Retirement. Yuck. Wealth Building. Yay!

Over the years I’ve noticed that personal finance can be a very touchy subject for a lot of people. For whatever reason, I’ve just always enjoyed learning and talking about it. I’m probably way over into the realm of TMI as several of my close friends continually tell me. My filter is set pretty low.

Lately, I’ve been considering a widely used term in the personal finance world. Retirement. Yuck. Just saying it brings a bad taste to my mouth. I’m 46, and by traditional standards, I’m about 19 years away from retirement. However, I don’t like the word retirement, nor do I like the idea of waiting till I’m 65.

Retirement is a Dirty Word

To me, retirement is a dirty word. When you’re young, you don’t really care about it. When you’re old, you’re scared of it usually because you didn’t do a good job preparing for it. For example, my dad feels like he’s invincible. He’s 67 and works 50-60 hours a week. He plans to work until the day he drops. Is that realistic? No, especially since he’s been smoking since he was around 10 years old. However, he doesn’t have any other option. No retirement, and social security is a joke.

So, I prefer to dump the term “retirement”. It’s a dirty word. Instead, let’s use the words “wealth building”. Whether you are young or old, you can and should do wealth building. The more wealth building you do, the better off you’ll be when you need money. And who wants to retire in their 60s anyway. Try setting a date to quit working at 59 1/2 years old which is the earliest you can draw on your retirement without tax penalties. If you did enough wealth building earlier in your life, it’s totally doable.

I’m big on the 59 1/2 years old or sooner number because of my past life experiences. I’ve seen too many of my friends and family pass away in their 60s to wait. My mother passed away last year at age 67. My former boss passed away around 65. Every one of them would have had a good 5-10 years to enjoy more time with their family and living life however they wanted if they’d just focused more on their wealth building and broke free from the traditional “retirement mindset.”

Wealth building. 59 1/2 years old or sooner target. Do it.

Vanguard Retirement Wealth Planning Tools

Vanguard Retirement Wealth Calculator

Can $10,000 Make You a Millionaire?

Lots of people dream about becoming a millionaire and “living the dream”, but only a relative few do anything about it. Today roughly 8.5% of American households are millionaires. While that’s up significantly from the 3.5% in 1996, I personally would like it to be much much higher. That’s why I’m writing this blog. To help make more millionaires and help people enjoy more freedom in their life.

Quite a few people have a warped view of wealth. They either believe they will never have it, or they believe it is bad. Both of those views of wealth are broken. Attaining wealth is a good and worthy goal. And guess what, wealthy people can help more people than poor people can. So if you have a choice of being wealthy or not being wealthy, why not choose wealth?

Now, in talking with many of my friends, I’ve realized that quite a few are just stuck. The idea of being wealthy or being a millionaire is a bit unrealistic to them, as it was for me until I turned 26. At 26, the lights came on, and I set off to become a millionaire. Now, 20 years later after I made it, I’ve come to understand that sometimes all people need is a little prod, a little knowledge, and a plan.

Too many of us spend our income wasting it away on frivolous things. I’ve been as guilty as anyone, but fortunately, I put a ton of money back as well. I started investing at 26. $500 a month into mutual funds and dabbling in stocks like Intel, Dell, Nvidia, and others. I made some decent money for a young guy making $40,000 a year, but I should have and could have done better.

I’m a numbers nerd, so understanding how it all works comes pretty easy for me. Now I want to make it a bit easier for you. Let’s get started.

A Spending Plan (a.k.a. Budgeting)

If you want to build wealth, you have to get your spending under control. Planning your spending intimidates a lot of people. That’s why “budgeting” is such a dirty word for a lot of people.

Now you can do a complicated spending plan if you want to, but a simple one can help get you on track for building wealth. You can count the pennies and nickles later to fine tune your spending plan.

Break your money down into 4 categories.

  1. Living Money: Money that you need to support your basic lifestyle. This includes housing whether you are renting or buying a house, food, utilities, car, insurance, clothing, education, and medical.
  2. Play Money: This includes the things you do to make life enjoyable. Date nights, gym memberships, hobbies, vacations, a four wheeler, a boat, etc. Generally you could call this “the perks of life” category. You have to have some play money in your life of you’ll dry up and become miserable. However, you have to be balanced as well. Put too much money in this category and you’re wealth plans could be toast. Quite a few formerly rich people have put too much money in this category only to see all of their wealth go up in smoke. Don’t make that mistake as you are trying to build your wealth.
  3. Wealth Money: Now as you can guess, this is the most important category for someone wanting to become a millionaire. This is the category that is going to determine if you become a millionaire, and if so, how fast. The more money you can get into this category on your spending plan the better. We use this category in a couple of ways. If you’re in debt, you need to get out as quickly as possibly. Debt will rob you of your ability to build wealth. We use this category to accelerate paying off your house if you want to do that. Third, we use this category for investing. That’s what most of this post is about. Wealth Money.
  4. Other Money: This is anything that doesn’t fit cleanly in one of the other categories. It includes things like birthday gifts, church tithes if you attend a church, Christmas presents, and things like that. Generally things in this category aren’t required to do and the amounts may vary quite a bit. You have wiggle room to adjust things a lot in this category as long as you don’t leave off your mom or spouse’s birthday.

Now I’m not going to cover the spending plan in today’s post. I’m going to only focus on the wealth money part of your spending plan. If you want to be wealthy, you have to put as much money into this part of your spending plan as fast as you can. Wealth can be built really fast if you’re a .com startup like facebook, or it can be built over time. The most common way to build wealth is over time through good financial decisions and investments.

Wealth Money

Wealth Money. So many people miss building wealth because they are busy spending their money on lattes, cable and new cars when they could be building wealth. I like to keep things simple…well, that’s exactly not true. I like complicated things, but sometimes things can be simple. We just over complicate them. Building wealth doesn’t have to be complicated. In fact, it really isn’t complicated. What do I mean?

Take $10,000 for example. It’s a simple number. It intimidates a lot of people. Have you ever held $10,000 cash in your hand? Try it. It’s pretty cool. Once you hold it, $10,000 doesn’t seem like a big number anymore.

Now, if you take $10,000 as your base investment number, what happens is pretty interesting.

  • $10,000 over 20 years becomes $67,275
  • $10,000 over 30 years turns into $175,000
  • $10,000 over 40 years turns into $452,000
  • $10,000 over 50 years turns into $1,173,000
  • $10,000 over 60 years turns into $3,044,000
  • $10,000 over 70 years turns into $7,897,000

These numbers are all based on a 10% rate of return which is an acceptable and available rate of return in the mutual fund and stock market. With the right investment, you can beat 10% and build even more wealth. I like using the 10% number because its simple to calculate, understand and readily available. Let’s go with it.

Now, you may be saying “Where do I get $10,000?” or “Are you kidding? I’m 45. No way I’m going to be wealthy. You just proved it to me.” Scrap those thoughts. Wealthy people all have one thing in common. When they run into problems, they figure out a way to deal with them. So what if you don’t have $10,000 right now, figure out how to get it. So what if your 45, find a way to increase your income and make up for lost time. Heck. Colonel Sanders started KFC in his 60s. Most people are retiring in their 60s. He was just getting started! $10,000 isn’t that much money when you break it down. $10,000 spread out over 1 year is $833.33 a month. Now how can you find $833.33 a month? There are tons of ways. At $10 an hour, it’s only 80 more hours of work a month. 20 hours a week. Or if you work at Costco and make $15 per hour, it’s 56 hours. Find a way. Don’t stop looking until you find a way.

As part of your spending plan, put as much money as you can into that wealth money category. In fact, scale everything back that you can until you hit a really good wealthy money number. If you can’t get to $10,000 year, start with what you can, then work towards $10,000 year as fast as you can. Once you hit $10,000, see if you can multiply it. Can you get to $20,000? Always up your goal. The more wealth money you can sock away, the faster it will grow. The bigger it will grow. Your first stop on this journey is the millionaire milestone. Once you do that, you’ll dream even bigger. You can do it.

Now, your homework. Play with your own wealth money numbers. Take that $10,000 and multiply it. What if you did that every year for 30 years? Well, I’ve already done the work for you and I’m including it in this post. Dream big! The more wealth you create the more good things you can do in this world, and guess what, it’s a lot more fun too when you have some wealth. I love traveling and I’ve got a long bucket list of places I want to go.

20, 30, 40 Year $10,000 Investments @ 10% Charts PDF

20, 30, 40 Year $10,000 Investments @ 10% Excel Spreadsheet

You can play with your own investment planning with this investing calculator at Bankrate.com or this more colorful and simple investing calculator at SmartAsset.com .

You’ve Got Your $10,000 Investment Money

Congratulations. You’ve figured out how to get your hands on $10,000 to invest. Now what do you do with it? You invest it. Where you say? Great question.

You can invest in a multiple of ways, but if its your first $10,000, you should probably play it a little bit safer. Stay away from single stocks. Mutual Funds are a better investment for you. Your first investments should go into your 401k or a Roth investment usually through your workplace. Even inside of those investment tools, you want to make sure you pick the right investments. Again, you’re looking for investing returns of 10% or higher for over 10 years.

Outside of your workplace, you can invest through an financial advisor or you can go direct to some of the best mutual providers like Janus, Fidelity, Oppenheimer or Vanguard. They have research tools that help you select funds. Again, you want funds that return 10% or more over the long haul. That’s averaging 10% growth per year over 10 years or longer. You can also use Morningstar.com to help you with your research.

Find a solid growth stock mutual fund at 10% or more and there you go. You’re off to the races. Oh, and one more thing. Don’t freak out if the stock market and your mutual fund drops. You leave your money in. The people that freak out and pull their money out, lose. Only take money out at retirement (59 1/2 years old) and preferably only when the market is up.

Working. Making Money. Building Wealth.

Work. 95% of eligible Americans do it.

I started working for minimum wage at age 13. Before that, I worked for my Dad helping out on his job sites. Sweeping floors, carrying trash, but I always wanted to hammer or saw something too. Apparently power tools aren’t for kids under 10 years old. For my mom, it was working at the convenience stores she managed re-stocking shelves, and yes once again, taking out the trash. Oh, and re-stocking the cold drinks in the cooler. That should have been called torture! My hands got so cold!

Eventually, I graduated up from family jobs to a real job at the local grocery store sacking groceries. I still think that was one of the most fun jobs I’ve had. Sacking groceries, checkout lines, sweeping and mopping floors, restocking shelves, and helping people to their car with their groceries. Once again, it paid minimum wage or close to it.

After graduating from high school, it was time for college, and I was a bit more ambitious with what I wanted to earn in compensation. I moved up from minimum wage to $7 per hour while working for RPS (Roadway Package Systems), and then it happened. I landed a $15 per hour summer job with P.I.E. freight company! My world was rocked. I was making $600 a week! Along with that jump came a shift in my expectations and what was possible with my income. As a young man and college student, I had reached a break through!

So many of us go through a similar experience of working and making money. Thinking in terms of single dollar increment raises. A $1 per hour raise blows us away! After I got out of college and landed my first engineering job, that’s exactly the world I lived in. Once I knew I could earn $15 per hour, I knew one day I could do it again, and I did. But sadly, I couldn’t imagine anything much more than that. $15 per hour is roughly $30,000 on a 40 hour a week job. $20 per hour is $40,000 per year. $30 is $60,000 per year. Hourly Rate x 2000 hours of work.

So ask yourself this question, how much money do you want make for your 2000 hours of work per year? $40,000? $60,000? What about $100,000? What about $250,000? More?

The idea of making $250,000 per year may sound ridiculous to many people who read this article, but it is doable. Lots of people are doing it. Why not you?

We can all work to make money, but working doesn’t have to be the only way we make money. Many people make money by developing multiple income streams. They start with a typical job, and develop supplemental income streams

Making More Money

So you want to make more money? I applaud you. Don’t settle for the status quo, every day routine. Expand yourself.

  1. Grow yourself. If you want to make more money, you have to grow yourself. You have to make yourself more valuable by learning and increasing the value you offer.
  2. Look for opportunities at work. Can you contribute at work on a higher level? Sometimes opportunities are right around the corner. Don’t wait for opportunity to find you, go looking for it.
  3. Be excellent. Do the best work you possibly can. Sloppy work won’t get you very far, and it definitely won’t make a you a highly valuable and top paid employee. Be excellent. Do excellent work, and money will flow your way.
  4. Might be time for a job change. Many people get stuck in a lower paying job because they get comfortable. You work the same hours whether you get paid $30,000 or $120,000. Why stay with a company that can’t pay you or won’t pay you more for your work? Think about this. If you make, $60,000 a year, that’s like working 2 years for $30,000 a year! Land a $120,000 a year job and thats 4 years at $30,000 or 2 years at $60,000. Don’t get stuck in a low paying comfortable job.
  5. Develop income streams outside your typical JOB. Developing multiple income streams can let you keep your day job and make extra money to help build wealth faster. You can start with side work, a hobby, or even a small business on the side. Millions of people are doing what is called an MLM (Multi-Level Marketing) or Direct Sales. While MLM has a bad stigma in the United States, millions of people are successful in using to make money to supplement or even replace their entire income.
  6. Rental Properties. Rental properties and real estate are historically a great income stream. Whether you’re flipping properties or buying a few rentals, you can make money in real estate. Starting with a low cost townhome rental can get you going or even renting out a room in your house. AirBNB makes it easy to find short term renters or if you like stability and a little more security, look for a longer term renter.

If you want to build wealth, multiple income streams will help you do it. I waited a bit longer than I should have to create my own multiple income streams, but I’m working hard to put them in place now. We have purchased 2 rental properties over the last 2 years. Now I’m engaged with Wealth Generators , a good MLM based around investing and helping people build wealth. They’ve created some investing tools, financial training and money management tools to help everyday people succeed with money. It’s right up my personal finance and wealth building alley. For more information on Wealth Generators, drop me an email. tony @ tonybradshaw.com

If you want to go the MLM route, there are tons of good companies like Melaleuca, Advocare, Kyani and others. If you are interested in one of these programs, I’ll be glad to connect you to some very awesome people. Drop me an email. tony @ tonybradshaw.com

How much more do you want to make per year and put towards your wealth building? $6,000 per year? $10,000 per year? $100,000 or more perhaps? It’s all up to you and what you choose do. The more money you can sock away into your passive investments or building your income streams, the faster you will become a millionaire and the more people you will be able to help with the wealth you’ve built.

 

 

What’s Your Net Worth?

Have you ever asked yourself that question? What’s your net worth? If you haven’t, then you probably should. Your net worth is a good way to tell if you are winning with your finances or not, and it’s kinda fun to do.

What is “Net Worth”?

Have you ever played organized sports? Baseball? Football? Basketball? Soccer? Something else? No matter what game you’re playing, there’s usually a score involved. That’s how everyone knows who is winning and who is losing. And make no mistake, the goal is to win. However, so many of us don’t have a goal for our finances, and as a consequence, we end up losing the game of money. We don’t know what the score is, and we don’t know what the goal is. It’s sad. It doesn’t have to be that way.

Your net worth is a financial calculation you can and should do annually to keep score on your finances. It takes your current assets (things you own) and subtracts your liabilities to give you your “net worth score”. Your assets are the things you own like cash, investments, cars, homes, boats, jewelry, and if you’re in the southern United States, probably a collection of guns. Your liabilities are your debts and money you owe. Subtracting your liabilities from your assets gives you your balance or net worth. If you are in heavy debt, it is quite possible to have a “negative net worth” meaning your finances are worth less than “0” and so is your net worth. While that sounds absolutely horrible, it’s better to know what the score is than to not know. Otherwise, you won’t know if you’re losing the game and what you need to change to “change the score”.

It’s important to check your net worth. I recommend calculating it and tracking it at least annually. This can help to hold you accountable on how you are handling your finances. It’s way too easy to make a lot of money and end up with very little progress by comparison to your net worth.

Way too many people make huge amounts of money and live the rich lifestyle, but never accumulate any wealth. Why? One of the reasons is they didn’t keep watch on their net worth. It doesn’t mean anything if you make a lot of money, but fail to manage it well. It doesn’t make a difference if you make $500,000 a year of $500,000 a month, if you don’t grow your net worth. I know it sounds crazy, but you can make $500,000 month or more and still have a net worth of $0 if you spend all your money and go into debt.

Knowing your net worth can give you a goal to aim at. Do you want to be a millionaire? Do you want to be a multimillionaire? How do you know how close you are to your goal? How do you know how far you are away from your goal? Knowing your net worth can inspire you to stay on track with your financial goals.

I really like this tool from CalcXML for calculating your net worth to help calculate your net worth.

Growing Your Net Worth

As you track and grow your net worth, it’s important you do the right things with your money. Just stuffing it into a savings account isn’t going to cut it. You need to look for good investments that help you grow your net worth. Rental property investments, mutual funds, well selected stock investments, and even small business opportunities like franchises can all be good ways to increase your net worth outside of the traditional J-O-B.

So many of us get stuck in the single mindset J-O-B. I’ve been fortunate to have awesome employment for over 20 years, but I still wish I had spent more time looking into developing multiple income streams. It’s only been in the last few years that I’ve begun developing multiple income streams. Traditional 401k investments have been in my toolbox for 17+ years. I began acquiring rental properties over the last 3 years. I wish I had started sooner. Now I’m looking at small business and other opportunities to grow my net worth.

$0 or Near $0 Net Worth

I have several family members that really don’t get finances and money. If fact, one of them has attended the same financial class 3 times over 15 years. That’s once every 5 years! Want to guess their net worth? -$50,000. Age 42. That’s a very bad situation to be in.

If you owe a ton of money on your house, it can take a huge chunk out of your net worth. Let’s say you have a $300,000 home, but you also owe $250,000. Your net worth is essentially $50,000. But wait, that’s not all. You owe $25,000 on a $30,000 car. You have $40,000 in student loans.

So now we have ($300,000 home + $30,000 car) minus ($250,000 house debt, $25,000 car debt, $40,000 student loan debt) for a net worth of $15,000. On the surface, this person could feel pretty good about their finances. They are living in a nice house, driving a nice car, and the student loan debts are under control. In reality, they’re very poor.

This is the reality for the average American.

Unless you have a number like net worth to keep score, it’s easy to think too broadly as “I’m poor”, “I’m doing okay”, or “I’m rich.” You can have a net worth of $30,000 or -$70,000, both are poor. It’s easy for someone who can pay all their monthly bills to think they are doing okay, but if their net worth is low, they’re really not doing okay. And some people even think they are rich because have a huge income and some nice toys, but their net worth could be $250,000. They’re not rich.

Net Worth Mindset

Developing a net worth mindset can help you keep your finances on track and headed in the right direction. It’s a simple way give you goal to help you cut out the waste. If you know you are shooting for a goal to become a millionaire that’s a net worth score of $1,000,000. It’s a lot easier to make good decisions with your finances. A good financial decision is one that gets your closer to your goal. A bad financial decision is one that keeps you from your goal.

Last night, our family went out to eat. I have 6 children. It’s expensive to eat out. It cost me $80 to eat cheeseburgers from Five Guys. On the way to Five Guys, my wife and I discussed that we can feed our family at home for $25. Eating at Five Guys did not help me build my net worth, but it sure was tasty.

Net Worth Target

I’m a believer that every American can become a millionaire, so your absolute minimum net worth goal is $1,000,000. I was a millionaire at age 40. Many people do it sooner than I did. I’ve met many people who become millionaires in their 20s and 30s.

As you get smarter and more confident in building your finances, your number should be higher. Since becoming a millionaire at 40, I now have aspirations of reaching the $10,000,000 mark and beyond.

Without being too scientific or getting caught up in the retirement planning game, set your net worth target between $1,000,000 and $10,000,000 to start. Sure some super aggressive types will want to set their goal higher. That’s okay, but the average everyday American can achieve a net worth target between $1,000,000 and $10,000,000 if they get serious about their finances now.

Make wise decisions with your money. Build your net worth. Build your wealth. Help others.

 

Learn About Money. Be Wealthy.

There’s a saying that there are no guarantees in life, but I’d say that there are some guarantees. You can pretty much guarantee that if you don’t take time to learn how to make money work for you, then you won’t be wealthy. That’s pretty guaranteed. People who are learn about money become smart about money. It’s just that simple.

Learning About Money

I was 26 when I started learning about money. Needless to say, before that, I was pretty clueless following in my parents financial footsteps. Spend more than you make. Don’t save. Don’t invest. Work you whole life and probably die with a relatively low amount of net worth. Thankfully that all changed when I was 26. You see, I got my first W2 form for my fully employed year of work after college. I worked as an engineer for a small family owned manufacturing company. My income that year was $39,000, and when I opened that W2 envelope, I was shocked. I had relatively little to show for that year of work and most of what I had to show for it was debt. A new car. A new computer. Some credit card debt for I don’t know what. That year, I knew something was wrong with my finances and how I handled money. It was time for a change, and change I did.

I spent the next several months going to the bookstore buying financial magazines, and learning about money. At the top of my list was Kiplinger’s investors magazine. That was what began my journey to build my financial knowledge and one day become a millionaire.

One of the first steps in becoming a millionaire is learning about money. How to make it, and how to use it to build wealth. You can’t build wealth unless you know how to make your money work for you. Otherwise, you’ll just go through life making money and spending money. That will never get you ahead.

While there are a ton of ways to put your money to work for you, I started with the stock market. At 26, I put $500 a month into an aggressive growth mutual fund. Back then, I chose Kaufmann funds, but I was a bit green. Today, a better bet would be Vanguard family of funds. While $500 seemed like a lot of money to me as a 26 year old single man, I should have been investing $1,500 a month. The more aggressive you are in making your money work for you, the better off you will be later on in life, and the more wealthy you’ll become. Eventually, you won’t even need to work for money. The income streams you create will work for you.

My second investment strategy was to put money into tech stocks, and I was able to make a bit of money as a young investor. I invested in Intel, Dell, Cyrix, Iomega, Nvidia and a few others. Holding each investment for 3-6 months, I was able to make 30-50% on each investment. Focusing on staying ahead of the new technology releases by the major vendors, I was able to make some money when the tech leaders saw their new products hit the market. It was a good start to changing my financial future.

At that time, I also made the decision to become debt free and live without debt. Being in debt doesn’t make you rich. It makes the banks rich. Avoid debt. Since I had already gotten into some debt, it took me 2 more years to pay off all of my debt. I paid the 5 year loan off on my car in 3 1/2 years. Hindsight being 20/20, I should have paid it off a bit sooner, but I was putting a bit of money into the stock market.

Being older and wiser now in my 40s. There are some things I would have changed along my financial journey, and one of those would have been how much I studied and learned about making money and putting it to work for me. I made the mistake of think I learned everything I needed to know about money when I learned about mutual funds and the stock market when the truth is, there is so much more to know and learn. While simple plans and investments do work, they leave so many more wealth building opportunities on the table.

I believe becoming wealthy is a noble goal. If you use your wealth properly, you should be helping others. The more wealthy you are, the more people you can help, and there are a lot of needy people in the world today. In fact, there are probably a lot of needy people in your neighborhood today. Wouldn’t you like to be able to help them?

Anyway, I encourage you to build your financial knowledge by committing time each month from this day forward to learn about money. Learning about money will help you build a better financial future for yourself, your family and your children for generations to come. By making this one small commitment, you will forever impact people’s lives.

Here are a few foundational books to get you started increasing your financial knowledge, but don’t stop here. Keep going.

If you build your financial knowledge and put it to work, you will build wealth for yourself and your family, and then you will be able to put that wealth to work helping others. It’s good. It’s noble. Do it.

The Millionaire Next Door. A Book Review.

The Millionaire Next Door

I’ve been learning about and working in personal finance for 20 years. I don’t know why, but I put off reading The Millionaire Next Door until this year. On many personal finance book lists, it is listed in the top 10. After finishing my reading this week, I can understand why.

The Millionaire Next Door is quite a bit different from many of the personal finance books you will read. Many other books focus on principles of managing money and try to get you to adopt their teachings. The Millionaire Next Door set out with a different intention. The authors, Thomas Stanley and William Danko, invested a tremendous amount of time in discovering how America’s millionaire’s lived. What were their habits and behaviours? What were they doing that was different from what everyone else in America were doing. They believed it was this difference that would hold the key between building wealth and becoming a millionaire or not.

Being a bit of a numbers junky myself, I found their research fascinating, but I also discovered something that surprised me as well. I’ll save that for later.

While you’ll have to read the book to truly appreciate all the work that went into the book and the knowledge they share, I’ll entice you to read their book with a few nuggets.

Did you know?

(From The Millionaire Next Door, Copyright 1996)

  • Only 3.5% of American households were millionaires?
    (In 2016, the number of millionaire households has increased to 10.8 million or roughly 8.5%)
  • 80% of these millionaires were first generation millionaires meaning they built their wealth.
  • EOC (Economic Outpatient Care) is almost always is bad for the recipient. This is when a parent supplements their child’s income in some way. Many times this continues on into adulthood and undermines the ability of the child to mature fully and independently often resulting in the adult/child from attaining as much success, income levels or wealth as their peers.
  • A large number of millionaires, 37%, buy used cars. They prefer to buy automobiles that are 1-3 years old to save money on the depreciation of the car. 50% of the time the priced paid for the car is $30,000 or less.
  • The average millionaire is very frugal. Choosing frugality over flash. The #1 watch owned by millionaires is a Seiko. The average suit cost $399 or less.

Perhaps one of the most fascinating things I found in the book came when the authors mentioned UAWs and PAWs. UAWs (Underperforming Accumulators of Wealth) and PAWs (Prolific Accumulators of Wealth) exist in the millionaire world. UAWs typically accumulate 1/2 the wealth of the average millionaire for their income level due to their spending, saving and investing habits. By contrast, PAWs typically develop twice the wealth of the average millionaire with their income level. Even with the same income level there are wide spreads of wealth accumulation. It all comes down to how you handle your money. Which one are you?

What I found most surprising in reading The Millionaire Next Door was how closely it fit my family and I. We’ve splurged a bit on some amenities, but overall, The Millionaire Next Door was a virtual match for how we live our lives and manage our money. It’s nice to know I’m on track.

If you want to become a millionaire, I suggest you read The Millionaire Next Door and learn a little something from the guys that studied millionaires.

Get The Millionaire Next Door at Amazon.com

 

Saving Money. A Penny Saved is a Penny Earned.

Learning to Save Money

So often we are focused on making more money, budgeting our money or investing our money as a way to build our wealth. While these are all good foundational building blocks of a strong financial plan, they overlook a simple and easy way to make more cash available in your monthly plan. Putting more cash in your monthly plans means you can eliminate debt faster, payoff your mortgage earlier and build your wealth sooner. What if you were able to find $250-500 more in your monthly cash flow plan? While it may not seem like a lot of money, but it adds up. $500 per month is $6,000 per year! Do I have your attention?

Saving money on your purchases and spending is a valuable part of your financial plan that is often overlooked. Why? Because it can take a bit of work. It requires you to change your thinking and plan ahead, and who wants to do that? Yuck!

Well, an extra $6,000 a year paid on your mortgage can knock your 30 year mortgage down to 16 years and save you $88,000 or more in interest, depending your loan amount and interest rates. I’d say that’s a pretty good use of $500 a month!

Or perhaps, you’d like to invest that $500 a month. Well $500 a month invested monthly for 10 years can turn into $95,000! What’s even more amazing is what can happen after that. You see, if you leave that money alone until you’re 59 (I like 59 because I want to retire before I turn 60), it can become $600,000 to $1,600,000 depending on your age. That’s what I call a good investment!

Well that’s what can happen with your money if you save it, but how do you save it? How do you find that $500 per month?

Saving Money Tip #1

Many people today have “stuffitus”. That’s the love of stuff. They just like buying stuff. Stuff they don’t need. If you can just cut back on buying “stuff.” It’s amazing what you can save. When you’re at the store, think twice before buying that thing that you don’t really need.

Tonight for me at Publix, it was chicken wings. They smelled so good I bought them. They were hot. They were tasty. However, my wife and I had a dinner appointment at a friend’s house in an hour and a half. All I needed was 1.5 hours of self-control, but I blew it. It cost me $9.95. Blow $9.95 per day for 30 days and that’s nearly $300 a month…$3,600 per year!

Saving Money Tip #2

Eat at home more. My wife and I have been looking for ways to save money. Our budget is a bit tighter than it has been in the past. With a family of 8, it’s expensive to eat out. We developed a bad habit of eating out. We can feed our family at home for 25% of what it costs us to eat out. Now that’s real savings!

If you’re going to eat out, use a coupon. Always use a coupon. Train yourself to use a coupon. I worked with a few guys who were pros at this. They would find buy one get one free lunch coupons, then they’d split the cost of the lunch. They were able to eat out at lunch for 1/2 the price! Brilliant!

Saving Money Tip #3

Always be on the look for more money saving tips and there’s no better place than PennyHoarder.com . At PennyHoarder you’ll find the best of the best ways to save even more money.

Also, use coupons whenver you can. It’s easy, and it’s effective. It’s an easy way to save money at the grocery store, and if you’re really good, you can save 25-50% on your grocery and household needs. That adds up! Checkout Coupons.com and CouponMom.com

 

Got anymore money saving tips? Add them in the comments section and tell us what you’re thinking.