Have you ever heard the one about the billionaire who lives in a modest home?
That billionaire is Warren Buffett, who Forbes estimates has a $75.6 billion net worth according to Forbes World’s Billionaire List of 2017. His house? It’s not a sprawling 30,000-square-foot beachfront mansion. No, he lives in a quiet Omaha neighborhood in a $850,000 home that he bought for $31,500 in 1958.
Sure, for most people, living in an $850,000 home is a pipe dream. But if you think about a house like that being occupied by the second richest man in the world . . . it’s pretty surprising, isn’t it?
Warren Buffett could buy any house in the world (with cash!), but he chooses to live in a modest, relatively small home in Omaha. Why is that?
It’s a surprising fact that, according to Thomas Stanley’s book The Millionaire Next Door, “more than 80% [of U.S. millionaires] are ordinary people who have accumulated their wealth in one generation.” The book goes on to say that most millionaires don’t look the part. Most live in normal, middle-class neighborhoods and drive modest cars.
So what can you learn from these millionaires (and even billionaires like Warren Buffett) who don’t live the stereotypical life of a millionaire?
1. They’re avid readers.
President Harry Truman once said, “Not all readers are leaders, but all leaders are readers.” In The Millionaire Next Door, Stanley says that the average millionaire reads one nonfiction book per month.
You get the idea. One of the reasons millionaires become millionaires is because of their constant desire to learn. To them, leadership books and biographies are much more important than the latest hit reality show. When they have free time, they use it wisely—by reading.
2. They understand delayed gratification.
In other words, the average millionaire has spent most of their life sacrificing temporary pleasures for long-term success. They have no problem buying an older, used car, living in a modest neighborhood, and wearing inexpensive clothes. Keeping up with the Joneses isn’t a priority for them.
Those lifestyle decisions allow them to do things like save for retirement and college and build up a large down payment for their dream home. They realize that instant gratification is fun—but delayed gratification is so much better. Today’s sacrifices set them up for tomorrow’s success.
3. They stay away from debt.
The idea of “debt as a tool” is foreign to the average millionaire. If they want something they can’t afford, they save and pay cash for it later.
Car payments, student loans, same-as-cash financing plans—these just aren’t part of their financial plan, and that’s why they win with money. They don’t owe anything to the bank, so every dollar they earn stays with them to spend, to save, and to give.
Debt is the biggest obstacle to building wealth. Run from it every chance you get.
4. They budget.
Your budget is your plan, and you don’t build a net worth of a million dollars without some sort of plan.
Just like you build a house by starting with the foundation, you build wealth by starting with the budgeting basics. And then you keep following them. When you’re making a lot of money, you don’t stop managing it, right?
The average millionaire has made a habit of budgeting every month. They know what’s coming in and what’s leaving their bank account. To this day, Dave Ramsey and his wife still make a monthly budget—a practice they started decades ago. If you only remember one thing, remember this: Budgeting is the key to winning with money.
5. They give.
Sure, some rich people can be selfish jerks—just like anyone else. But the everyday millionaires who live down the street, the ones you don’t even realize are wealthy, are some of the most giving people you’ll ever meet.
Whether it’s tithing at church, donating to a meaningful charity, or just giving to friends and family on occasion, these people have a caring spirit. They realize that the most important thing you can do with wealth is help others. That’s actually why they continue building their wealth. They realize they can’t take it with them when they die. But instead of frivolously spending it all, they choose to leave a legacy for the people who mean the most to them.
This idea that wealthy people always live in ivory towers and wear $500 jeans is a myth. Being successful with money is as simple as living a modest lifestyle that follows a few basic principles.
The more of these habits you follow, the more successful you’ll be with money. Just ask Warren Buffett.
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