Did you know that the phrase “keeping up with the Joneses” is based off of something entirely fictional? Yep, that’s right: “Keeping up with the Joneses” originally came from an early 20th century comic strip featured in the New York World. The Joneses were a couple who represented (and still do today) the “ideal” family—with the car, the television, and the white picket fence…
In the book The Millionaire Next Door, authors Thomas Stanley and William Danko discuss, amongst other things, why this obsession with “keeping up with the Joneses” can impede your path to wealth. Overall, the book serves as a kind of “how to become a millionaire” guide, and goes about this in almost a revolutionarily simple way. They simply look at what millionaires do and don’t do, and teach you how to emulate it. They argue that nearly anybody with a steady job can, over time, amass a nice little fortune. That means you.
So today, we thought we’d bring you ten simple, yet practical tips, straight from The Millionaire Next Door. These are some things that the millionaire next door does not do in order to be so successful.
1) Spend more than they earn. The millionaire next door holds this rule above all others, because, after all, how are you going to gain wealth if you are struggling with debt? It’s important to get rid of the “I’ll be able to afford it later” notion, because, as we’ve seen in today’s economic climate, sometimes this isn’t the case! (For example, all of those houses that people thought they’d be able to afford, but couldn’t; cars; schools; and on and on…) The point is, the millionaire next door knows not to spend beyond his or her means, which is one of the main reasons behind their success.
2) Think they know it all. Most self-made millionaires have more than just “cents”—they have some real sense and business savvy as well. But the real, successful millionaires never stop learning and never say they know it all.
3) Eat out for every meal. One of the reasons the “millionaire next door” blends in so well is because they’re not flashy about their money! They don’t buy fancy new cars, they don’t live in mansions, and they don’t dine out on a regular basis.
4) Keep money in a checking account. The millionaire next door knows that money sitting in a checking account is just… well, sitting there. Put your money in a high yield savings account and let the wealth accumulate! Click here to find out more about Mango’s new savings rate—45 times greater than the national average!†
5) Desire instant gratification. Okay, this one might be a hard habit to break, but the millionaire next door knows that in order to achieve long-term success, you need to think in the long-term. So next time you feel the itch to buy a pricey new pair of shoes, ask yourself how that will help you in the long-term.
6) Impulse Buy. Impulse buying is a sort of symptom of desiring instant gratification. So rather than buying that new pair of shoes to satisfy your “new shoe itch,” think about the long-term and spend some time thinking about it! Remove yourself from the store where the cute shoes are calling you, go home, and think about whether you really need them. Remember, a great way to fight unproductive impulse buying is to actually remove yourself from the store!
7) Focus attention on negative obstacles. The millionaire next door might just be one of the most positive people you’ll ever meet. I don’t necessarily mean he/she is happy and chipper all the time, but a truly successful person focuses only on the positive, and so that is what they experience in life!
8) Socialize with people who waste money. Not to say that you should ditch your friends if you want to gain wealth, but do know that the people you surround yourself with shape your habits. For example, if you’re looking for something to do on a Sunday afternoon and your group of friends think dining out and boutique shopping sound like a good time, chances are, you’ll spend more money hanging out with them than if you were with a group who would rather go to the park or shop at thrift stores! Over time these behaviors become habits, so it’s important to choose the right ones (habits and friends!)
9) Pay retail prices for name-brand clothing. Savvy millionaires know how to spot a deal—and when they’re being overcharged! Paying $200 for a pair of jeans is excessive for anybody, especially when you can get that same pair of jeans at a fraction of the price! There are tons of discount store options, like Marshalls, TJ Maxx, or Ross. Or, if you’re feeling really thrifty, check out our post on how to save by swapping clothing!
10) Spend unnecessarily. You know the saying “don’t fix it if it ain’t broken?” Well, the millionaire next door lives by this! They don’t buy new things just for the sake of getting something new—even if they can afford it—they use what they have, and if it breaks, well, they fix it. Can’t fix it? They’ll search for an inexpensive solution.
Remember, the millionaire next door is just as frugal, if not more so, than the rest of us. They bargain-hunt, they do things themselves, and they certainly don’t care about keeping up with the Joneses. That is why they’re millionaires next door!
Do you know any “millionaires next door”? What did they do to gain wealth? Comment below and share their secrets! )
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† Interest is calculated on the average daily balance of your Savings Account and paid monthly. Annual Percentage Yield (“APY”) and the APY comparison is accurate as of October 1, 2011. The APY advertised applies only to the portion of your Savings Account balance which is $5,000.00 or less. An APY of 0.10% will be paid on the portion of your Savings Account balance which exceeds $5,000.00. Fees may reduce the earnings on your Savings Account. This is a promotional rate and is subject to change without notice. A minimum of $1.00 is necessary to open your Savings Account. A limit may be placed on the maximum amount of funds you can deposit into your account. This limit may be exceeded by interest accruing on the funds. The limit may be changed from time to time.
Photos from Flickr, used under Creative Commons License, although Mango is not endorsed by the owners of the photos. Photo credits (in order of appearance): opensourceway; treehouse1977; All Things Ace; bredgur; sherrattsam; Diego3336