4 wealth building habits

Dr. Thomas J. Stanley thoroughly researched wealth-building behaviors and revealed the results in The Millionaire Next Door. In his 1990s survey of over 14,000 affluent American households, Stanley concluded that households can become wealthy without six- or seven-figure salaries.

Dr. Stanley passed away in a car accident in 2015, and his daughter Dr. Sarah Stanley Fallaw recently published The Next Millionaire Next Door. Dr. Fallaw confirms that many of the behaviors identified in Stanley’s research continue to play a significant role in wealth accumulation now, and behavior change is possible.

She finds that frugality, diligence, hard work and time management are more important than salary alone. Choice of spouse, career and location are also influential.

Habit No. 1: Frugality

Frugality means you spend less than you earn. Most millionaires are able to ignore the temptation to buy a bigger house, newer car, latest tech gadget and so on. They may notice what other people are buying but don’t go on a shopping spree themselves.

Habit No. 2: Discipline

Self-made millionaires are also disciplined. They choose moderation over extremes. If they buy a luxury car, it’s often a used one. You’re unlikely to find them living in the most expensive, elaborate house on the block. As investors, many millionaires don’t try to time the market. Slow and steady wins the race.

Habit No. 3: Hard Work

Another defining characteristic of many millionaires is their work ethic. Money wasn’t handed to them on a silver platter. It’s incredibly difficult to build long-term wealth yourself if you’ve relied solely on handouts from parents or other family members. The adage “from shirtsleeves to shirtsleeves in three generations” rings true: A sense of entitlement quickly erodes family wealth. Millionaires profiled in Dr. Fallaw’s book are willing to roll up their sleeves, launch businesses or stick it out in high-paying careers until they’re financially independent.

Habit: No. 4: Time Management

Effective allocation of time, energy and resources is another guiding trait of self-made millionaires. Even if hiring an outside financial adviser, a millionaire still monitors the family budget and ensures the investment portfolio matches the level of risk taken. He or she takes the role as household CFO seriously but may also rely on a professional with deep expertise in tax mitigation, charitable giving or college saving strategies.