building wealth

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.

10 Reasons You’re Not A Millionaire

June 14, 2013 By Jeffrey Strain 28 Comments

There seems to be an impression that the only reason that people aren’t able to become millionaires is because 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 reason 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 it 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 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 certainly 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 a 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)

The Best Financial Gifts You Can Give Your Kids

January 26, 2012 By Jennifer Derrick 10 Comments

Whenever I read or post an article that suggests that someone cut down spending on their kids, I’m always amused (and amazed) by the outraged comments. If you dare to suggest to someone that is struggling that they cut down on the sports or extra curricular activities, take the kids out of private school, cancel a vacation to an expensive destination, or sell/stop buying toys, people freak out. “Don’t skimp on your kids! They’re only young once!” “Kids need experiences and sports or else they’ll be behind everyone else!” “It’s not Christmas if the kids don’t get a lot of gifts!” “Don’t take the kids out of private school; you’ll scar them for life.” And on and on it goes. People seem to think that doing the best you can for your kids means spending tons of money even if you can’t afford it.

I think this is the wrong thought process. The best gifts you can give your kids don’t come in the form of activities, toys, private schools, or vacations. Sure, these things are nice and can add to what a kid learns about the world. But they are not necessary. In times of struggle, necessities are more important. The best gifts you can give your kids are these three things:

A secure financial environment in which to grow up

Which is more important to a kid? To have a stable home with all necessities covered, or a fabulous vacation? Kids do best when they grow up in an environment that’s free of struggle and worry. They do best when they can stay in one place for a while and form friendships and ties to the community. A house where the parents are always fighting about money, where necessities aren’t covered so the parents can pay for vacations or expensive activities, or a household that gets uprooted regularly due to financial mismanagement are much harder on kids than simply telling them, “Hey, we can’t afford hockey/Disney World/the Xbox this year. Maybe next year.” If you think you’re scarring your kids by cutting back on luxury items, think about the damage that will be done if you don’t cut back and have to sell the house, move, pull them out of their community, or get divorced.

A secure and functional financial environment to learn from and model

The better you are at managing your finances, the more your kids will learn about financial management. If you say, “No,” when you have to and explain why, they won’t like it, of course, but they will learn. They will learn from and model what you do financially. If you’re racking up bills to give them things you can’t afford, the lesson they will learn is that they, too, can live above their means when the time comes. The better lessons for them to learn are that sometimes hard choices have to be made, money doesn’t just magically appear, and that you have to meet your obligations and pay for necessities first.

Your own security in your old age

If you spend recklessly while you and your kids are young, you’re likely jeopardizing your future wealth. One of the best gifts you can give your kids is your own financial security. You may want to give your kids lessons in everything and trips and toys, but what happens when everyone is older? Do you really want your kids to have to sacrifice their finances as adults to pay for what you wasted when they were young? Being young and just getting started is hard enough without having to bail out a parent who made foolish choices. Extras for your kids should only come after you’ve provided for your future. Otherwise, your kids might have a fabulous childhood, but come to hate your guts when they have to pay for your care out of their own pockets to the detriment of their own dreams.

Kids won’t like it when you cut back on their activities and things, especially if they’ve been living large to date. You’ll have to endure some backlash and pouting and probably some, “I hate you’s” and slammed doors. In the long run, however, it’s best for them to grow up in a household that lives within its means and functions well, even if that means that everyone doesn’t always get everything they want. If you can’t afford to give your kids everything and keep a stable financial household, the greater gift is stability.

(Photo courtesy of asenat29)

Seven Differences in Thinking Between the Rich and Middle Class

November 2, 2011 By Guest Writer 7 Comments

By Steve Siebold

A new report from a research arm of congress says the rich are getting richer. The average household income for the nation’s top 1% nearly tripled from 1979 to 2007, while middle class incomes grew by less than 40%. How do you break into that top 1%? It starts with your mindset.

Do you think like a millionaire? Most people don’t and that’s what’s holding them back from life-long wealth. The differences in thinking between the middle class and the wealthy are extreme, and the underlying factor in how much money one is capable of earning. If you want to be rich, learn how rich people think, copy them, take action and get rich. Here are seven differences in thinking between the middle class and the rich to help you get started.

Use non-linear thinking to earn more money: Most of us are taught to trade hours for dollars, which is the reason the average person makes little money. The rich earn their fortunes tapping their creativity and coming up with new ideas that serve people and solve problems. It’s not how many hours you can work or the amount of midnight oil you can burn; it’s about training your mind to think about old problems in new ways.

Use logical and emotional thinking: The middle class blends emotional thinking in their decision making process, which clouds their judgment. The rich use left brain, logic-based, emotionless thinking to make decisions in regards to earning, investing and saving money. They use emotion to motivate themselves to take action. Both forms of thinking have value. The secret is to know when to use which, and avoid blending the two.

See money as abundant and infinite: Money is created through ideas that solve problems, and since ideas are infinite, the amount of money you can earn is infinite. The masses see a world in recession filled with seemingly unsolvable problems. The rich see these new, complex problems as the opportunity of a lifetime to become even wealthier by solving them. The more numerous and complex problems society faces, the more opportunity all of us have to become rich.

See money as freedom: The middle class scorns the rich for flaunting their money and falsely assumes they acquire it for status. Status makes people feel important, and while everyone enjoys it, the rich build fortunes primarily so they can live life on their own terms. Money provides the freedom to do what you want, when you want, with whom you want, for as long as you want, while never having to answer to anyone unless you choose to.

Expect to be rich: The masses have a lottery mentality and have been brainwashed to believe the only chance they have to get rich is by picking the right numbers or playing slot machines. The rich expect to earn more money every year and aren’t surprised as millions of dollars flood their bank accounts. The rich have trained themselves to expect big things to happen, and as a result they are bold, aggressive and fearless in their pursuit of wealth.

Vaccinate yourself from Either/Or Syndrome: Most us of have been told we can’t have it all, and we must choose between having a balanced life and being rich. The rich know you can have whatever you want, and through leverage you can earn more while working less. Creative problem solving is the root of all great fortunes, and one idea that solves a small problem for a lot of people or a large problem for a small group of people can yield millions. Ideas can be incubated any time day or night, anywhere in the world. They don’t always require an excessive amount of time, but rather a persistent and unrelenting focus.

Self-Education is the secret: Formal education will make you a living, but self-education will make you a fortune. The rich are obsessed with learning and personal development. They know their mind is the hub of their financial empire, and while the masses seek entertainment, the wealthy are reading, listening to audio programs, attending seminars, and networking with powerful people who can help raise their level of awareness.

If you follow the beliefs, philosophies and strategies of the rich and take action, you have a legitimate shot at becoming a millionaire and breaking into the one percent of income earners. The secret is not in the mechanics of money, but in the level of thinking that generates it. Once you learn to embrace this, your earning potential is limitless.

Steve Siebold is author of the book How Rich People Think (download five free chapters of the book and get more information), which compares 100 thoughts and beliefs about money between rich people and the middle class. Siebold is one of the world’s most noted experts in the field of mental toughness training. His mental toughness clientele includes world-class athletes, Fortune 500 companies, and entrepreneurs.

The Best Financial Advice Ever Given

October 27, 2010 By Beer Guy 50 Comments

My uncle recently passed away. This would not normally be something that I would share with others, but he also gave me the best financial advice I have ever received. This is advice I would like to share with you so that you can share it with your children. There is no question that he had a way with words that could deeply impact the mind of a 13 year old boy.

“Do you like money?” my uncle asked one day when we were by ourselves at a family reunion.

“Yes,” I replied with a grin on my face.

“Do you want to have money or be poor?” he questioned.

“I want to have money,” I stated with conviction.

“I will give you the secret, but you have to promise to follow it,” he said in almost a whisper as if he were really giving me the ultimate secret to becoming rich.
“I promise,” I whispered back.

“Are you sure?” he questioned. “It’s a big responsibility that most people can’t handle.”

“I promise. I swear. Really,” I said hoping that he would tell me the secret.

“OK, this is it. I am going to give you the best financial advice ever. Listen very carefully and never forget to follow this rule. If you ever decide to stick your dick into a girl, make sure that you have a condom on it. If you don’t, you are going to be poor because you are going to get the girl pregnant and all your money will go to raising the kid. And that is the lucky scenario. If you are unlucky, not only will she get pregnant, you are going to get some nasty disease that will grow all sorts of leaking sores all over you dick and you will have doctors shoving something up it every few months to treat it. The only way to prevent this from happening is wearing a condom every time you have sex. No exceptions.”

My uncle was a beer guy. He told things like he saw them. I like to think that he saw a bit of me in him. Much of my family considered him too undiplomatic to listen to what he said. I think they just didn’t like hearing the truth, but I digress. What I do know is that for all his unvarnished language, the words he said and the way he said it had an impact.

My parents told me about the birds and the bees. My school had sex education classes that explained about how things worked. I’m sure that I heard countless times that if I was going to have sex, I should use a condom. The funny thing is that all through my life, any time I was in a position to have sex it was always my uncle’s words which came to mind, and the words continued to have a deep enough impact that I actually listened to them and wore a condom.

I have come to see the financial wisdom of the advice that my uncle gave me. More than a few of my friends got their girlfriends pregnant in high school and have ended up paying the financial consequences of doing so. They struggle to pay their bills and make ends meet. They have no savings. They don’t have money.

So I raise a beer to my late uncle. I thank him for the sound advice that I should never stick my dick into a woman without wearing a condom if I want to have money. Thanks to him, I didn’t get any of my girlfriends pregnant, I have avoided all sexually transmitted diseases and I actually do have a few dollars in the bank. With results like that, I consider that the best financial advice ever.

Photo credit: Graham Campbell.