Why Am I Not Wealthy?

9 habits of self-made millionaires, based on research

From time-to-time, many people ask themselves why they’re not wealthy. Often, the people who ask it are hard-working, high-income individuals or couples. These days there seems to be too many such people who earn a good income but are still facing a bleak retirement. Sometimes they realise this too late in life.

So, why is it that so many people in this situation aren’t wealthy, despite seemingly having the means to be?

The answer to this intriguing question is contained in the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko. This classic read is great for those who are serious about increasing their personal net worth, as to compile it, the authors studied millionaires for over 20 years then documented their common traits and habits.

One fascinating statistic is that the author’s research identified 80% of American millionaires are first-generation rich. This is consistent with other research, for instance, a study by Ramsey Solutions in the United States found that 79% of millionaires were self-made. Specific statistics on the proportion of self-made millionaires in New Zealand are limited, but there’s no reason to believe that New Zealand statistics would be any different. This disproves those who would have you believe that wealth is usually inherited, a view commonly pushed by the New Zealand media.

How Did They Become Wealthy?

Becoming a millionaire or financially independent is not rocket science, just a matter of planning, investing, living below your means, and avoiding a few mistakes. During investigations by Stanley and Danko, they discovered some common factors among those who successfully built, and kept, wealth.

Let’s explore these in detail.

1. The Wealthy Live Well Below Their Means

In general, millionaires are frugal and avoid lavish lifestyles. They’re willing to pay for quality, but not for image.

Being savvy enough to have become wealthy, self-made millionaires naturally tend to spend their money in ways that maintain and increase their wealth, including the prospects for their children – such as education. For themselves, their spending includes carefully procuring professional services from those such as investment advisers, accountants, tax specialists, and lawyers.

In a revealing scene from their research, when the authors interviewed a series of ‘decamillionaires’ – those worth over US$10 million – and hosted them in a lavish penthouse with expensive beverages and a gourmet meal, not a single person they interviewed ordered any of the expensive food or drank the gourmet wine. The only thing the decamillionaires ate was the gourmet crackers! The decamillionaires simply weren’t interested in the lavish niceties on offer.

Learn more:

• ‍Pay yourself first
• Lifestyle creep, what it is and how to avoid it

2. The Wealthy Allocate Their Time, Energy and Money Efficiently

Millionaires budget and plan their investments. They begin earning and investing early in life.

Stanley and Danko found that investing is a regular activity and, most often, it is done automatically, meaning their investments are set up on recurring automatic transfer and invested for the long-term.

It should go without saying, but we’ll say it anyway – the wealthy avoid shortcuts and the temptation of modern get-rich-quick schemes. This means they’re less vulnerable to financial scams of all different kinds. The self-made millionaires know more money is lost than made chasing fast money. Whether its fake investment opportunities, courses sold by gurus on social media platforms including Instagram, YouTube, and TikTok, or phishing scams, self-made millionaires know there are no shortcuts to wealth. This leaves them less tempted by such offerings, and more likely to succeed over a long period of time.

3. Millionaires Place Financial Independence Above Social Status

It's easy to get caught up in real-or-perceived social pressures and start living a lifestyle you can't afford just to keep up appearances. Buying the latest tech or designer handbag, going on lavish holidays, or driving the newest cars on loan, can all rapidly deplete your wealth.

Self-made millionaires spend little time thinking about their social status and instead spend a lot of time focussed on making wise financial decisions for the overall betterment of themselves and their loved ones.

This includes taking the time to shop for a well-maintained used vehicle rather than buying the latest year or model of your favourite vehicle. Not only do they purchase used vehicles, but they also purchase with cash. No high-interest vehicle loans!

Ironically, when the main goal of financial independence is maintained for many years, social status can come as a side-effect, anyway. Though by then, usually the wealthy are too financially independent and emotionally stable to care much about their social standing!

4. Their Parents Did Not Provide Economic ‘Out-Patient Care’

In the book, economic ‘out-patient care’ refers to parents who provide their kids money whenever they need it.

In fact, fewer than 20 percent of the millionaires studied inherited 10 percent or more of their wealth, and more than half of the millionaires never received as much as a single dollar in inheritance. To put it another way, they were overwhelmingly self-made millionaires.

The authors’ research indicates that “the more dollars adult children receive [from their parents], the fewer they accumulate, while those who are given fewer dollars accumulate more”.

5. The Millionaires’ Adult Children Are Economically Self-Sufficient

Self-made millionaires are famously hands-off when it comes to financially supporting their adult children. Unlike inherited wealth families, who may view trust funds as a rite of passage, self-made individuals often believe that giving too much money too soon can stifle ambition and breed entitlement. They know firsthand the grit and sacrifice it takes to build something from the ground up, and they want their children to develop those same muscles. It’s not that they’re stingy, it’s that they’ve seen the long-term value of struggle. The book authors concluded giving money to adult children hinders anyone’s ability to succeed, so should be avoided. A parent-funded university education or seed money for a startup business? Maybe. A monthly allowance for avocado toast and concert tickets? Absolutely not.

Many of these self-made millionaires adopt what can only be described as a “tough love with a calculator” approach. They’re focussed on transferring values rather than transferring dollars. As one might joke, “My dad’s idea of a trust fund was trusting I'd find a job.” It’s cheeky but rooted in truth. By encouraging independence, they’re not just building wealth, they’re building a range of character traits that lead to long-term success. And in the world of the truly wealthy, that might just be the most valuable inheritance of all.

6. Millionaires Are Proficient in Targeting Marketing Opportunities

“Very often those who supply the affluent become wealthy themselves.” The authors determined one of the best ways to earn money is to sell products or services to those who already have money.

Continuous learning is also a focus.

The wealthiest among us didn’t get that way by standing still. They stay informed about their profession and developments in it, and stay informed about ways to bolster their income, so they can save and invest more. This might be achieved through various resources or methods like reading books or newsletters, listening to podcasts, attending micro-courses, seminars, conferences, and so on. Some, but not all, stay informed about financial markets and trends, though most tend to focus their efforts on their primary means of earning.

7. The Self-Made Wealthy Choose a Good Occupation

Theres’s no such thing as the ‘best’ way to earn.

In other words, there is no magic list of different fields from which wealth is usually derived. People can be successful with any type of career path or business. In fact, many of the millionaires the authors studied got ahead in industries described by the authors as “dull” or “normal”, such as making cabinets, selling shoes, pest control, or professional careers such as dentistry.

That said, you can still maximise your chances of success by seeking a profession in a growing area, which provides a tailwind in the form of read-made organic growth. This might be areas such as finance, technology, healthcare, real estate, education, or consulting. Entering or staying in a growing area of the economy gives you a much higher chance of building a career or business (or both) where it’s possible to make a good income to grow your wealth.

It also pays to be in a field where the millionaire has a degree of control over their income, such as by being a sales professional or by being self-employed.

Related material:

• ‍‍Get up early‍
• ‍Do you really need a financial adviser?
• Habits that keep you poor, and what to do about them

8. Protect Against The Unexpected

Here at Become Wealth, we’ve added a couple of extra points based on our own observations. Holding appropriate insurance is one of them.

Life is unpredictable. Not investing in essential insurance like health, home, or income protection can lead to massive, unexpected expenses which can ruin your financial situation, relationships, and more. While insurance can feel like an unnecessary cost, a suitable level of insurance in key areas is a safety net that can save you from devastation due to unforeseen situations.

It's not just about insurance, either. Appropriate protection could take the form of:

1. Estate planning including wills,
2. Maintaining a lump sum of cash set aside to meet contingencies, and
3. Establishing and maintaining legal structures like trusts or limited liability companies.

Learn more:

• ‍Are trusts still worth it?
• Why you need a will

9. Addiction Avoidance

Left unchecked, addictions can have devastating impacts on an individual's finances. Whether it's gambling, drugs, alcohol, or something else, the financial drain is often significant and can spiral out of control rapidly.

Beyond the immediate monetary costs, addictions can lead to missed work opportunities, medical expenses, legal troubles, and other related costs.  The emotional toll can lead to impulsive financial decisions, further exacerbating the financial strain.

Moreover, addiction doesn't just affect the individual. Families can be pulled into the financial black hole, often using their savings or taking on debt to help their loved ones, only to find the cycle repeating.

Self-made millionaires know this and may seek intervention and professional help at an early stage to help manage or eliminate such vices. The first step is always acknowledgement. It's far from easy, but if you don't, there's no way up. The wealthy, and those on their path to wealth, readily accept they’re human and have flaws, but work hard on themselves to face them head-on.  

Bottom Line – An Simple Formula, but Not Always Followed

The stories of self-made millionaires aren't just tales of wealth; they're blueprints for building a life of purpose, independence, and achievement. Their habits, from relentless learning to discipline and a commitment to self-reliance, aren't exclusive to the already rich. These are habits which are accessible to everyone willing to put in the work.

So stop waiting for a windfall, handout or a lucky break, you just need to adopt the mindset of someone who is deliberate about what they want from life. Success isn’t handed out: it’s built, one intentional choice at a time. Start cultivating these habits today, embrace the journey, and you might just find yourself writing your own incredible success story.

What’s stopping you from replicating the habits of the self-made wealthy?

If you'd like to discuss your financial independence with a trained professional, then get in touch to book your complimentary initial consultation.