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.
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.
Read more at Good Financial Cents.