What do millionaires do differently?
Are they harder workers? Do they have brains that can bend spoons? Do they exhibit Bond Villain levels of cunning?
80% were self-made, accruing all their wealth in one generation. And they were doing a number of things you and I probably aren’t.
Here are a few patterns the researchers saw:
1) Most Millionaires Are Self-Employed
Got a great idea for a business? Make sure the profits are going in yourpocket, not your boss’s.
Sound risky? It is. Less than a third of new companies survive 10 years.
But millionaires have a different perspective. They think it’s risky to work for someone else. You could get laid off. Your boss could make a bad decision.
But not only is entrepreneurship risky, it’s also hard work.
In only two countries out of all the ones surveyed did the self-employed not work harder than salaried employees:
Why do something so risky and difficult? Research shows one of the main things that makes us love our work is autonomy.
And this is definitely true here. You’d need to earn 2.5 times as much money to be as happy as someone who is self-employed.
(For more on what the most successful people have in common, click here.)
So these aren’t salaried employees. But how do they decide what kind of companies to start?
2) Millionaires Choose Their Careers Strategically
They don’t start a business they’re necessarily passionate about. They don’t even do something they necessarily understand or have experience in.
They start a business that they think is going to make money. They look for areas of big demand and small supply.
Some of you are saying, “Duh. Of course that’s how you should pick a business.” Yeah, but that’s not what the vast majority of people do.
63% of new business owners admit their venture doesn’t have a competitive advantage. Only a third say they really did a search for good business ideas.
And the industry you start a business in is very important: some industries are over 600 times more likely to be successful than others.
One of the authors of The Millionaire Mind is a business school professor. Every year he asks his students what the most profitable businesses are.
And every year the students can’t even name one correct answer. If smart, educated business students don’t know, why would the average person?
But millionaires pride themselves on thinking differently and looking for underserved markets and hidden opportunities.
And, frankly, the companies they start usually aren’t sexy. They fall into the category of “dull-normal.” But they make bank.
Despite thinking differently and doing things their own way, they’re not jerks. 94% of millionaires said “getting along with people” was key.
(For more on how not following your passion can be the smartest career strategy, click here.)
So they run their own shop and choose wisely what type of business to be in. But to make it a success don’t they have to be brilliant? Nope.
3) They’re Not Geniuses But They Have A Strong Work Ethic
We’ve all heard the old saying, “If you’re so smart, why aren’t you rich?” What was the average college GPA of an American millionaire?
2.9 out of 4.0.
(Not a lot of Phi Beta Kappa keys jangling around here, folks.)
Few were ever called intellectually gifted and many were explicitly told they didn’t have what it takes for medical school, law school or MBA school.
But what most people don’t know is that GPA is a very poor predictor of success.
Via The Millionaire Mind:
And this may be part of the reason they’re so successful as entrepreneurs: “smarter” people are less likely to take such risks.
Via The Millionaire Mind:
And maybe this is why former drug dealers are more likely to start businesses.
In entrepreneurship, you’re the boss. So it requires leadership. And some research shows being super-smart actually makes you worse at being a leader.
(Though research shows if you want to be a successful terrorist, definitely study hard in school.)
But future millionaires do work hard. When asked what their teachers did compliment them on, what was the most common response?
When asked what they did learn in college, 94% replied “a strong work ethic.” And research shows self-discipline trumps IQ when it comes to success.
(To see the type of schedule successful people follow every day, click here.)
So we know how they bring their money in. Is there another part to the equation? Yeah. Don’t let that money out.
4) They’re Cheap
When the authors of The Millionaire Mind interviewed the wealthy, they didn’t want them to feel uncomfortable.
So they rented a penthouse in Manhattan, loaded it with four types of pâté, three kinds of caviar and plenty of fine wine.
The millionaires arrived… and felt completely out of place. All they ate were the gourmet crackers.
When offered the fancy wine one interviewee said he only drank two types of beer: free and Budweiser.
The researchers were stunned. They quickly realized the media images we see of millionaires aren’t representative.
Expect a millionaire to be a fancy dresser? 50% have never paid over $399 for a suit. (10% had never paid $195.)
In fact, if you do see someone wearing a $1000 suit, it’s more likely they’re not a millionaire.
Fancy car? More than half have never paid over $30,000 for a car. See someone in a Mercedes? They are probably not a millionaire.
Most millionaires live a lot more like you and me than Jay Z, Elon Musk or Donald Trump.
They’re thrifty, not very materialistic, and they think a great deal about how much they spend.
And the more materialistic people are, the less satisfied they are with their lives.
Are you as money-conscious as a millionaire? Most millionaires answer “yes” to these four questions. Can you?
- Does your household operate on an annual budget?
- Do you know how much your family spends each year on food, clothing and shelter?
- Do you have a clearly defined set of daily, weekly, monthly, annual and lifetime goals?
- Do you spend a lot of time planning your financial future?
(For more on research-backed ways to spend your money so it increases your happiness, click here.)
So it’s clear how millionaires make their money. But what should we take away from all of this?
Being a millionaire must be nice. But we won’t all get there. And that’s okay. Money isn’t everything.
So even if you don’t get rich, what lessons can we all learn from millionaires?
- Take control of your life as best you can.
- Plan and be strategic, whatever your career might be.
- Work hard.
- Watch your money.
That’s advice anyone can follow and everyone can benefit from.
This piece originally appeared on Barking Up the Wrong Tree.
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