Amassing a million dollars within one lifetime is a goal well within reach for many Americans, according to Thomas J. Stanley and William D. Danko, wealth researchers and authors of "The Millionaire Next Door."
Surprisingly, those with a high income or sizable inheritance aren't necessarily more likely to build wealth than those with mediocre incomes and no wealthy ancestors. If that's true, then what exactly
the key to financial success?
The answer is, quite simply, behavior. First-generation self-made millionaires have created regular, consistent habits that build wealth.
Is it possible to learn these wealth and savings habits and then emulate them? Thanks to Stanley and Danko's research on the wealthy, coupled with the insights of Charles Duhigg, author of "The Power of Habit: Why We Do What We Do in Life and Business," it just may be.
Habits of the rich
Overwhelmingly, millionaires save a lot -- an average of 20 percent of their income -- and spend as little as they can. The trick, of course, is that spending less leaves more to be saved. Millionaires also tend to follow these habits:
- Creating (and sticking to) a budget. They know how much their family spends per year for food, clothing and housing, among other major expenses. They spend substantially more hours per month reviewing their budget than do non-millionaires.
- Creating financial goals. Wealthy people spend twice as many hours planning their future wealth strategy -- how much of their future income they will save and invest and for what purpose -- as do the non-wealthy.
- Maintaining consistent lifestyles. They stay in the same home (no trading up) and remain married to their original spouse.
- Minimizing major expenses. They often live in a modest home, drive a less fashionable car and buy clothing off the rack at discount retailers like Kohl's and JC Penney.
Create a new habit
Now that we know how the self-mades have done it, how can we emulate their behaviors? Building a new habit is not always easy, as anyone who has tried to start a new exercise routine can attest. "If we can understand how habits work, however, they become much easier to control," says Duhigg in his book.