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What do millionaires do differently?
Authors Thomas J. Stanley and William D. Danko of The Millionaire Next Door spent 20 years studying millionaires across a wide spectrum of industries to find out.
To much surprise, it turns out the habits of millionaires are not complex. Best of all, they’re habits anyone can start today.
While the book discussed 7 millionaire habits, there’s one habit in particular that stood out to me…
Can You Answer Yes To These Two Questions?
Via The Millionaire Next Door, the majority of millionaires can answer “yes” to these two questions.
- Does your household operate on an annual budget?
- Do you know how much your family spends each year on food, clothing and shelter?
Why though do millionaires budget?
Millionaires treat their personal finances like a productive business.
Planning and controlling consumption are key factors underlying wealth accumulation…Operating a household without a budget is akin to operating a business without a plan, without goals, and without direction.”
In fact, their research found that for every 100 millionaires who don’t budget, there are 120 who do.
But what comes as an even bigger surprise, the higher the net worth, the higher the percentage of budgeters.
Only those clients with considerable wealth want to know exactly how much their family spends on each and every category.”
How Do Millionaires Budget?
Budgeting means a lot of different things to different people.
How do millionaires budget?
According to their research, millionaires tend to the ebb and flow of their bank accounts.
This tracking doesn’t have to take a lot of time.
Helpful Tip: As a Certified Financial Planner™, I get asked a lot about different apps and software for budgeting from friends, family, and readers. The one I use to budget my family’s expenses is Personal Capital.
Recently voted the best financial tracking app by MacWorld and with a rating of 4.6 with over 1,200 reviews in the App Store (available for both iPhone and Android, as well as a desktop version) — with Personal Capital you can view all your account activity — checking, savings, 401(k), college fund, loans, investments — in one place. If you use the popular budgeting software Mint, here’s how Personal Capital and Mint compare.
Why Do Millionaires Need To Budget?
When you write a best-selling book, which promotes simple habits available to anyone, a predictable question will come.
Here’s what Thomas J. Stanley and William D. Danko had to say:
Why would someone who is a millionaire need to budget? Our answer is always the same:
They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way.
Sometimes we are forced to add analogies to make our point. We ask, for example: Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that’s why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.
Never tried budgeting before or want to simplify your existing budgeting method?
*If you decide to add this financial tool to your own belt and do so using the image below, you help support this blog and its mission of helping Americans connect the dots between their money and what makes them happy. Thank you!
Personal Capital Quick Summary
- Get insight into your weekly, monthly and yearly income and spending habits
- Named best financial app by MacWorld
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