When you think about questions like “How do millionaires live,” what comes to your mind? In other words, if you were to live like most millionaires and were given enough funds, what would you buy? A private jet, luxury cars, custom designer clothing… or would you immediately buy a super luxurious mansion with a view of the sea and blooming flowers?
Consider your answer carefully; it could be the key to why you haven’t become (or might become) a millionaire yourself. Personal finance expert George Carmel revealed in a video on his own media channel eight things that most millionaires tend to have, and their choices in life may surprise you.
Of course, everyone has different ambitions, and millionaires also come in various personalities. Some enjoy living extravagantly, regardless of how much money they have. This article discusses items that the majority of millionaires own, based on surveys. Let’s take a look.
Firstly, most millionaires tend to own assets that appreciate in value, such as real estate, land, or index funds. On the flip side are assets that depreciate, like cars and electronic products, which decrease in value over time. Therefore, most millionaires own their own properties.
Surprisingly, the survey shows that millionaires typically pay off their mortgages in an average of 10.2 years. So, if you own a house and have paid off the mortgage in about 10 years, you might have already taken the first step towards becoming a millionaire.
Unlike some movie scenes, most millionaires don’t drive supercars or custom luxury vehicles. Their second habit is to drive a quality second-hand car purchased outright.
On average, millionaires drive a 4-year-old car with 41,000 miles, and 80% of them buy cars without taking out loans. Their logic is, why spend more money on a depreciating asset and pay interest for it?
For instance, in 2017, a millionaire bought a 2009 Honda Civic for $6,000, drove it for 5 years, sold it to a friend, and bought another used car. “Stock market guru” Warren Buffett has been driving 8 to 10-year-old used cars, proudly embracing frugality.
Do you think millionaires only wear designer brands? Not quite. Research shows that on average, millionaires spend only $117 per month on clothing, less than the average $146 spent by the middle class. Most millionaires choose cost-effective and practical clothing like Costco jeans, focusing on saving rather than flaunting wealth.
Surprisingly, 35% of millionaires regularly use coupons for shopping; 58% occasionally use them, and only 7% never do. If you have items bought on discount in your closet, you might be unknowingly following the habits of millionaires.
Millionaires have a keen sense of risk awareness. One key way they reduce stress from potential risks is by having ample emergency funds. The survey shows that nearly half of millionaires save at least 16% of their income monthly. Emergency funds can cover the family’s living expenses for 3 to 6 months.
So where do they keep this money? High-yield savings accounts are a popular choice due to their high interest rates.
Being the master of money, not the other way around, is another prominent trait of millionaires. They assign tasks to every dollar through budget planning, rather than spending it recklessly or letting money “sleep.”
For example, the free app “Every Dollar” is a helpful tool to track expenses. If you have a similar budgeting tool on your phone, you may be well on your way to accumulating wealth.
Compound growth is the secret weapon millionaires use to continually accumulate wealth. For instance, investing $10,000 with a 10% annual return would grow to $11,000 after the first year, $12,100 after the second year, and so on. By staying consistent in the long term, wealth can grow substantially.
The survey indicates that 80% of millionaires leverage their company’s 401(k) retirement savings plan. By the average age of 49, millionaires have accumulated a million dollars in their retirement funds. Experts suggest investing 15% of monthly income into tax-advantaged accounts like 401(k) or Roth IRA.
Millionaires steer clear of bad financial products, such as expensive whole life insurance. Most opt for lower-cost term life insurance (e.g., 15 or 20-year term) and utilize investment returns and mortgage pay-offs for self-insurance once the policy expires.
Lastly, millionaires ensure their families are taken care of after their passing by having a will. Regardless of how much total assets they have, leaving a will ensures that these assets go to the right people.