Everyday Millionaires - Book Summary

Discover the truth about millionaires and how you can be one of them

Once upon a time, a man in his thirties—inspired by his work with financial guru Dave Ramsey—transformed his life by shedding debt and embarking on a journey to wealth. Drawing on his experiences as a financial coach, he set out to debunk myths and unveil the real strategies that lead to wealth. This exploration led to an extensive study involving over ten thousand American millionaires, exploring their habits, beliefs, and paths to success.

What emerged were striking revelations about millionaire myths and a roadmap to financial freedom that doesn't require a high-profile education or a stroke of luck but adheres to a disciplined set of behaviors and beliefs.

In this exploration, you'll discover:

- The myth of the necessity of prestigious education for financial success and why bypassing this can save you a fortune.

- Insights from Olympic champion Michael Phelps on the power of focused and consistent effort.

- Strategies to reset your financial direction much like programming a GPS to ensure you stay on track to becoming a millionaire.

These insights break down the walls of misconception surrounding the millionaire lifestyle and open up a clear, actionable path for anyone aiming to reach this coveted financial status.

Believe in your millionaire potential and wear your success with pride

The notion that the American dream is a relic of the past is not just an inaccurate statement; it's a detrimental one. Such myths deter individuals from pursuing and realizing their financial aspirations. Chris Hogan, a former financial coach and a man who once viewed the idea of becoming a millionaire as a distant reality, is a testament to overcoming these daunting odds. Raised by a single mother in Kentucky, Hogan discovered the profound power of belief in transforming financial goals into realities.

Consider Roger Bannister, the British athlete who shattered the four-minute mile barrier when experts claimed it was humanly impossible. On May 6, 1954, by clocking a mile at three minutes and fifty-nine seconds, Bannister defied the naysayers and redefined the limits of human endurance. His achievement not only disproved baseless limitations but also inspired others, reinforcing that barriers exist primarily in our minds.

Drawing parallels to Bannister's journey, becoming a millionaire isn't an unachievable feat reserved for a select few but a plausible achievement for those who believe it's possible. Reports by CNBC Money in 2017 highlighted that America is home to nearly eleven million millionaires, evidencing that with the right mindset and persistence, financial success is within reach.

For those who reach this milestone, it's crucial to take pride in your financial victories. Hogan's comprehensive study with millionaires revealed a common trait among them: a deep sense of pride in their financial accomplishments, not marred by shame but celebrated as markers of hard work and dedication.

This segment sheds light on the importance of dismantling the myths surrounding the millionaire identity, urging us to redefine what it means to succeed financially. With renewed understanding and motivation, let's explore further how shifting your beliefs can dramatically alter your financial reality.

Hard work, not luck, is the cornerstone of most millionaires' wealth

There's a common misconception floating around that wealth is either a result of pure luck or a lavish inheritance. However, the portrait of the millionaire is far more textured and rooted in realism than these stereotypes suggest. The reality, supported by rigorous research, is that a significant majority of millionaires, specifically 79 percent, have reached their financial status through diligence and perseverance, rather than inheriting their riches.

Take the story of Thomas, a man who emerged from a challenging childhood defined by poverty and personal loss. With a determination to steer clear of alcohol and financial insecurity, Thomas pursued an education, eventually earning a PhD—not in pursuit of a glamorous position but to teach mathematics. After a 37-year-long career, he retired with a net worth totaling two point six million dollars, a testament to years of prudent saving, cautious investing, and consistent hard work.

This narrative dismantles the myth of the 'overnight millionaire' and brings to the forefront the everyday realities such as avoiding debt, making sensible financial choices, and investing earnestly over the long term. Often, the public only sees the end result—wealth—but not the sacrifices and gradual progress behind it.

Consider Michael Phelps, renowned not just for his athletic prowess but also perceived genetic advantages. Despite these, Phelps underwent rigorous training, swimming up to fifty miles and engaging in serious weightlifting every week. His commitment showcases that even those endowed with natural talents must work tirelessly to convert potential into success.

Similarly, millionaires understand that while they may be fortunate in some respects, their financial achievements are mostly due to hard work and smart choices. By recognizing this, we unlock a more attainable vision of wealth creation that relies not on luck but on actionable, consistent steps towards financial goals.

This insight invites us to rethink wealth and its origins, encouraging a proactive approach to personal finance. As we continue, we'll delve deeper into how millionaires identify and capitalize on opportunities, further illustrating that success is less about chance and more about choice and hard slog.

Millionaires achieve wealth through calculated, not reckless, risks

The stereotype of a wealthy individual might conjure images of a Wall Street maverick making bold, brash decisions that turn into overnight millions. But the reality of how the majority of millionaires build their wealth is far less dramatic and much more grounded in cautious strategy.

Interestingly, in an extensive study on millionaires, not a single participant credited their wealth to speculative investments like single stocks. The reasoning is simple: such investments represent a high-risk gamble, akin to placing all your eggs in one volatile basket. If that chosen stock plummets, so does your financial security.

Then there's the buzz around cryptocurrencies, such as Bitcoin. Despite the media hype and tales of astronomical gains, cryptocurrencies are inherently unstable, unregulated, and unpredictable — attributes that the average millionaire steers clear of.

On the other side of the investment spectrum lie ultra-conservative options like certificates of deposit and bonds. While these are much safer, they typically offer lower returns, which doesn't align with the goals of most millionaires either. Instead, a significant 79 percent of millionaires in the study revealed a preference for employer-sponsored retirement plans, primarily investing in growth stock mutual funds. These funds offer a balanced risk through diversification and hold potential for appreciable growth, aligning with a strategic approach to wealth accumulation.

This insight dispels another prevalent myth: that millionaires are all about instant wealth. The reality is quite the contrary — 95 percent of millionaires report that it took them more than ten years to amass their wealth, with the majority not hitting the million-dollar mark until the age of 49. This challenges the fantasy of 'get rich quick' schemes, spotlighting a path to wealth built on patience and persistence.

Even Chris Hogan, whose personal and professional journey has provided him with deep insights into wealth management, learned this lesson the hard way. In the 1990s, lured by the promise of swift returns, he invested heavily in AOL stock based on a friend's success. However, the peril of such a concentrated investment soon became apparent, and he faced a significant loss of twenty-five thousand dollars, a stark reminder of the risks of putting hope in quick gains.

Through their disciplined approach and avoidance of extreme financial risks, millionaires demonstrate that sustainable wealth is typically the result of methodical planning and long-term investment strategies, not the luck of the draw or daring market plays.

The road to millionaire status doesn't necessarily pass through Ivy League halls

There's a persistent belief that joining the ranks of millionaires requires an elite education and a glamorous, high-paying job. However, the reality is often far more modest and accessible. While it's true that a solid education correlates with financial success—88 percent of millionaires have at least a bachelor's degree, as opposed to 33 percent of the general population—the type of school they attended might surprise you.

In fact, a significant 62 percent of millionaires opted for degrees from public state colleges rather than high-priced private institutions. Considering the cost differences—around twenty thousand dollars annually for state schools compared to over forty-five thousand dollars at private colleges—choosing the less expensive option does not seem to hinder financial success. This decision also aligns with millionaires' general avoidance of excessive debt, with 68 percent graduating without the burden of student loans, significantly higher than the general population.

Moreover, mystical high-paying jobs are not as common among millionaires as one might think. About 30 percent of them have never earned a household income exceeding one hundred thousand dollars per year. Surprisingly, the most common professions among millionaires are engineers, accountants, and teachers—not exactly the glamorous high-stake traders or corporate moguls one might envision.

What truly differentiates these millionaires is not where they studied or the jobs they held, but their prudent financial behaviors—favoring affordability and stability over prestige and risk. These choices emphasize a path to wealth that is open to many, reliant more on sound financial practices than on the pursuit of high salaries or prestigious diplomas. Thus, debunking the myth that you need to start rich or spend a lot to become wealthy.

Millionaires master their fate by taking full financial responsibility

In an era riddled with various national crises, perhaps the most overlooked is the crisis of responsibility, particularly when it relates to finance. Many Americans, it seems, are not taking active control of their financial futures. This is evident in the retirement preparedness of many, where research indicates a stark disconnect between concern for the future and actionable planning. A surprising 56 percent of Americans worry about retirement, yet many have not taken concrete steps towards securing their financial future. Specifically, half of the baby boomers surveyed had less than ten thousand dollars in retirement savings, and 80 percent of millennials desired to invest more for the future but hadn't started.

In contrast, millionaires tend to adopt a markedly different approach. An overwhelming 97 percent of them believe they are the architects of their own financial destinies. They recognize that taking personal responsibility for their money is the first step toward achieving substantial wealth. It's akin to setting a destination in a GPS; you need to know your starting point and desired endpoint to chart the course accurately.

The starting point in financial terms is your net worth, defined as the total value of what you own minus your owed debts. Accurately calculating your net worth can give you a concrete understanding of your current financial status, akin to locating yourself on a map. Many online tools, including those provided on the author's website, can assist in this calculation.

Knowing your financial standing is crucial, but equally important is having a clear vision of where you want to be. This involves candid discussions, potentially with a spouse or partner, about the intricacies of your ideal retirement. Envisioning the specifics, such as your desired residence or type of car, helps in painting a vivid picture of your goals.

The final step involves detailed planning on how much money needs to be saved and how much should be invested monthly to realize this vision. Starting this financial journey is a personal endeavor—no one else can undertake it for you. This ethos of personal accountability is what distinguishes millionaires in their financial conduct and success.

Master your finances with the power of intentionality, just like millionaires do

Millionaires might blend in with the crowd in their blue jeans, but one defining trait makes them stand out: their intentionality in managing finances. Intentionality, the deliberate decision-making process in financial habits, is what sets millionaires apart from those who simply "slide" through life without a concrete financial plan.

Consider the behavior of a financially successful couple, Frank and Alice. Drawing from a tradition of thrift inherited from his German immigrant forebears, Frank learned early on to live within his means and prioritize savings. By applying these principles during his career on Wall Street, Frank didn't just accumulate salary but actively pursued knowledge on investing and wealth accumulation. Now, Frank and Alice boast a net worth of six million dollars, a fortune built not through extravagance but through consistent, purposeful saving and spending below their means.

This approach isn't unique to Frank and Alice. A staggering 94 percent of millionaires spend less than they earn, according to Hogan's detailed study on millionaire behaviors. Additionally, 95 percent prioritize saving for significant expenses. Their most common strategy? Adhering to a strict budget.

Budgets often receive negative connotations, viewed by many as restrictive or limiting. However, in the context of financial planning, a budget is an empowering tool. It facilitates control over your funds, enabling you to make every dollar count and extend your financial reach. A budget dissipates the fog of financial uncertainty, offering clarity on where each dollar is funneling and identifying potential savings in everyday expenses.

By reallocating funds from over-budget areas—like an overspent grocery bill—to more pressing financial priorities, such as debt reduction, savings, or investment contributions, a budget effectively puts every dollar to work. This practice of allocating funds with purpose is a cornerstone of millionaire financial strategy. It's not merely about managing money, but directing it in a manner that aligns with one's financial goals and values, thereby transforming everyday earnings into lasting wealth.

Thus, the key to emulating the financial success of millionaires lies not in earning a high income but in practicing intentionality with the income you have, making judicious choices that resonate with long-term financial desires and stability.

Millionaires harness the power of goal setting to turn visions into reality

A distinctive feature of millionaires is their unwavering commitment to their goals. Indeed, a staggering 97 percent of millionaires accomplish nearly all the objectives they set for themselves. This high success rate is underpinned by the SMART goal-setting framework that anyone can adopt to enhance their likelihood of achieving their aspirations.

SMART is an acronym that stands for Specific, Measurable, Achievable, Relevant, and Time-sensitive—each component a crucial pillar in effective goal setting.

Specific goals require clarity and precision. Rather than vague ambitions, your goals should detail exactly what you aim to achieve. If you've envisioned a particular lifestyle for your retirement, this vision should inform the specifics of your financial goals. Measurable means establishing concrete benchmarks or metrics, such as a specific savings amount per month, allowing you to track progress transparently.

Achievable goals emphasize realism. While ambition is important, setting goals within the realm of attainability ensures continuous motivation and success. Relevant goals should align closely with your larger life plans; they should interconnect rather than stand in isolation or contradiction. Time-sensitive adds the element of urgency—a deadline by which the goal should be met, motivating consistent effort towards achievement.

Once goals are set using the SMART framework, documenting them can significantly boost your commitment and the probability of success. Research by Dr. Gail Matthews shows that people who write down their goals are 42 percent more likely to achieve them compared to those who don’t.

Mixing short-term and long-term goals can create a balanced roadmap for financial success. Short-term goals provide immediate gratification and motivation, such as saving for a vacation, while long-term goals, like paying off a mortgage, have transformative impacts on your financial health. Becoming mortgage-free not only shifts a home from a debt burden to a full asset but also frees up financial resources to grow through investments.

Consider the potent effect of paying off a mortgage ten years ahead of schedule. The money once allocated for mortgage payments could then be invested, taking advantage of compound interest—a concept that we'll explore further—potentially leading to substantial wealth accumulation.

In conclusion, millionaires don't just dream; they strategize and execute their plans meticulously, using tools such as SMART goals to ensure each step taken is a calculated move towards their ultimate financial goals.

Millionaires embrace the slow but sure path of compound growth

Patience isn't just a virtue; it's a financial strategy for millionaires, who understand that resisting the allure of immediate gratification can lead to substantial wealth over time. Key to this approach is the concept of compound interest, often hailed as one of the most powerful forces in financial growth, it's even rumored to have impressed Albert Einstein himself!

Imagine investing one thousand dollars and watching it grow to one thousand one hundred dollars over a year. If you leave the entire amount invested, the additional one hundred dollars will also start generating interest. This process, where interest builds upon itself, can dramatically accelerate financial growth, but it requires patience and the resolve to leave your investment untouched to work its magic.

When exploring long-term investment strategies, the favored choice among millionaires is typically traditional retirement plans like 401(k)s. To maximize your retirement investments, first ensure you are fully benefiting from any employer matching contributions. This is essentially free money, an immediate return on your investment. If your employer matches five percent, for instance, make sure at least that portion of your income is funneled into your 401(k).

After maximizing employer contributions, turning to a Roth IRA can be a wise next step. Unlike a 401(k), a Roth IRA offers tax-free growth and more flexibility in investment choices, though it does come with income and contribution limits. If your income surpasses the threshold for a Roth IRA, then channel the full recommended fifteen percent of your income into your 401(k).

Remember, the goal is to consistently save and invest—starting with at least fifteen percent of your income. As your financial obligations, like a mortgage, are cleared, these funds should be redirected towards your investments, further enhancing your capacity to grow your wealth.

Patience and consistency in your investment strategy, coupled with the strategic use of retirement accounts and the power of compound interest, can transform your financial landscape over time. It’s not about overnight success but a gradual and steadfast journey to becoming a millionaire. The real secret lies in staying committed to your financial plan and allowing time to do its profound work.

The attainable dream of becoming a millionaire

The overarching message from the insights gathered is strikingly clear: Millionaires are not a distinct breed distinguished by inheritance or luck. Instead, they embody the quintessence of the American dream —ordinary individuals who, through determination, goal-setting, and perseverance, climb the economic ladder to financial success.

Contrary to popular belief, millionaire status is not reserved for the privileged few but is achievable by anyone willing to engage in consistent hard work and thoughtful financial planning. These millionaires illustrate that with the right mindset, habits, and strategic financial decisions, the path to significant wealth is open to all, proving that the dream of becoming a millionaire continues to be vibrant and achievable in today's world.