Did you know that there are 20.2 million millionaires in America? That’s about one in every 16 people. Isn’t that something? On top of that, 2 million of those millionaires were ‘created’ between 2019 and 2020. So taking those figures into account, do you know who, out of your circle of friends, family and acquaintances are the millionaires?
You might think you could guess at some of them – the ones with the nice cars and the fancy vacation photos, right? Maybe, but probably not. The chances are, the millionaires you know look like your average Joe – maybe even that neighbor you don’t often speak to – the next door millionaire.
A fantastic book was written back in the 1990s by Stanley and Danko about just this, and many of its proponents think it remains as relevant today as it was when it was first published. It encourages the reader to change their perspective on money and their financial behavior, to reap significant rewards.
It shows you that it’s your attitude to money that can make you rich, not just your income, and certainly not just luck or good fortune. The next door millionaire has a particular money mindset that means they’re almost destined for financial success.
The Next Door Millionaire Rethinks Frugality
Having the next door millionaire mindset often means that people won’t notice that you’re accumulating enough wealth to make you comfortable, and then some. I like to call it growing rich gracefully. The next door millionaire doesn’t flaunt their money; they focus on using it sensibly.
Let’s take their spending on cars as an example. They don’t buy the most expensive cars – they buy sensible ones. They buy what will meet their needs, probably preferring used cars so that their value doesn’t depreciate the moment the key is first turned in the ignition. And most likely, they run those cars into the ground before replacing them – or certainly before they start getting too costly in repair and maintenance.
It’s in that sense that the behavior of the next door millionaire is the epitome of frugality. A lot of people I know roll their eyes when they think about being ‘frugal.’ They immediately associate it with penny pinching, coupon clipping, substituting comfort and happiness with saving money. Sure, that can be some people’s understanding of a frugal life, but it isn’t mine and it’s certainly not what I recommend. Life is for living, after all.
Frugality is about making wise decisions so you are not pouring money down the drain by making excessive or wasteful purchases. Being frugal means that you monitor what’s going in and coming out, and check that nothing is being spent uneconomically.
Let’s go back to the cars. Being frugal means you’re going to keep an eye on your auto expenses, spending what is right for you and your family. It means not keeping a car that is costing you more to maintain than it’s worth, or more in fuel than a more economical model would. It’s certainly not about denying yourself a car, or running around in one so old that it is costly – or dangerous.
The Next Door Millionaire Knows What Enough Is
The next door millionaire prioritizes having ‘enough’ in all areas of her life, never too little and never too much. She strikes that balance between enjoying her life fully and completely, and using her money to create a stable and secure future.
The next door millionaire mindfully and confidently sets goals, ticking them off as she achieves them. She calls in professional help to use her resources most wisely, delegating the trickier jobs – such as retirement planning and investment advice – to make sure her life is streamlined and organized.
She doesn’t make lavish, unnecessary purchases that will cost her dearly, but instead spends money on the things that are most important to her – time with her loved ones, hobbies for personal fulfilment, or investing in her career for professional accomplishments. Every financial decision she makes is well thought through. By creating her own personal definition of ‘enough,’ she lives a contented life knowing that she has what she needs, and can get what she wants.
Growing rich gracefully involves some careful planning at the outset, but then automating your financial processes as far as possible. By doing so, you will relieve yourself of the burden of financial stress and worry. You’ll know that the greatest benefit of good financial planning is the knowledge that your everyday financial concerns are taken care of, as well as the long-term, more significant financial goals.
Change Your Financial Habits to Change Your Financial Horizons
Several things go into creating a next door millionaire. It’s a change of attitude, and a careful – but not obsessive – monitoring of your finances. It’s a shift in focus from what society tells you that you need, to what you instinctively know that you need. It’s about making your money work hard for you while you use your money to make the most of your time.
The Millionaire Next Door goes so far as to include a formula to calculate how much money you should have saved by a certain age. I’m not on board with that so much; it doesn’t take into account how quickly people can change their financial habits and horizons with a few mindful and conscious adjustments. The key to getting your finances on track, however old you are, is to create your support team; reach out to professionals who can help you to shape your financial plan.
If you’d like to reach out to start tweaking your money mindset or start crafting your financial plan, I would love to hear from you. We’ll start to pull your financial team together with tax advisors and career coaches in my extended and trusted network. You can live the life you deserve now and for the rest of your life, with some careful and in-depth planning. Schedule an appointment, and use our help to grow rich gracefully, becoming the next next door millionaire.