building wealth

10 Reasons You’re Not A Millionaire

May 6, 2019 By Jeffrey Strain 28 Comments

There seems to be an impression that the only reason that people aren’t able to become millionaires is that they don’t work hard enough. The truth is that hard work has very little to do with becoming a millionaire. That’s not to say that you don’t have to work hard. You do. But you also need to avoid the many pitfalls and bad financial decisions which end up being the real cause that most people aren’t able to build wealth. The truth is that you don’t have to have a huge salary to gain assets in excess of a million dollars, but you do have to make good financial decisions (and avoid making bad ones).

It’s important to note that a single issue is likely not what’s keeping you from millionaire status, but a combination of several of the actions and decisions you’ve made. And, yes, there are exceptions to the rules, but then there are also people who win the lottery — and would you really bet your retirement on winning the lottery? Here are 10 reasons that could very well be a contributing cause of why you’re not currently a millionaire:

You Spend More Than You Make

There are no secrets, and there certainly is nothing magical, when it comes to the basics of personal finance. In order to keep your finances in order, you need to spend less than you earn. If you fail to do this one simple thing, it doesn’t matter how much money you make, you’ll always find that you don’t have enough money to make ends meet. It also goes a step further than this. Spending less than you earn is not enough in itself to build wealth. You have to also actively save and invest a portion of all the money that you make. Most people recommend this amount to be 20% of your income. If you aren’t putting aside 20% of every paycheck you receive and placing it into long-term savings and investments, chances are you aren’t going to become a millionaire.

You Try To Meet Other’s Expectations

There is nothing which will keep you from reaching your financial goals faster than trying to live up to other people’s expectations instead of your own. This is more commonly known as trying to “keep up with the Joneses.” The simple fact is that if you’re trying to live like a millionaire before you have the resources of an actual millionaire, it’s not likely that you’re ever going to become a millionaire. Instead, you will simply be building up a lot of debt and wasting money on things to impress people who probably won’t be impressed anyway. Trying to keep up with the Joneses when your salary can’t compete with the Joneses is a sure way to sabotage the chance of building wealth.

You Don’t Pay Yourself First

One of the most fundamental steps that you can take to ensure that you put away money for yourself is to pay yourself before you pay anybody else. If your goal is to save 20% of your income, you need to pay yourself that 20% from your paycheck before you pay any other bills or expenses that you may have. If you try to pay yourself after you pay all your other expenses, you’ll inevitably fall short at the end of the month from time to time (if not always), and fail to save as much as you had hoped. By paying yourself first, you make the commitment that wealth creation is an important part of your overall plan, and not something that hopefully gets accomplished after everything else.

You Have Kids

This probably isn’t going to be the most popular item on the list of why you’re not a millionaire, but the hard, cold truth is that children are expensive. Very expensive. The costs associated with kids can be mitigated to some degree if you have already built some wealth and have planned the cost of having children into your budget, but that often isn’t the case for many couples. Having children when you are young with a limited income will greatly affect your ability to build wealth. With compound interest being so important to wealth creation, and a cornerstone of it being that the sooner you begin saving and investing, the better, the fact is that it’s nearly impossible to put money aside when you’re young with children. When this is the case, all the extra money you have inevitably ends up going toward the children’s care instead of being invested for wealth creation.

Your House Is Too Big

Some people assume that purchasing a big house is a good investment. While this can be the case, purchasing more house than you can afford is a good way to make sure that you’re unable to create real wealth. The problem is that when you buy big, your expenses for the house are also bigger. A large house will mean bigger tax payments, more expensive upkeep, more stuff purchased to fill the house, higher insurance payments and all around more expenses than if you purchased a house that actually fits your needs. The real way to build wealth is to purchase a house that fits your needs and budget, and take all the savings that you gain from not buying the large house to invest and create wealth.

You Replace Things Too Soon

Just because there is a newer and shinier version of the gadget that you purchased a year or two ago doesn’t mean that you need to buy that new gadget. If you’re the type of person who is constantly replacing products that still have a useful life in order to buy the supposedly latest and greatest gadgets, chances are that you’ll have a difficult time building the type of wealth that you want. Those who create savings to invest do so by getting great value out of what they buy by using their purchases for the entirety of the items’ useful life. People who are able to afford the newest and shiniest things by upgrading every year are those who have already built their wealth, not those that are currently trying to.

You Let Others Take Charge Of Your Finances

There is nothing wrong with getting the opinions of others to help you lay out a plan to build your wealth, but it’s important to be an active participant in this planning. Giving full control to somebody else to handle your money is a sure way to make sure that you fail to build the wealth that you hope to create. Creating wealth and keeping it means that it’s necessary for you to understand the financial decisions which are being made, and periodically reevaluating them to make sure that they are meeting the goals that you have set. Giving full control of your finances to somebody else creates a situation where you’re no longer in control of your financial future, and the only one who you can truly trust to be looking out for your best financial interests is yourself.

You Fail To Take Care Of Your Health

There is nothing which will drain your wealth more quickly than getting sick. While you may not be able to control all aspects of your health, there are certain steps that you can take to make sure that you’re as healthy as you can possibly be. Eating right, getting exercise, taking preventative measures, getting annual check-ups and taking care of medical problems before they become truly serious all put you in a position to live a healthier life. The better you take care of her health, the better the chance that you will be able to create wealth, and keep that wealth as you age.

You Get A Divorce

Just as getting married can be a wonderful way to help build wealth, getting a divorce usually has the exact opposite effect. In fact, getting a divorce is one of the best ways to destroy the wealth that you have built up to that point. That’s not to say that you should stay in marriage solely for financial reasons, but it’s important to know that divorce is usually a giant wealth destroyer, and getting a divorce will hamper the best-laid plans to become a millionaire.

You Have One Or More Bad Habits

A bad habit is anything that takes money away from you without giving more in return. The classics are smoking, gambling and drinking alcohol, but a bad habit could just as easily be that daily expensive cup of coffee or the three sodas that you drink each day. It doesn’t even have to be buying things. Being lazy and sitting in front of the TV five hours a day instead of working on making yourself better is also a bad habit that hurts wealth creation. Depending on the number of bad habits you have, and how much they cost you on an ongoing basis, these alone could be keeping you from becoming a millionaire.

(Photo courtesy of Enkhtuvshin)

There Are Over 1 Million New US Millionaires. Why You Aren’t One of Them?

June 10, 2014 By Jeffrey Strain 5 Comments

Report: there are more than 1 million new millionaires in the US BCG

There are 1.1 new millionaires in the US according to a new report released by the Boston Consulting Group (BCG) through their Global Wealth Report. This raises the number of US millionaires to 7.1 million. This is fewer than the 9.63 million millionaire households reported earlier this year by the Spectrem Group. The discrepancy in total numbers of millionaires can be attributed to slight differences in the way each group calculates wealth. BCG calculates household wealth as assets which can be invested such as cash, deposits and securities, but not less liquid assets such as collectibles, business ownership, luxury goods or real estate. The Spectrem Group numbers also exclude real estate, but do include other less liquid assets the BCG report excluded. What both reports show is there are more millionaires in the US than there have been in previous years, and their ranks will likely continue to grow.

The BCG report found a 16.3% growth in US wealth in the past year, with the trend looking to increase going forward. They project millionaire’s wealth will increase by a minimum of 7.7% each year through 2018, a much larger increase in wealth growth than what’s expected from non-millionaires. Most of the increased wealth is coming from equity markets which have been doing well as of late.

The wealth increase wasn’t limited to those living in the US. The world’s richest 1% also had a banner year with global private wealth increasing 14.6%. This worldwide wealth increase led to 20% more millionaires all over the world, reaching a total of 16.3, up from 13.7 million in 2012. Asian countries fared best with a total increase of wealth of approximately $8.7 trillion. North America came in a close second with a wealth increase of $6.8 trillion.

If you find that you’re not one of the new millionaires included in this report, there could be a number of reasons for this. Below is a list of ten common reasons many people fail to become millionaires:

You spend more than you make each year
You try to “keep up with the Joneses” by trying to live up to other people’s expectations
You fail to pay yourself first
You have kids, and you have them too young
You own more house than you need
You continually replace things before you need to
You let others take care of your money
You don’t live a healthy life
You get a divorce
You have at least one bad habit that’s a money drain

If you currently aren’t a millionaire, or aren’t on course to becoming one, it’s likely due to the consequences of choices you’ve made in the past. The good news is you can make different choices from this point forward to create the wealth you want. It won’t necessarily be easy, you’ll need to create a plan, and you’ll need to avoid making the mistakes which drained your wealth in the past. By doing so, you may be able to count yourself as one of the newly crowned millionaires in these yearly reports in the not-too-distant future.

(Photo courtesy of Pamela Carls)

Quotes from the World’s Richest Man

May 29, 2014 By Jeffrey Strain 2 Comments

When it comes to getting financial inspiration, it never hurts to follow the advice of some of the most successful people out there. In fact, you should actively seek the thoughts of those who have been successful to try to find inspiration to achieve your own financial goals. You can learn a lot from the words of those like Warren Buffett, Steve Jobs and Bill Gates. It’s even better if the person who is successful and wealthy is also frugal. You can do that with a new book “The World’s Richest Man: Carlos Slim In His Own Words”

Although in 2014 Carlos Slim was ranked at number two behind Bill Gates as the richest man in the world, he did previously top the list in 2010 as the first person from a developing country to ever to do. Despite his wealth, he still lives in the same house he has for the last 40 years.

The book contains a collection of over 200 quotes giving Carlos Slim’s perspective about business, corporate leadership, entrepreneurship, management, philanthropy, smart investing and wealth. It should give anyone who wants to create wealth a wonderful deposit of inspiration and down-to-earth advice on a variety of business related topics.

Below you’ll find 10 quotes excepted from the book and their original sources:

1. “Whomever doesn’t invest, out of fear, precaution, or whatever, will stay behind.”
— Agence France-Presse, March 9, 2011

2. “Share price is important — in the end. But when does the end come?”
— Financial Times, February 25, 2013

3. “Any personal crisis — you have to use it to get stronger.”
— New Yorker, June 1, 2009

4. “In acquisition, we don’t really move people. We cannot get involved at that level with so many companies. Besides, if you move people, they will run.”
— Korn/Ferry Briefings on Talent & Leadership, Fall 2010

5. “Buying well is a discipline.”
— Arizona Republic, May 30, 2007

6. “Mistakes are normal and human. Make them small, accept them, correct them, and forget them.”
— American University of Beirut, March 18, 2010

7. “Periods of excess make you ambitious, but not always for the right thing.”
— Korn/Ferry Briefings on Talent & Leadership, Fall 2010

8. “I invest for the long term, not the short. If you buy something because it’s cheap, that’s only speculation.”
— New Yorker, June 1, 2009

9. “Firm and patient optimism always yields its rewards.”
–“Questions and Answers,” Carlosslim.com, 2007

10. “I don’t believe too much in luck. I believe in circumstances. I believe in work.”
— George Washington University Global Forum, October 29, 2010

Personally, I find quotes number three, six and ten appeal to me the most from the ten listed above. We all have crisis which we have to overcome, and using them to make you stronger and better is a key to not repeating them again. It’s also vitally important to realize that everyone makes mistakes. The only thing that’s wrong with mistakes is if you don’t learn from them so that you repeat the same ones again and again. Finally, while there may be luck that plays a part for some people building wealth, for the vast majority of us, it’s a matter of creating opportunity from the circumstances we find through our own work.

Of course, that’s just me. Quotes tend to hit different people and different ways, and chances are others may appeal to you more. What is pretty certain is that you can find a large amount of inspiration among the 200 quotes in the book.