How People Become Millionaires

Twenty years ago, I began studying how people become millionaires, Surveying residents of posh neighborhoods across the country, I discovered somthing odd. Many who live in expensive homes and drive luxury cars donot have much welth. They may earn a fair amount of money, but they spend it all.



Then I discoved something even odder: many who have a great deal of wealth donot live in posh neighborhoods. In one large metropolitan area, I suveyed, fewer than half the millionaires lived in high-rent districts.

How do you become wealthy? Most people have it wrong. It's rarely luck or inheritance or even intelligence that builds fortunes. Wealth is more often the inexorable result or a person's hard work, perseverance and, most of all, self-discipline.

Who tends to become wealthy? Not the exotic back-stabbers and dabblers in high finance you see depicted on TV. The average person with a net worth of $1 million or more is usually a businessman who has lived all his adult life in the same town, He owens a smalll factory, a chain of stores or a service company. Married once, and still married, he lives in a middle-class neighborhood, next to people with a fraction of his wealth. He's a compulsory saver and investor. And he's made his money on his own: 80 percent of America's millionaires are first-generation rich.

As many millionaires see it, a luxury house is a bad investment. Why pay $500,000 when a $150,000 house will do? That extra $350,000 could be earning interest or building equity.

Millionaires understand that when you buy a luxury house, you buy a luxury life-style too. Your property taxes skyrocket, along with the cost of utilities and insurance, and the prices of nearby services, such as grocery stores, tend to be higher. The only thing worse than a big house, millionaires have told me, is the flood of problems that comes with it.

The rich man's attitude can also be seen in his car. Many drive old, unpretentious sedans. Sam Walton, billionaire founder of the Wal-Mart Stores, Inc., drove a pickup truck. Another fellow said, "I buy then by the pound-- the biggest car I can find for the least amount of money."

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