One of the best wealth building books I have read and added to my library is The Millionaire Mind by Thomas Stanley. Although this is really a sequel to his first book , The Millionaire Next Door – which is a true eye opener of the difference between being rich vs. being wealthy – in The Millionaire Mind he digs deep into the actual facts, steps and principles that made these people wealthy. It offers a slew of wealth building tips.
There are so many great lessons on building wealth in both of these books but the author offers a concise list of wealth building tips towards the end that he calls “elements of the economic success equation”. Surprisingly they are no “secret” or “magic formula” instead they are principles you and I can use on the way to wealth.
The following are these eight wealth building tips along with some of my comments :
- ”Understand the key success factors our economy continues and will continue to reward: hard work, integrity and focus.”
The hard work part is probably not a surprise to anybody, but in my earlier years it is something that really had not set in with me. What I still struggle with is focus and have seen my best results when I am able to keep “my eye on the ball”. However doing this on a long-term basis is where I believe the real rewards are. To focus on a long term wealth/investing strategy and plan is where the life-changing results will be seen.
- ”Never allow a lackluster academic record to stand in the way of becoming economically productive.”
Man was I glad to read this . Seriously, if you read this book it really refers to people that have created wealth even though some of them just have a high school diploma. Although most of the millionaires in his study have at least a bachelors degree what the author found out was that there was no correlation between high wealth and a high GPA and/or advanced degrees.
- ”Have the courage to take some financial risk. And learn how to overcome defeat.”
There are two important background points you need to know of in order to understand this recommendation. First, although most of the millionaires in his study are wealthy via a business they own they also speak against creating their businesses through large amounts of debt. Therefore big debt is not the financial risk that the author refers to with this line.
Second, some of the millionaires in the study created a successful business and lost most if not all of it only to create another one even more successful than the first. So when they talk about defeat is not just hitting a stumbling block or a difficulty, it could be a “I-lost-everything-what-am-I-going-to-do-now” type of defeat. Overcoming such a defeat requires character and a strength that I am not sure all of us have.
- ”Select a vocation that is not only unique and profitable; pick one you love.”
This has got to be probably the hardest recommendation of all the wealth building tips, in my opinion. Because there are points in life where you have to choose to pursue x or y career path, you probably know that it can be profitable but, how will you know if you love it until you have tried it for a while? And then what happens if you discover you don’t?
On the other hand it is a good objective to have in the background when making career decisions because often the recommendation is to find something you love but not a lot of thought is given to how profitable it can be.
- ”Be careful in selecting a spouse. Those who are economically productive married husbands or wives who had the characteristics that are compatible with success.”
I might have to take back what I wrote in the previous entry, THIS might be the hardest recommendation. How many of us use this as criteria when choosing the person we want to marry?
Again, in the case of the book the author illustrates this point with one business man whose first wife let the money thing go to her head when they started being successful. So when he re-married he took this into consideration. But many of the other couples in the study complemented each other on how they view money and how they live their lives. It wasn’t just one person wanting to drive a used car instead of the latest model they were both in agreement that was the smart thing to do.
From personal experience I know how valuable it can be to have both agreement and support from my wife that it is okay to have less “stuff” than our friends and use that paid off car a year or two longer than what we expected. I guess I indirectly saw that in her when we started out but it was not a “selection criteria”.
The golden question is, what if your spouse does not have these characteristics, what do you do?
- ”Operate an economically productive household. Many millionaires prefer to repair or refinish rather than buy new.”
You could say that if you have the previous condition met this would basically take care of itself. One will drive the other. The concept of frugality (not to be confused with cheapness) is recurring when looking at wealth builders and throughout most wealth building tips.
- ”Follow the lead of millionaires when selecting a home. Study, search and negotiate aggressively.”
Being into real estate investing you could say I almost do this for a living and because of that I have run into many properties were my offer is rejected because another buyer (usually someone that is going to live in the property rather than invest in it) decides to pay too much. They don’t find out how much that house should be worth or try to negotiate down the price.
I have seen people paying $20,000 to $30,000 more than what I offer on houses that would then need $10,000 - $20,000 in repairs. This is because for many, selecting a home is an emotional rather than an economic purchase. Couple that with bad advice from an agent, family or friend and they end up paying much more than they should.
- ”Adopt a balanced lifestyle. Many millionaires are “cheap dates.” It does not take a lot of money to enjoy the company of your family and friends.”
This probably is due to the fact that truly wealthy people realize that wealth resides in experiences and not things.
What I both like and find a little surprising about these wealth building tips is that they are both character and lifestyle traits rather than specific financial advice. I hope that like me you can use these both as “eye-openers” and as inspiration that there really is no secret to wealth. Like the Wealth Steps headline says wealth is built one step at a time.