In a world full of TikTok, YouTube, Instragram, X and other social channels trying to sell us a dream of becoming wealthy, or their version of success they have met with very little effort, I would like to share a tried-and-true recipe that is evergreen.
Getting into the mindset of a millionaire isn’t what most would think. It is not always a flashy car, drinking champagne out of crystal glasses and having butlers answer the door; that was soooo 1980 (think “Lifestyles of the Rich & Famous”). Most of today’s millionaires next door are ordinary people, who drive sensible cars, spend less than they make, and save their money for things that are more important to them like experiences and family vacations. Whether clipping coupons, thrifting clothes and/or shopping for gently used furniture or a newer used vehicle off Craigslist or Facebook Marketplace, they understand the value of a dollar and how hard they have worked to earn it. Most millionaires did not “get rich quick” and the reason why we see so many “overnight Millionaires,” think lottery winners, fail at having so much money, is because they have not had the education or discipline to know what to do with that windfall. We all know someone who has come across an inheritance or large tax refund and it’s gone in the blink of an eye. The difference is being self-made vs. being instantly wealthy. So, what is really going on in the mindset of a millionaire?
Most plan ahead and have good habits, like telling their money where to go with intentionality. This means having an emergency fund because bad things happen to good people. Having some money squirreled away in case of an emergency home repair, car repair or medical bill, they aren’t fighting to catch up or ask to borrow money. Tax refunds go in the bank and make you revisit your withholding so you aren’t giving the IRS a free ride on your money.
The millionaire mindset is not to take on debt. My parents taught me at an early age, if you can’t afford to buy it, don’t! They managed to rack up over $80K in credit card debt by the time I was 15 years old (30 years ago), and that was a recipe for disaster! Yes, they had 6 kids to feed, clothe and house, but they were not on the same page about money and that ruined their marriage.
If you must borrow and take on debt, make sure you are able to knock it out with gazelle like intensity. Make a plan: like a large down payment and paying additional on principal until you are out of debt and back to paying yourself back. Most millionaires I know are debt-averse and would rather have peace of mind being debt-free than trying to make excess returns by holding debts.
Delaying important things until you are financially ready. I did not have kids until I was 32 years old. I knew when I graduated college with about $75K in student loan debt, there was no way I could afford a mortgage payment, car payment, student loan payment AND childcare for kids; I had to delay starting a family and I was okay with that. My mindset was I could pay off my loans by age 30 if I made some sacrifices, like not dining out often, limiting what I spent on personal items that were discretionary, asking for cash or gift cards for my birthday and holidays so I could purchase a “want” and only traveling once per year.
While paying off debt, I was also making sure I was saving for my future. I started a Roth IRA when I was 19 years old and decided at the time I could afford to put $100 per month away. When I started work, I had access to a 401k but was not really educated on how they worked so I did not start participating until I was 28. I didn’t know I was leaving “free money” aka the employer match on the table! Once I was debt-free, I gradually increased my percentage until I started maxing out my 401k contributions. When my kids were born, my husband and I decided we did not want them to have debilitating student loan debt like we did, so we started educational savings plans for each child, putting away a modest amount and was able to increase that as our take home pay increased.
It has not been about what thing do we want to buy so much as what lifestyle do we want to live now and in retirement: debt-free and financially confident. Who are the people and the causes we care about? We give back to our community in the form of scholarships and regularly scheduled donations to our favorite non-profits. They should not have to wait until we die to get some money, we want them to be around long after we are gone!
Prioritizing where my money went not only set the stage for good money habits, but I was also planning for my future without ever really thinking of it that way.
The Millionaire Mindset has never been, “what is the least amount of effort I need to do and be wildly rich?” It has been intentional planning, collaborative discussions and putting action steps in motion.
“Plans are worthless, PLANNING is everything” General Eisenhower