessed with money.
Perhaps the most surprising secret of millionaires — that is, the one who stay rich — is that while they certainly understand the importance and value of money, they aren’t obsessed with it. They embrace the definition of wealth provided by New York Times “Wealth Matters” columnist Paul Sullivan, who spent many years communicating with millionaires from all walks of life — from teachers to hedge fund managers. Said Sullivan: “You’re truly wealthy, he adds, when you have enough money to do all the things you want to do.” That about says it all, doesn’t it?