Millionaires v. Billionaires
What’s the difference between millionaires and billionaires, besides $999 million? This is not a joke.
All self-made billionaires were once self-made millionaires. Therefore, it makes sense to study how to be a millionaire first.
As they say, any idiot can turn a million bucks into two million, but it takes real genius to make that first million. So, how do they do it?
According to The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (1996) by Thomas J. Stanley, Ph.D., and William D. Danko, Ph.D., millionaires are frugal, frugal, frugal!
HOW TO BE A MILLIONAIRE
Most millionaires answer 3 questions in the affirmative:
1. “Were your parents very frugal?”
2. “Are you frugal?”
3. “Is your spouse more frugal than you are?”
If you answered with a resounding “yes” to all three of these questions and you net at least $50,000 in annual income, you are likely to retire a millionaire, meaning you will have one million dollars worth of total assets. Granted, you have to invest what you don’t spend in relatively safe investments, such as rental property or diversified mutual funds.
Tip: If you want to be a millionaire, you and your family must be frugal.
HOW TO BE A BILLIONAIRE
Billionaires also answer the three questions above with a resounding “yes,” but they do one more thing that mere millionaires do not do: They go after the passive income. They are entrepreneurs who have a great idea for a service or product. Then, they take action to develop that service or product to make it available to the millions of people who need or want it. Billionaires do not limit their income to their salaries. They take the income from their salaries and invest it in their big ideas.
Tip: Watch “The Big Idea” with Donny Deutsch on NBC for ideas and inspiration from other people who turned their ideas into millions.
LIFESTYLES OF MILLIONAIRES AND BILLIONAIRES
If you want to be a millionaire relatively risk-free, save money like crazy and invest it conservatively for a long, long time. But how exactly do you do that? Do it the same way most millionaires did it:
DO: Own a small house most of your life, and don’t remodel it.
DON’T: Buy too much house, remodel it often, and switch up to bigger houses ASAP.
DO: Buy used cars or trucks, after researching the best price, then drive it till it dies.
DON’T: Buy or lease the latest foreign automobiles every few years.
DO: Shop at JC Penny’s or Sears for suits, and never spend more than $300 for a suit.
DON’T: Shop at high-end department stores and display wealth instead of having wealth.
DO: Wear inexpensive watches and jewelry.
DON’T: Buy expensive status symbol accessories and update often.
DO: Take modest vacations, if any.
DON’T: Travel to the most expensive locations in the world and often.
DO: Prefer inexpensive foods and drinks, such as sandwiches and Budweiser.
DON’T: Develop a preference for luxury food and drinks, such as caviar and champagne.
DO: Teach your children, by example as well as by lessons, that frugality is a virtue.
DON’T: Spoil your children with a lifestyle that neither you nor they can afford.
DO: Teach your children the importance of close money management.
DON’T: Assume your children will make enough money to pay for their own needs someday.
DO: Stay married to the same frugal spouse.
DON’T: Divorce or marry a spendthrift spouse.
Does the lifestyle of a millionaire sound boring to you? Do you find yourself asking, “What’s the point of having a million dollars worth of assets if you can’t spend it?” The point is you can spend it if you need it. That’s more peace of mind than most people have. But if you do spend it, especially on the things in the DON’T category above, you obviously won’t be a millionaire anymore.
“But,” you point out, “Donald Trump and Oprah Winfrey enjoy expensive homes and all the luxury that money can buy.” True, but they didn’t always have that lifestyle. When they were up and coming, they were very, very frugal. I am sure when they had “only” a million dollars in total assets, they were still very frugal. Then, even after they reached their billionaire status, they are still careful to spend it in ways that increase their overall wealth instead of blowing it all on expensive doodads.
Frugal does not mean cheap as in wanting to pay less for something that is worth more. Frugal means disciplined as in willing to live with less now to accumulate substantial wealth in the future. If you want to have your cake and eat it, too—be able to enjoy all the luxuries that money can buy and still have a million dollars worth of assets—you will have to aim at being not just a millionaire, but at least a multi-millionaire.
If you want to have 5 million dollars in total assets, you want to be a pentamillionaire. If you want 10 million, you want to be a decamillionaire. 100 million will make you a hectomillionare. The next step is, of course, 1 billion and a billionaire.
$5,000,000 = 5 million dollars = Pentamillionaire
$10,000,000 = 10 million dollars = Decamillionaire
$100,000,000 = 100 million dollars = Hectomillionaire
$1,000,000,000 = 1 billion dollars = Billionaire
As long as you’re dreaming, dream big! You can’t achieve what you do not truly desire. And you cannot truly desire anything without drawing a clear picture of it in your mind. Think of all the things you could do for yourself, your loved ones, and the world if you were a billionaire!
If you think there’s something wrong with wanting to be a billionaire, or even a “mere” millionaire, read my next article “Greed v. Desire.”
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[For “Greed v. Desire,” click here.]
[For “How to Be a Billionaire in 10 Steps,” click here.]
[For “How Dad Turned $50 into $1.2 Million,” click here.]
