The Key Financial Habit of Millionaires

Despite what your state lottery says, becoming a millionaire doesn’t have to start with a winning ticket. It can start with a steady road of saving and investing.

That’s not as exciting as picking the winning numbers in the lottery, but like the tortoise beating the hare in a race, following such financial habits can get you there just as well, if not quicker.

There’s no special secret to the key habit of millionaires, as we discovered by interviewing a few of them, but they do have the foresight to follow basic financial principles that would make the tortoise proud.

What’s their secret to becoming a millionaire that people with modest incomes can emulate? It can be as simple as living within your means. Not spending more than you need sounds like an easy enough rule to live by, but with U.S. consumers having $16.5 billion in debt, it’s a skill worth learning.

The frugal millionaire

Ilene Davis, a certified financial planner, has $2.5 million to $3 million in assets, depending on the stock market, and one of her main habits is spending money frugally. Other than investment income, Davis’ earnings have only exceeded $100,000 in a few recent years, she says.

People who make millions of dollars a year can easily become millionaires if they just try a little, she says, while people with modest incomes can do it with simple habits.

For example, Davis primarily shops for clothing at thrift stores and consignment shops. She also buys used cars, furnished most of her home through Craigslist deals, doesn’t stay in expensive hotels on vacation, makes a lot of her meals, often uses coupons when dining out, has a high deductible on health insurance, and takes care of her health to minimize health care costs. Davis also doesn’t buy “stuff” she can’t pay for when the credit card bill arrives.

“I’ve never really done without something I truly wanted, but thanks to wonderful parents, I was blessed with a foundation of strong self esteem,” she says.

“Perhaps the most important ‘habit’ is not trying to buy the respect, approval, friendship of others,” Davis says. “If I have to be something I’m not for someone to be my ‘friend,’ then it isn’t worth the cost in either time, money or self-respect.”

Don’t buy an MG

Barry Maher, a keynote speaker who lives in Corona, Calif., became a millionaire by not buying something he thought he really wanted: a sports car.

“I’ve  put off buying a whole lot of things over the years, things that upon reflection I didn’t really want,” Maher says. “I almost bought an MG when I got my first corporate management job. If I had, I wouldn’t have had the money I used to start what over the years has become a decent-size investment portfolio.

“I didn’t buy my first brand new car until could afford to pay cash for it. Same for the first house I bought. That’s quite a bit of money saved on mortgages and car loans.”

The best financial advice he got was from his mom, who he says told him: “Before you buy anything, think of how long and how hard you had to work to earn that much money.” “It’s amazing how many things I’ve thought I needed turned out to be a lot less necessary when stacked up against the hours of work it would take to own them,” he says.