We’ve long preached discipline in investing and living below one's means as good methods for accumulating and maintaining wealth. Now there’s research supporting these concepts.
Sarah Stanley Fallaw, director of research for the Affluent Market Institute has co-authored “The Next Millionaire Next Door: Enduring Strategies for Building Wealth”. She surveyed more than 600 millionaires in America and found six behaviors, which she called “Wealth Factors” that relate to net worth potential. You’ll probably notice some common-sense ideas here:
Frugality-Spend less, save more and stick to a budget.
Confidence-in your ability to manage your finances and investing.
Responsibility-accept your role in the financial outcomes in your life.
Planning-set goals and measure your progress.
Focus-stay on target for the tasks you assign yourself.
Social indifference-don’t follow the latest trends and ignore investment tips you hear at cocktail parties.
In our role as advisers, we’ve seen a lot of success for early retirees who adapt to a new budget after no longer earning a paycheck. That takes tons of discipline and confidence in the decisions they’ve made. Those who’ve planned well for retirement seem to have the most success.
One of the hardest things to avoid is lifestyle creep-the tendency to overspend as your earning power increases during your career. “Keeping up with the Joneses” has damaged a lot of savings plans. People who succeed in accumulating wealth aren’t focused on what makes them happy today, but on their long-term wealth building plan.