Editor's Note: In his first article for TheStreet University, Scott Rothbort covered the timely subject of
Attention: Aspiring MillionairesBecoming a millionaire requires a lot more than just buying a lottery ticket or winning a game show. Millionaire status is achieved best by those who have the right frame of mind, which is best instilled at a younger age. I try to do so with my own five children. Let me start with one of my own real-life experiences. When I was a junior at the Wharton School of the University of Pennsylvania, my paternal grandfather passed away. Since my father predeceased his father, part of his estate was distributed to me. It was not a huge amount, but for a poor college kid working two or three jobs to pay for school, it was a nice foundation to build on. When I received the money, I was told (although I did not have to be told) that the money should be used on either school tuition or investment, and not to buy things like cars or vacations.
Investing (and Reinvesting) Is the Name of the GameOn Dec. 2, 1981, I went to my other grandfather's broker and bought 100 shares of Philadelphia Electric for $1,437.57 with a part of the money I received from the estate. Over time, Philadelphia Electric became PECO and then was merged with Unicom into what is now Exelon ( EXC - Get Report), which is the stock I currently hold. It has not been an easy road for those companies. Philly Electric has had its share of problems over the years. Still, since 1981 I have reinvested every single dividend into that initial investment. When my brother graduated college in 1991, I gave him 50 shares. He still owns them and has also reinvested every dividend ever since. Through the dividend reinvestment plan (or DRIP --
Lessons LearnedSmall investments can finance big investments: I weathered a fair amount of volatility since 1981, and even though I did not meet Jim Cramer until many years later, his
- Becoming a millionaire requires a plan and long-term discipline.
- Think twice before making short-term consumer decisions and weigh them against long-term investment opportunities -- you can't deposit memories into the bank.
- Develop savings and investment habits early in life. Teach them to you children.
- Read The Millionaire Next Door by Stanley and Danko.
- Perform a personal audit of your cash flows, income and expenses and balance sheet at least once a year. Tax time is an optimal point in the calendar to do so.
- Look to turn expenses into savings.
- Bring your children and grandchildren into the investing conversation.