Tips on Improving Your Odds of Becoming a Millionaire

Tip #1 Automate Your Savings

Each Saver-Investor in my Rich Habits Study/Research consistently saved 20% or more of their net pay, each pay check. Many accomplished this by automating the withdrawal of a fixed percentage of their net pay. Typically, 10% of their net pay went into employer-sponsored retirement accounts and the other 10% was automatically directed into a separate savings account.

Once a month, the Saver-Investors would then transfer their accumulated 10% monthly savings, into an investment account, such as a brokerage account.

Tip #2 Consistently Invest Your Savings

Because the Saver-Investors consistently invested their savings, their investments compounded over time. In the beginning of this Investment of Savings strategy, this compounding was not very significant. But after ten years, their investment wealth began to become significant.

Towards the final years of their working lives, using these two strategies, the Saver-Investors’ wealth grew to an average of $3.3 million.

Similarly, many of the Big Company Climber and Virtuoso Millionaires in my Study adopted these two strategies during their working lives, which significantly added to their stock compensation-related wealth, upon retirement.

The millionaires in my Study who pursued some dream and started a business, whom I call Dreamer-Entrepreneurs, did not have the ability to invest their savings, particularly in the early stages of the pursuit of their Dream. Whatever savings they did have were used as working capital, in those early years, in order to fund their dream.

But, interestingly, once most of these Dreamer-Entrepreneur millionaires began to realize success, in the form of available cash flow, they immediately pivoted and began to employ both strategies into order to preserve and grow the wealth generated by their success.

Tip #3 Be Frugal with Your Spending

One of the common denominators for Saver-Investors, Big Company Climbers and the Virtuoso self-made millionaires in my Rich Habits Study, was being frugal with their money.

For these millionaires, this frugality began the moment they received their first paycheck.

For the Dreamer-Entrepreneur millionaires in my Study, their frugality started the moment their dream began to create enough cash flow to enable them to save and invest.

What does it mean to be frugal?

Being frugal requires three things:

Awareness – Being aware of how you spend your moneyFocus on Quality – Spending your money on quality products and services andBargain Shopping – Spending the least amount possible, by shopping around for the lowest price

On its own, being frugal will not make you rich. It is just one piece to the Rich Habits puzzle, and there are many pieces. But being frugal will enable you to increase the amount of money you can save. The more you have in savings, the more money you can invest.

Tip #4 Don’t be a Lifestyle Copy Cat

In our modern world, comparisons go off the rails when tied to the lifestyles of others. When this hard-wired human tendency of comparing ourselves to others is applied to seeking to emulate the desirous lifestyles of others, that is when you lose your way in life. Such comparisons lead to excess spending, debt and ultimately, an unhappy life.

Being a Lifestyle Copy Cat is Destructive Comparison.

With the explosion in social media, it is far easier to fall into this Copy Cat rabbit hole. You see it all the time – social media “friends” post pictures of their new boat, or an exotic, expensive vacation or new sports car and you find yourself becoming green with envy, wanting to emulate their glorious lifestyle, irrespective of the financial costs or the accumulation of debt to fund such a lifestyle.

Instead, seek Constructive Comparisons, such as emulating the good traits and habits you see in others and avoid being a Lifestyle Copy Cat. It is a form of Destructive Comparison and a slippery slope that will only lead unhappiness and want.

Tip #5 Don’t be Penny Wise and Pound Foolish

Many millionaires in my Rich Habits Study were frugal. By frugal, I mean they spent time seeking the highest quality product or service, at the lowest price. They would also squeeze some of those they regularly did business with in order to save money: dry cleaner costs, bank fees, credit card fees, landscaper costs, grooming expenses, such as haircuts and manicures, professional service fees, such as CPAs, attorneys, doctor and dentist charges. They fought like a hell if they thought they were overcharged for a grocery item or a restaurant charge. And then strangely, these same penny wise millionaires would go out and splurge on an expensive boat, expensive cars, a diamond ring, a Rolex, or take an absurdly expensive vacation. I have seen far too many wealthy business owners fight to keep wages down at their business only to spend their hard-fought savings on yachts, big homes or expensive cars. It’s as if they had a Jekyll and Hyde battling it out inside of them. While it’s a Rich Habit to be penny-wise, it is most definitely a Poor Habit when you take those hard-earned pennies and then make an expensive emotional purchase.

Tip #6 Don’t be a Sheep in Wolf’s Clothing

The vast majority of the rich in my study and in my CPA/Financial Planning Practice are long-term investors. They buy, hold and rarely panic. In fact, when the economy turns south, they might even double down on their investments, hoping to invest more at a discounted price. But I’ve also seen some wealthy individuals who invest aggressively, panic at the first sign of trouble in the markets and begin unloading their investments. These so-called “aggressive investors” were actually conservative investors in disguise – sheep in wolf’s clothing. And their wolf disguise came flying off the moment they start losing money. Staying calm during adversity is a Rich Habit. Losing control of your emotions during adversity is a Poor Habit.