What do you think of when you imagine being a millionaire?
Do you look forward to the idea of buying a big house and a fancy car?
Do you imagine that riches are something that you will only acquire through incredible good luck?
Do you think about swimming in a vault full of coins, like Scrooge McDuck? (DuckTales was one of my favorite cartoons growing up, by the way)
If any of those is the case, then you are not thinking like a millionaire.
Despite what many of us non-millionaires might think, self-made wealth is not so much about a lucky break or knowing the right people.
It’s about a mindset—one that anyone can develop.
Here are four ways you can start thinking like a millionaire, as you work to become one:
1. Looks Are Not Always What They Seem
Remember that being wealthy doesn’t mean looking wealthy. One of the most surprising findings of Thomas Stanley and William Danko, authors of the bestselling book Millionaire Next Door, is that our mental image of a millionaire (looking something like the monocle- and top hat-wearing millionaire on the Monopoly board) is completely wrong.
In point of fact, millionaires are much more likely to be frugal, follow a budget, and live within their means than they are to fill a swimming pool with $100 bills. Most American millionaires drive practical used cars, live in modest homes, and avoid wasting money on status symbols. What many non-millionaires get wrong is the feeling that you must ostentatiously spend money in order to prove your worth—whether it’s your net worth or your emotional worth.
I can remember a meeting I had with a retired couple that I was trying to bring on as clients. They lived in a modest home, drove Lincolns, and were very humble in their ways. The wife was a retired school teacher, while the husband spent most of his days in a tire factory. The amazing trait they shared was that they both like to save and save they did.
Prior to meeting me they had no idea what their net worth was. After completing a financial plan for them, they were shocked to learn they were in fact millionaires.
If you have trouble separating the idea of wealth from the trappings of wealth, take the time to think about why the high cost status symbols are important to you. Who are you trying to impress with your new car or expensive watch? Wouldn’t you prefer to have the money in the bank rather than a new Jaguar and an empty account?
2. Believe in Yourself.
Something that can really separate self-made millionaires from their wage-earning brethren is how they each perceive their place in the world. Millionaires are much more likely to have what psychologists call an internal locus of control. Basically, the theory of locus of control looks at how people perceive their ability to run their own lives, and individuals have either an internal or an external locus of control.
Those with an internal locus of control see themselves as in charge of their lives. If a person with an internal locus were to invest money in a business that failed, they would look at all the ways they could have done things differently and vow to learn something from their experience.
Someone with an external locus of control, on the other hand, feels as though they have no power over what happens to them. If they were to lose the same investment, they would feel that luck was against them and that there was no way to prevent it. This means that an external locus investor would just stop trying after the first failure, while an internal locus investor would get back in the game with new insights.
It can be extremely difficult to change your locus of control from external to internal. It’s easy to just blame luck or fate or The Man, because it means that you don’t have to keep trying when things don’t go your way. But if you want to become a millionaire, you have to recognize that the only one who has the power to make that happen is you.
3. Learn to Embrace Risk.
Many years ago, a woman I know named Helen took out a personal loan to start her own business. Her mother was angry at her for taking such a risk, when Helen could safely collect a paycheck every week for the rest of her life by working behind the cosmetics counter at Macy’s.
Today, Helen is a multi-millionaire.
Helen and her mother really embody the difference between rich thinking and scarcity thinking. Yes, working at the department store was the safe option, but Helen not only wanted more wealth than what she would ever earn as a Macy’s employee, she also wanted to do more with her life. By starting her own business, she took a risk—one that not only paid off, but it helped her to create meaning as well as wealth.
“What’s the best that could happen? What’s the worst that could happen? And what’s most likely to happen? If you ask those questions when an opportunity arises, the answers can give you some insight. If the most likely thing to happen will get you closer to your goals and if the worst thing that could happen does happen and you’re OK with that, you’re willing to live with it or go through it, then you go for it and you take action.”
This was a similar fear that I had to face when I started my own financial planning practice. I had no reason to go out on my own. My clients were happy. I was still independent and could run this blog although with great restriction. Even though I knew I would be giving up a significant amount of income ($36,000 per year to be exact), it was a risk that I knew was necessary if I wanted to achieve the growth I knew was possible.
Living with scarcity thinking means you feel any risk is too high, which means you will never get to a point where you are building wealth for yourself.
4. Commit Yourself to Wealth.
It’s really easy to wish for something: wealth, a better body, a better job. You can see these sorts of half-hearted wishes every day. How many people do you know who spend their time buying lottery tickets or the latest fad diet book, but never reach their “goals?”
The thing is, if you are thinking wistfully about how great life would be if you had wealth (or a great body, etc), you’re not doing anything to reach that point. You’re just wishing your life away.
Millionaires know that you can’t just think about what you want—you have to commit to it. Rich people are committed to getting and staying rich; they’re not just wishing for it.
Specifically, committing to a goal in writing will make it that much more likely that you will achieve what you want. Not only does the act of writing down your goal help you to clarify your wants and needs, but it also helps you to take the time to actually figure out how to achieve it.
To increase the chances of achieving your goal, the psychology site PsyBlog.com suggests that you
“First imagine a positive vision of the problem solved then think about the negative aspects of reality… Researchers found that [this] technique was the most effective in encouraging people to make plans of action and in taking responsibility.”
Making a formal commitment to wealth is the first step in seeing your goals come to fruition, which every self-made millionaire knows. Living without that commitment is a good way to find yourself wondering whatever happened to that dream of yours.
Do You Have a Millionaire Mindset?
Becoming a millionaire is no easy feat. It requires hard work, discipline, and the ability to strike when the iron is hot. But it also takes a change in your mindset. If you start thinking like a millionaire now, you’ll be in a much better position to harness that hard work and discipline when the big opportunities arise.
Some might call that luck. Millionaires would call it the moment they’ve been waiting for.
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