How the Millionaire Next Door Pursues Income
Today’s guest post comes from Matt, who is a licensed CPA and founder of Distilled Dollar where he shares how he and his fiancée went from living paycheck-to-paycheck to building wealth. With his fiancée’s help, he’s distilling down $$$ topics in pursuit of financial independence by the age of 35.
The overall premise is many millionaires don’t act or even look like millionaires. The specific topic I’ll pull out of the book today is the importance of financial offense AND defense. In other words, how the millionaire next door pursues income.
When it comes to accumulating financial resources and building wealth, I prefer to learn from people who have, “been there, done that.” That’s why I picked up the book many years ago.
About 1 in 15 households in America are millionaires when you include household equity. Compare that statistic with less than half of Americans having just $100,000, again, including household equity.
Many people we presume to be millionaires are, in reality, worth less, much less. In fact, one in ten drivers of an imported luxury vehicle are actual millionaires. The most common cars driven by most millionaires today include Toyotas, Hondas & Fords.
Don’t confuse rich with wealthy.
If we want to become financially wealthy then we should model the wealthy, not the rich. That’s why the book described financial defense as being critical. If we overspend our income, we will never become millionaires.
“A fat kitchen makes a lean will,” as Ben Franklin phrased it.
How Millionaires Pursue Income
Stanley and Danko interviewed thousands of millionaires. My main takeaway was that millionaires are willing to work harder because they understand their financial defense is in place.
Meaning, they know for every dollar they earn, they will be placing a large amount of that dollar into their investments and into their businesses.
Many affluent people know they need a strong positive cash flow going directly back into their assets as opposed to paying off liabilities.
If our income is earmarked for future purchases, then is it really our income to begin with?
Financial offense becomes more meaningful when we have a strong defense.
There are enough obstacles as it is when it comes to making additional income. The one barrier I, myself, have removed is having a lifestyle where the money’s gone before I realize it was there.
I’m always working on plugging holes in my budget to optimize my lifestyle.
Since I am young, at the age of 27, I know I’ll have plenty of time for luxury down the road. Right now, I’m focused on enjoying a lifestyle I can afford while simultaneously building wealth and resources for the next chapter of my life.
Is your financial defense supporting your financial offense? What helps you in having a winning combination?
To read more articles from Matt, check out Distilled Dollar.