A question for you.
Do you keep track of your money? Or do you like to spend and forget?
Before I ventured into business, before all the training and reading of the right books, I had this common image of the rich stamped on my mind. It’s the common idea that the rich are people who live in mansions on some posh exclusive neighborhood, who drive super flashy cars, and have an endless entourage of body guards and maids. They wear designer clothes and go to the most posh places on earth to do what they love to do – spend.
And then, I was reading The Millionaire Next Door by William Danko and Thomas Stanley and was told that these are all lies! Reading through the book, I learned about the following facts about the rich:
- They wear inexpensive suits.
- They rarely drive foreign cars. Only a minority drive the current-model-year- automobile.
- Their businesses can be classified as dull normal. They are welding contractors, owners of mobile-home parks, pest controllers, auctioneers, rice farmers, coins and stamp dealers and paving contractors.
- Their total annual realized income is less than 7 percent of their wealth. In other words, they live on less than 7 percent of their wealth.
- Half of them live in homes that they have occupied for the past 20 years. When they buy houses, they think about its future selling value, not look at it as an extension of their home.
- Only half of them have wives working outside home.
- They have 3 children on an average.
- They value the importance of having an accountant and a lawyer. So they believe these are the ideal occupations for their sons and daughters.
- About two-thirds of them work between forty-five to fifty-five hours per week.
- Most of them have never felt at a disadvantage because they did not receive inheritance. About 80 percent of the rich are first-generation affluent.
- They have more than six and one-half times the level of wealth of than their non-millionaire neighbors but are outnumbered by three to one.
- They are cheapskate. They track every cent that comes in and out of the bankroll.
Learning all these facts about the rich and wealthy made me rethink my values and my financial behavior. As I spend more time with them by attending training and coaching lessons, the more I realize that the real millionaires don’t act like how they are portrayed by the media. They value hard work and more importantly, they track their money. They value their money because it’s a product of hard work.
I’ve asked people who are financially struggling and their response surprised me; they don’t track their money. Why? Because it’s a tedious, boring process and they feel they could use their time to more valuable tasks. This only shows that many people do not see the significance of knowing where and how often you spend your hard-earned money. This conscious disregard leads to leaks in your finances and poses trouble in the future.
Learning from these “millionaire-mentors”, my wife and I have imposed to ourselves the discipline required in spending and tracking our money. Yes, we go through the tedious process, keep receipts and books that show our expenditures and savings.
This culture is also reflected to our business. Should partners or clients ask us to show our financial activities from the day we started the company, we can confidently show them the books. This is very important in keeping your credibility as a business owner.
Tracking your money is made easier by technologies available today. At present, there are already existing applications one can use in tracking expenses and savings. These apps will help you understand your financial behavior.
Being in control of your finances is one of the most important values you will need to succeed. This is one fact all millionaires know and live by everyday.