What Do Millionaires Know About Money That Most People Don’t?
Hello millionaires/future millionaires,
Today we bring you an awesome guest post from Benjamin Davis, a fellow blogger at From cents to Retirement.
He’s on his way to acquiring 100 rental units and FIRING (Financially Independent, Retire Early) at 33 years old! He’s going to talk about what millionaires know about money that most people don’t.
Without further ado….
What Do Millionaires Know About Money That Most People Don’t?
When I decided I wanted to retire early, I decided to interview many millionaires to see how they had done it. Over a few months I learned the nuts and bolts of successful lives and people.
So, what is the secret then? Millionaires apply a formula that only very few people truly understand and have the courage to implement. Millionaires understand money and how it works.
Most millionaires buy assets; they don’t buy “stuff” or liabilities. My biggest epiphany regarding this was caused by a friend of mine. He invited me to come over once.
His dad was a multi-millionaire, yet his home was almost empty! There were only a few things lying around, little to no pictures, some paintings and only one or two ornaments.
We actually ended up fighting that afternoon, over some computer games. At the time, internet was not fast and accessible to everyone, so we actually needed to carry CDs around.
I wanted to bring a few CDs to my friend’s, so we could play. But he said “no” because his father has a rule: “For each item that enters my home, one has to leave, and preferably, I should make money with that transaction”.
That marked me for ever. Think of all the stuff and junk people buy over the years. That 1-dollar item that makes them happy for 5 seconds, or the new bed sheets or the new this and that…
The main quality of millionaires
I’d say it is persistence. This is especially true among self-made high net worth individuals! Persistence is the number one quality that will get people far. While most simply give up at the beginning, when it is difficult, some persist through the difficulties and succeed. Only those who have enough persistence win.
Most people do not want to leave their comfort zone, and they never hustle as they want other people to do the work. But everyone knows that there is no gain without pain. They live one life in comfort, without hustle, just to regret it later on.
Ray Kroc (who founded the McDonalds corporation) is, in my opinion, an example of persistence. Just look at his personal history: he took McDonald and franchised it, which went on to become one the largest and most profitable businesses in the world.
He took McDonalds from 1 location to one of the biggest companies in the world, with countless locations, in about 20 years. The most impressive thing: he did it when he was 52! You read this well? He was 52. That is FIFTY TWO. He never gave up on his own dreams. Never. And that paid off big time.
We can also see persistence in Ms and Mr 99to1percent’s inspiring story. They started off poor and broke as new immigrants to US and Canada, put themselves through school, worked 2-3 jobs at the same time, barely had food to eat, lived in not so safe neighborhood surrounded by alcoholics, gang members, gamblers, prostitutes, drug dealers/users,…but they persevered, and were able to graduated college, and get good jobs and they now make $400K+/year at 35 years old.
Over the years, I realized that everyone can follow a very simple formula and succeed. Here’s how it looks like:
- Maximize your income. Try to get a well-paying job. Or two that don’t pay that well. But hustle. Grow your income in every possible way. Source cheap products and sell them for a profit. You can even start a blog.
Today, you can start a blog with $0. Mine is only 18 months old and I have made up to a $1000/month. There is a world of information out there such as mistakes you shouldn’t make.
- Save aggressively (think 60%+). In my opinion, spending less money actually makes me happier.
First, I am more comfortable saving money, as I know my financial situation will be better that way. I feel less stressed if I have less stuff at my place (remember my friend? yes, it is also a way to get richer).
My home has the essentials; I refuse to make it a repository of “stuff”. That’s how I’m able to live off of 30% of my salary. Ms & Mr 99to1percent also lead the same minimalist lifestyle and they live off as little as 15%!
Second, you must pay yourself first. Program your home banking to transfer a fix amount of your salary to an investment account. Have that money working and paying you through that account.
Have your other sources of income be deposited on that account. Investment money is one thing. Money you need to live is a different ball game. Never, ever confuse them!
- Invest wisely. Of course, that “wisely” is very easy to say but hard to implement sometimes. Neither I or other people can teach you how to invest wisely. The good news is that you can do it yourself, should you educate yourself and read.
Say you go the real estate route. You’ll learn how to make money there, by yourself – but by reading. I publish a ton of resources on real estate investing and land-lording.
As everything, all boils down to education. How many books on finances do you read? 99to1percent has also put together a collection of books that can educate anyone financially and think like the rich: Books.
If you want to go the real estate route, check out my list of free real estate books.
Some other pointers
If you are serious about getting richer, you should consider things like geographic arbitrage, which essentially means to take advantage of a specific location to get richer – by living there you can save more money.
That is why I decided to go and live in Portugal – I literally live where you vacation! If you want to know how I will retire by the age of 33, check out my book “My strategy to retire early” on Amazon.
Benjamin Davis is the mastermind behind From cents to Retirement, a blog where he reports his steps towards financial freedom through Real Estate investing. Beyond blogging, he is also an author, entrepreneur, coach and soccer fan. Unfortunately, he developed adrenal fatigue during his PhD, which motivated him to retire early. His goals are to grow his Real Estate portfolio to 100 rental units before he turns 35 and turn From Cents To Retirement into a reference blog for early retirement through Real Estate, inspiring others with his own story.
Benjamin nailed it. It’s all about maximizing your income, saving aggressively and investing wisely. It’s easier said than done, but following our blog and his blog, and using the resources that we recommend will get you there.
We would also like to add that it’s all about a positive mindset, and a can-do attitude. Even though we started off as poor, broke immigrants; we never really considered ourselves poor.
We just saw ourselves in a very temporary, challenging situation, that we would overcome for sure.
We visualized ourselves very successful, enjoying the Canadian/American dream. They say it takes as much effort to dream small as it does to dream big.
But they also say it takes as much energy to wish as it does to plan. Thus, make sure you take action to turn those dreams into reality.
There you have it guys.
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Do you want to learn more about us? If so, you can also read these other posts:
- About us
- How We Increased Our Annual Income From $0 to $160K to $400K+
- How we live on 15% of our income
- Joining the Million Dollar Club/Challenge and So Can You
- How To Pay Off A Mortgage In 5 Years
- Our Biggest Money Fight and 9 Lessons Learned