Seven Ways Millionaires Next Door Become Wealthy (and Stay That Way)

When most people think “rich,” they automatically envision people like the Kardashians, Brad and Angelina types, pop stars, and professional athletes. They picture luxury homes, flashy cars, and diamond necklaces so large they must be kept under lock and key.

But the reality is rather different, according to Thomas J. Stanley and William D. Danko, authors of “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy.”

As Stanley and Danko share through stories and examples, most of the truly wealth in this country aren’t parading their wealth through the streets or begging for eyeballs with fancy cars or expensive jewelry; they are living normal lives and trying their best to get ahead – and stay ahead.

According to research conducted for the book, the vast majority of the nation’s millionaires didn’t become wealthy overnight, either. Nor did they accumulate wealth in some loud or luxurious manner.

Nope, most millionaires became wealthy by living a lifestyle that promotes wealth-building – and living with certain ideals and habits they perform consistently over time.

Seven Ways ‘Next-Door Millionaires’ Become Wealthy

These “rules” for wealthy living, as explained by the authors, aren’t all that impressive or over-the-top on their own. But when you combine them all and follow them consistently for decades, they can help you build wealth that will last a lifetime.

Here are the seven factors that influence wealth across the nation, according to research from “The Millionaire Next Door.”

America’s rich live below their means.

One way America’s quiet millionaires have built a net worth of $1 million dollars or more is by committing to a lifestyle where they are always spending less than they earn. This way, they ensure they never run out of cash – and always have money left over to invest.

If you want to become a millionaire – or simply improve your financial situation — one of the best things you can do is live within your means and spend a lot less than you earn, says Kevin Smith, executive vice president and founding partner of Smith, Mayer & Liddle, a wealth advisory group in York, Pa.

“It’s been my experience that those who drive the fanciest cars and live in the biggest homes aren’t often as sound financially as is widely believed,” says Smith. “Many millionaires are the ‘millionaire next door’ types who live modestly, invest wisely, and don’t fit the stereotype generally reserved for the wealthy class.”

  • Related: Living Below Your Means is a Challenge for Everyone

Most millionaires spend their time and energy accumulating wealth, and do so in an efficient way.

Your average, everyday millionaire did not get rich overnight. Most of the time, Americans with a net worth of $1 million or more built their nest egg over time with money they earned working 9-5 jobs and through various investments.

Unlike rich celebrities who may flaunt their wealth one day and claim poverty the next, regular millionaires generally also know how to budget their money to make it last. They spend a lot of time researching their investments, and plan carefully to maximize every dollar they earn and stash away.

And most of all, they have the patience to follow through. Why? Because most millionaires have a carefully-crafted financial plan, and they stick with it for the long haul.

“The biggest strength that the millionaire next door has is intent,” says Eric Sajdak, partner at Fox River Capital, a wealth advisory firm. “Financially, their moves are planned out and have context in their overall plans.”

The millionaire next door is not blindly throwing money at a wall and seeing what investment or savings strategy works, notes Sajdak. Rather, they have a comprehensive plan that guides their financial lives – a target they are trying to meet. “Finally,” he adds, “they have the discipline to execute it.”

They believe that financial independence is more important than displaying high social status.

Unlike the Kanye West’s and Paris Hilton’s of our time, most millionaires don’t go out of their way to show others just how wealthy they are. Instead of spending money on items that make them look wealthy, they pour their money into investments that actually build wealth.

According to Michael J. Howley of Meyer Capital Group, most millionaires also pay for the majority of their negotiable expenses – like cars, furniture, and clothing – in cash.

“They generally pay for everything in cash because they realize that if they can’t buy it with cash they can’t afford it and probably don’t ‘need’ it to begin with,” says Howley. As a result, most millionaires don’t borrow money unless they are buying a home or building a business.

“They know paying recurring interest on credit cards is bad debt and a waste of money,” says Howley.

Their parents did not provide economic outpatient care.

Research carried out for the book shows that children of affluent parents are often held back if they receive financial assistance well into adulthood. It turns out, most millionaire-next-door types didn’t receive a lot of financial help from their parents, but instead learned positive financial habits that led them to build their own wealth.

Yes, you read that correctly: Surveys show that most millionaires didn’t actually inherit much of their wealth. In a 2013 survey of American millionaires by BMO Private Bank, two thirds (67%) said they were self-made, meaning they hadn’t inherited their wealth. “Millionaire Next Door” author Thomas J. Stanley wrote that, in his years of research, he found that about 80%-86% of America’s millionaires were self-made.

This just goes to show that, in some cases, everyday people can build wealth over time whether they are born to a rich family or not.

  • Related: Five Dilemmas in Teaching Children About Money – And How We’re Handling Them

Adult children of millionaires next door tend to be economically self-sufficient.

The Great Recession helped create a generation of young people with high levels of debt and unemployment and grim hopes for the future. And what happens when young people can’t support themselves, or owe so much money in student loans they can barely stay afloat? They depend on their parents for financial support, often to the detriment of their parent’s long-term financial health.

According to the authors of “The Millionaire Next Door,” most everyday millionaires have managed to break the mold in this respect since their adult children tend to be self-sufficient. Perhaps this is because they shared positive money habits early, or maybe it’s because they never let their children depend on them.

Either way, having adult children that can take care of themselves without financial help will always have a positive impact on one’s own wealth. When you don’t have to lend your adult children money, you have more money to save and invest for your own future.

They are proficient in targeting market opportunities.

If you look at most millionaires, you’ll see a common trend – opportunism. I don’t mean that in the negative sense, however. Most millionaires aren’t trying to take advantage of others; they just tend to see things differently than the rest of us.

They may see business opportunities in situations where the rest of us only see a struggle. Other times, they envision a money-making opportunity that completely escapes those of us who may not be business-minded. Some millionaires next door may even be more willing or able to take risks – whether it’s building a business from scratch, investing in real estate, or pouring money into a business opportunity.

Either way, millionaires tend to see opportunities where others don’t. And most importantly, they tend to act on those opportunities.

They chose the right occupation.

If most millionaires are actually self-made, it shouldn’t surprise you that many of them work in common, everyday occupations. Others are entrepreneurs who rely on their exceptional work ethic and skills to build wealth over time.

Either way, most millionaires have learned where their strengths and weaknesses lie, and managed to build a career that relies on their biggest assets. And since they excel at what they do, they tend not to rely on external sources for enjoyment or validation.

“If your work doesn’t inspire you it is likely that you will look for other ways to find fulfillment in your life, which include spending money,” says financial attorney Leslie Tayne, author of “Life & Debt.

“Many rich people find and follow their passion,” she says. “While they may work very hard, for them it doesn’t feel like work because they love what they do.”

The Bottom Line

Behind the flashy façade of the word “millionaire” is a more common reality: People who have built their wealth the slow and old-fashioned way. They may not have the most expensive home or car, but they’re perfectly fine with going without.

At the end of the day, these individuals have discovered one of life’s biggest lessons — that having real wealth and looking like you do are two entirely different things.

To have real wealth, you need investments that are working for you, a nest egg to grow and build on, and dreams you are working to achieve. Looking like you’re wealthy, on the other hand, just requires stuff – and you don’t even have to “own it,” either, since you can borrow the money instead. Millionaires usually know better.

The seven factors that led to real wealth for everyday millionaires can also work in your life if you let them, but you have to know where to start. For most people, the first step is the hardest. But by living within your means, learning to look for opportunity, and having the discipline to put your financial goals first, you will give yourself the best shot.

Do you know anyone who would be classified as a “millionaire next door”? What habits are you building with the goal of becoming wealthy over time? 

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Holly Johnson

Contributing Writer

Holly Johnson is a frugality expert and award-winning writer who is obsessed with personal finance and getting the most out of life. A lifelong resident of Indiana, she enjoys gardening, reading, and traveling the world with her husband and two children. In addition to The Simple Dollar, Holly writes for well-known publications such as U.S. News & World Report Travel, PolicyGenius, Travel Pulse, and Frugal Travel Guy. Holly also owns Club Thrifty.