Ever dreamed of joining the millionaire’s club? It’s more than a dream; it’s an achievable goal by adopting the behaviors that lead most millionaires to success. In this article, we’ll examine the top 10 behaviors that define the millionaire mindset, including saving diligently and lifelong learning, to guide you on your journey to financial prosperity.
The Context
For many, becoming a millionaire is a dream, but you know what— the secret to achieving that dream lies in understanding the behaviors that lead most millionaires to success.
To keep things simple, a millionaire is someone who has a million units of their local currency like— pounds, dollars, or rupees. On a global scale though, millionaires are individuals with a personal wealth of around $1 million, which is approximately ₹8.33 Crores in Indian terms, based on the prevailing USDINR conversion rates.
Currently, India has about 796,000 of them, making up about 0.1% of the world’s millionaire population and about 0.06% of our country’s millionaire population. According to a report by Knight Frank, this number is expected to double in the next five years, growing at a massive 108% to reach 1.7 million.
If you’re among these millionaires, consider yourself lucky to be part of the 0.1% of the world population. But, luck isn’t the only factor in the journey to becoming a millionaire.
You might think millionaires mostly inherit their wealth, but recent studies by Dave Ramsey— a personal finance expert and founder of Ramsey Solutions, tell a different story. It turns out that about 80% of millionaires are self-made. They reached millionaire status through a combination of hard work, education, and smart financial decisions.
These studies also revealed that self-made millionaires tend to have some common traits.
So, we’re here to dig deeper into this topic and uncover the top 10 most common behaviors displayed by these high-net-worth individuals (HNIs).
1. They Save Excessively
Millionaires not only think differently but also act differently when it comes to managing their money. You might have heard of the conventional 50-30-20 budget rule, which suggests spending 50% of your after-tax income on essential needs and obligations, allocating 20% for savings and debt repayment, and keeping 30% for other discretionary expenses.
But wealthy individuals take it to the next level with a 30-20-50 approach. They spend only 30% on necessities like food and shelter, dedicate 20% to other desires, and save a whopping 50% of their income.
Here, they follow the principle of “paying themselves first,” setting aside a certain percentage of their earnings before allocating funds to other expenses.
Now, this might sound extreme, but it becomes more manageable as their fortunes grow. If you’re in your 20s, you can consider stretching yourself a bit in the savings department, but not to the point where it negatively impacts your quality of life and personal growth.
On the opposite, if you’re a bit older and just getting started on this journey, don’t worry, there’s hope! As we go further into this list, you’ll discover more insights on how to achieve financial success, regardless of your age or current financial situation.
2. They Build Multiple Income Streams
Millionaires are experts at creating multiple income streams by diversifying their cash flows. Unlike most salaried individuals who depend on a single income source, millionaires explore various opportunities to make money. It’s quite common for them to have at least two sources of income.
They use different strategies to achieve this, such as investing in stocks, real estate, or businesses, starting side ventures or freelance work, and earning passive income from royalties, dividends, or intellectual property like copyrights and product patents.
By adopting this diversified approach, millionaires effectively reduce risks and steadily grow their wealth, ensuring both financial stability and long-term success.
3. They Take Calculated Risks
Millionaires take calculated risks by carefully analyzing opportunities and thinking about the possible rewards and downsides. They don’t rush into decisions based on feelings or hypes. Instead, they do a lot of research, gather information, and even get advice from experts.
They also spread their investments around like manure to reduce the risk. They don’t put all their money in one place, so if something goes wrong in one area, it won’t hurt them too much.
Millionaires also set limits on how much risk they are comfortable with, and they plan for what to do if things don’t go as expected. They know that every investment has some risk, but they try to make smart choices that fit their long-term goals.
In short, millionaires balance the desire for good returns with careful thinking about potential problems, making sure their decisions are based on facts and good planning.
4. They Don’t Maintain A Budget
You know, when it comes to budgeting, there are two kinds of people. Some people diligently keep track of every penny, while others don’t pay much attention to where it goes.
Interestingly, some millionaires fall into the second category. They don’t maintain a strict budget, but that’s because they have excellent self-control and adherence to their budgeting rules. Once they decide on a certain amount to spend, they stick to it without getting caught up in the small details. Their strong discipline helps them manage their finances well without needing a formal budget.
They feel comfortable with this approach because they have a good understanding of their finances and can instinctively handle their spending and saving.
However, it’s important to know that not every millionaire follows this style. Many successful high-net-worth individuals (HNIs) still use budgeting as a useful tool to track their money, set financial goals, and manage their finances responsibly.
So, if you’re on your way to becoming a millionaire, budgeting can still be a practical method to maintain financial discipline, save money, and reach your financial goals.
5. They Invest For Long-Term
Many millionaires prefer investing for the long term because they believe it’s a clever way to make their money grow. They understand that over time, their money can grow significantly due to compounding. By being patient and avoiding impulsive decisions to cash out, they can benefit from the ups and downs in the market.
Another advantage of long-term investments is that they usually come with lower costs and taxes, allowing money to grow even faster. This approach helps millionaires steadily build wealth, ensuring a secure financial future and achieving their financial goals.
Moreover, instead of constantly worrying about their invested money, they focus on adding more by exploring ways to generate additional cash flows. It can be compared to attacking your enemy from all sides. By doing so, they continue to expand their wealth and create more opportunities for financial growth.
6. They Invest In Simple Instruments
Millionaires prefer to invest in simple instruments with low fees and commissions because it aligns with their long-term investment strategy. By choosing low-cost investments, they can minimize expenses, allowing their money to get easily tracked, work harder, and grow more effectively over time.
Index funds and ETFs, for instance, are popular among millionaires due to their simplicity and low expense ratios. These funds track a market index and have lower fees compared to actively managed funds.
As a result, more of their money is invested rather than being eaten up by high fees and commissions. This approach helps millionaires maximize their returns and build wealth steadily while staying focused on their long-term financial goals.
7. They Heavily Invest In Real Estate
Real estate investment is one of the most preferred choices for millionaires, followed by stocks. There are several reasons why they like it so much.
Firstly, real estate has the potential to grow in value over a long time, helping them increase their wealth significantly. Secondly, owning properties allows them to earn rental income, which means they get a steady flow of money coming in, even without much effort.
Also, real estate can protect them against rising prices (inflation), making sure their money’s value doesn’t decrease over the years. They can also borrow money to invest in real estate, which can boost their returns and let them grow their investment portfolio.
Lastly, having physical properties gives them a sense of security, and it fits well with their overall financial goals and plans. All these benefits make real estate an attractive and top choice for millionaires to grow their wealth and secure their financial future.
8. They Don’t Seek External Validation
Millionaires don’t try to impress others for self-validation because they know their worth and feel confident in their financial achievements.
They focus on their growth and financial goals instead of seeking approval from others. They understand the importance of financial privacy and prioritize long-term security over impressing people in the short term.
By staying true to themselves and their financial principles, they find contentment in their success without needing validation from others.
9. They Limit Their Circle
Millionaires often tend to limit their circles to smart, resourceful, and successful people. This is simply because they believe in the power of positive influence and networking.
Being around like-minded individuals inspires and motivates them to achieve more. They learn from each other, exchange ideas, and get insights into different industries and investment opportunities.
Successful people can offer support and valuable connections, opening doors to new ventures and partnerships. Millionaires understand the importance of having a strong support system with people who share their values and goals. This positive environment helps them grow and succeed in their financial journey, making informed decisions along the way.
10. They Are Lifelong Learners
Millionaires believe in learning throughout their lives making them a rare and curious breed. They always want to know more and keep up with what’s happening in the financial world. This helps them make wise decisions and adjust to changes in the market.
They’re open to new ideas and strategies that can help them grow their wealth. Whether it’s attending events, reading books, or talking to experts, they’re committed to gaining knowledge and staying ahead. This passion for learning is a key factor in their ongoing success.
Conclusion
By now, you probably realize that becoming a millionaire isn’t a walk in the park, but it’s also achievable with the right mindset and actions. Many people wonder what sets millionaires apart and how they reach such heights.
It’s not just about money and material possessions; it goes much deeper. Perseverance, financial discipline, an entrepreneurial spirit, self-confidence, and adaptability play a crucial role in their success.
We hope you found this article enjoyable and that the insights shared here will guide you on your journey to becoming a millionaire. With determination and the right attitude, you can make great strides toward your financial goals.
Keep going and stay focused!
Invest wisely!
