Have you ever wondered how millionaires built their wealth? Many people assume that a lot of wealthy individuals easily just inherited large sums of cash. While this can sometimes be the case, but most millionaires are actually self-made! So, what common strategies are they using in their day-to-day lives that make them so successful? Learn it in this week's episode.
For the full transcript, show notes, and resources, visit theinvesteddads.com/210
Sign up for our exclusive newsletter here!
The Invested Dads: Website | Instagram | Facebook | Spotify | Apple Podcasts
Have you ever wondered how millionaires built their wealth? Many people assume that a lot of wealthy individuals easily just inherited large sums of cash. While this can sometimes be the case, but most millionaires are actually self-made! So, what common strategies are they using in their day-to-day lives that make them so successful? Learn it in this week's episode.
For the full transcript, show notes, and resources, visit theinvesteddads.com/210
Sign up for our exclusive newsletter here!
The Invested Dads: Website | Instagram | Facebook | Spotify | Apple Podcasts
Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments. Here are your hosts, Josh Robb and Austin Wilson.
Austin Wilson:
All right. Hey, hey, hey. Welcome back to, The Invested Dads Podcast. A podcast where we take you on a journey to better your financial future. I'm Austin Wilson, Co-Portfolio Manager at Hixon Zuercher Capital Management.
Josh Robb:
And I'm Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Austin, how can people help us with our podcast?
Austin Wilson:
Three things. Number one, subscribe if you're not subscribed.
Josh Robb:
Yes.
Austin Wilson:
So hit that plus, that follow, whatever that button is on your podcast player. That way you get new episodes as soon as they drop.
Number two, we'd love it if you'd leave us a review. And number three, maybe you have a question about your financial situation, maybe we can help. We'd like to get to know you so you can check out the Invest with Us tab on our website, theinvesteddads.com. So Josh.
Josh Robb:
Yes.
Austin Wilson:
Today. Millionaires.
Josh Robb:
Yes. Big number.
Austin Wilson:
Once you hit that status, now we're talking net worth. Once you become a person with a million dollar net worth, that's assets, less liabilities, that's kind of a cool place to be. Let's talk about today how millionaires build their wealth. How did millionaires get to be a millionaire?
Josh Robb:
That's a good question.
Austin Wilson:
It's a great question.
Josh Robb:
And there's an old joke that I remember, and it goes like, this is, how I ended up with $10 million. Here's a list. All right, so I get up at five A.M. every morning, 90 minutes of cardio, take a cold shower, journal, day trade stocks, schedule out your day, inherit $20 million from parents and meditate, and that's how you get there.
Austin Wilson:
That's how you get to be a 10 millionaire.
Josh Robb:
Yes.
Austin Wilson:
Start with 20.
Josh Robb:
That's the thing is you got to remember that there's a lot of people out there that are going to tell you the keys to success, and some of them may have had maybe a head start on getting there, like $20 million so that they could be $10 million richer because they blew the rest on being smart. But the idea there is be careful who you're getting your advice from.
Austin Wilson:
That's true.
Josh Robb:
But being in our industry, we get to meet and talk with and learn from a lot of people who have been successful. And so we put together a list of these habits and traits that we think if people follow them, it will be a good way of getting you closer to your goals. If one of your goals is that wealth and a lot of these traits as we go through them, you're going to find they're not just for building wealth, they're just for being a successful person. And so we're going to start going through these. I'm going to do three.
You're going to give me a dad joke, and then we're going to end with three. And I got a bonus one.
Austin Wilson:
So I was actually thinking one of the... So Dave Ramsey, we talk about him, he's a very popular guy in the financial world. We have some differences of opinions on a couple different things, but one thing that I like that he does point out is the vast majority of millionaires he meets, and that's a lot, works and talks with a lot of millionaires are self-made.
Josh Robb:
Yes.
Austin Wilson:
So it's actually more rare than you think for people to just have buckets of money dropped on them.
Josh Robb:
Just inherited.
Austin Wilson:
In fact, most people just are using some of the things that we're going to talk about very soon, but they do the work, they just continually work hard at it for a long time and they become a millionaire. And that's how they do it. It's not like it was given to most people.
Josh Robb:
And as a reminder. Actually accumulating a million dollars, which seems like this big daunting task, when you give yourself time, if you start early, it's actually not that hard to do.
Austin Wilson:
Mathematically.
Josh Robb:
Yeah. Mathematically. And again, not the hard in that-
Austin Wilson:
It is hard.
Josh Robb:
The consistency is, and we're going to see that as one of the things we're going to talk about. But just getting to that number is not really the end all, be all. It is more a matter of your lifestyle, your needs, and trying to live below that along the way to be able to save and accumulate.
Austin Wilson:
I would say that $1 million is a very arbitrary number, but this is just something that people think about. They throw out millionaire as a term, but everyone's financial situation is completely different. And so a million dollars may be not near enough for someone to maintain their lifestyle for retirement, whatever that may be, to hit their goals. But for others, that may be more than enough depending on how their lifestyle and their situation is. So this is just an arbitrary number, but based on whatever your financial goals are, these are some things that are going to help you get there.
Josh Robb:
That's right. If you think about it, a 4% withdrawal, which is kind of our industry standard for withdrawals in retirement, a 4% withdrawal of a million dollars is $40,000. So you say, "Is that enough to need for all my stuff?" Yeah, you're right. It's just because we're using that number as a reference point doesn't necessarily mean that's the end all, be all of achievements.
Austin Wilson:
Absolutely.
Josh Robb:
So as we look through it though, we got a couple of these. And so the first one of a trait or habit that we see for successful people is organization. If your life is a mess and chaotic, it is hard to achieve your goals and move forward because you're just constantly losing things, or missing things, or not optimizing your time or your energy. And so organization is important and some people are more naturally inclined to be organized. But overall, I think it really comes down to it's not your default mode, you can learn and find ways to get your organization better.
And so there's a lot of tools out there. I think with technology, technology, that's one of the benefits I think technology has is there are easier ways. You don't have to carry around a little day planner anymore with you. You have a phone that has a calendar app that you can keep everything in and organized. So just utilize the tools that you have to make sure that you are staying organized, that's going to help you in the long run so that you have more time to do some of these other traits, which we'll talk about.
Austin Wilson:
I think that one thing when it comes to organization is, yes, digital organization is huge, but financial organization is a huge thing. And when I look at accounts, and you can have accounts at variety of different places. But when it comes to being organized financially, I have found that personally I am willing to give up a little perk here, or a quarter of a percent here, or whatever, to try and have as much as I can in one place, on one app, on one screen.
Fidelity is the example. They custody a lot of assets, a lot of retirement assets around the country, and you can have all kinds of different accounts there, but if you have all of your accounts or most of your accounts in one place, it's so easy to just move money around instead of having to go, "Well, I'm using Chase for this, I'm using Fidelity for this, but I'm going to use XYZ for this." That makes things a little bit trickier to be organized when you're trying to look at things all at once. So that's one thing when it comes to organization that I found a little helpful.
[7:12] - Millionaires Are Generally Frugal
Josh Robb:
Time to me is the huge one is if I am not organized, I waste time trying to figure things out. And that's really where I think you save a lot from that. But yeah, you're right, organization and budgeting, which fits in in this next category that I have, but I think it overlaps between organization and being frugal.
Austin Wilson:
Cheap.
Josh Robb:
Not cheap. There's a difference. Frugal is just being mindful of your spending and making sure you're getting the most bang for your buck. Most self-made millionaires have some form of frugality built into who they are. They didn't get as far as they did by spending a lot of money. They were very aware of their expenses and their costs and were only keen to spend money when it made sense. And so being frugal and being organized and budgeting like you talked about, I think those go hand in hand.
If you don't know where your money's going, it's hard to know if you're spending it. If you don't know where everything's at, it makes a lot of sense. So what a lot of people run into is trying to keep up with those other people around them with new cars and bigger houses and all those things. And while it may feel good in the short run to get you that long-term success, those are the things that actually hold you back, not get you farther forward.
And you and I were talking before this that a lot of self-made millionaires, they don't drive brand new cars.
Austin Wilson:
They could afford it, but they've made a habit over many years of probably not having a big expensive car payments and maybe they drive, as, Dave Ramsey likes to say, his millionaires he talks to drive a five-year-old Toyota or whatever. It's nothing flashy. It gets the job done. They probably bought it used, statistically speaking. So that brings me to a couple tips. Buy things that last.
So when you buy something, don't buy something that is just giving you the endorphins of being a purchaser. Buy something that even if you have to save up a little bit for it's going to last awhile and then you won't have to continue to be replacing it. This goes for technology, this goes for vehicles, this goes for clothing. Another thing that I've found very helpful is buy used first, whether that be a car, that's one thing because that's a huge... You can save a lot of money buying a used car, but clothing, kids' clothing.
Josh Robb:
Oh, man.
Austin Wilson:
Oh, man.
Josh Robb:
So expensive.
Austin Wilson:
If you go buy it new, your kid's going to wear it three times and outgrow it. So go to Goodwill or Salvation Army first or see if your friend, who has another kid, like I just got handed a bag of clothes from a coworker.
Josh Robb:
There you go.
Austin Wilson:
You can swap things back and forth. That's one way to save money. Where you shop for groceries is one way to save money too. And how you shop for groceries. Eating in the house is typically cheaper than eating out, all these things. There's a lot of different ways to save money over time. It takes intentionality. Culture wants you to spend a bunch of money all the time, and you're being constantly targeted with your ads on your phone of ways to spend more money.
Josh Robb:
Look at all these cool things we have. You need it.
Austin Wilson:
They're cool.
Josh Robb:
They're cool.
Austin Wilson:
Some of those things are good and you can enjoy them, but you also need to be realistic that doing too much of this can get in the way of your long-term goals.
Josh Robb:
That's right. And that frugality isn't something that is bad because one of the things, and this isn't on my list, but it goes with this, is a lot of wealthy people are also great givers. And so this sense of frugality is not just a stingy everything, I got to hold on tight. It's just a mindfulness of your spending because it doesn't mean you cut back on giving or anything like that. It means more that I'm aware in value, this expense versus that expense. And that's really where it comes down to.
Austin Wilson:
Well, I think that that's the difference between frugality and being cheap. Being cheap has a negative connotation, and that is the, "Being stingy with what I have. I'm not a giver. I'm not a cheerful giver if I am giving. I feel like it's horrible and it's not fun." But being frugal is just being intentional, being cautious, being realistic. And that allows you to have the flexibility to be generous, which is a joy.
[11:11] - Millionaires Desire to Read and Build Knowledge
Josh Robb:
Yup. All right. Third one is knowledge or reading. Most millionaires, especially self-made ones, have a skill or expertise that got them to that point. And most of the time that came from the desire to continually be growing and learning in their education and in their skills. I think that's a huge factor. I think in general, even when we look at people in retirement, continuing to grow and challenge yourself is a big part of just maintaining a healthy mind and body is just to continue to push yourself that way.
Austin Wilson:
That's something that Warren Buffett's been very vocal about in his entire career is what does he do all day?
Josh Robb:
He likes to read.
Austin Wilson:
He just reads.
Josh Robb:
Reads everything.
Austin Wilson:
He reads papers, he reads articles, he reads books, he reads... His entire job is reading. And when you read, you're in taking knowledge. And from that knowledge, you're able to apply it to, in his case, investing a lot of money. But whatever you're doing, you can do it really well, the more knowledge you have.
Josh Robb:
That's right.
Austin Wilson:
And I would argue that being well-read in a diverse spectrum of things is really important. So you could read, yes, personal finance and business books, but read things about science, read things about space, read things about history. And that's just going to form a well-rounded person that is going to be really social.
Josh Robb:
Yeah. If you're an older male, read about the Roman Empire. Is that the thing now?
Austin Wilson:
That could be, but I would say just being well-read is a cool thing.
[12:39] - Dad Joke of the Week
Josh Robb:
All right, can you give me a dad joke?
Austin Wilson:
Dad took of the week. We're taking a break. Josh, why did the man put his money into the blender?
Josh Robb:
Ooh, put money in the blender. Why did he blend his money?
Austin Wilson:
Because he wanted to make liquid assets.
Josh Robb:
Oh, he wanted his assets to be liquid. I get it.
Austin Wilson:
Liquidity.
Josh Robb:
Liquidity.
Austin Wilson:
It's a liquidity play.
Josh Robb:
Nice.
Austin Wilson:
So that was your dad joke the week. We got three more.
Josh Robb:
All right.
Austin Wilson:
And Josh always brings extras.
Josh Robb:
I have a bonus at the-
Austin Wilson:
We'll come back to that.
[13:07] - Millionaires Are Incredibly Disciplined
Josh Robb:
All right. So discipline.
Austin Wilson:
Discipline.
Josh Robb:
Discipline. You'll see most successful people have developed discipline within their life. You see some of those, I think it was a guy who started Twitter. He was known for his fasting. He had a lot of different disciplines within his life.
Austin Wilson:
Jack Dorsey.
Josh Robb:
Yup. Jack Dorsey. But you see those habits, right? And that's that joke back up to my top, like wake up at 5 A.M., do your workout. But all those things are really true in the sense of, if you have a disciplined life, you tend to have routines and you tend to have habits, hopefully positive habits that will help enhance your progress. And discipline also helps you avoid things.
Austin Wilson:
Absolutely.
Josh Robb:
And so I think that's the other side of the coin is if I'm disciplined, I'm also less likely to be distracted or fall for the things that will set me back on my progress.
Austin Wilson:
And I think that that discipline leads to consistency. And consistency does what?
Josh Robb:
Compounds.
Austin Wilson:
Consistency compounds. And that is exactly what it takes to become a millionaire. You don't have to do much. You have to be intentional and be consistent for decades. And if you're consistent about it for decades, no problem. Anyone who has enough time can be a millionaire if they're disciplined.
[14:25] - Millionaires Are Goal-Oriented
Josh Robb:
Yes. And number five is goal oriented. Goal oriented because if you don't have a direction that you're going to, you will wander and get distracted and get pulled in all different directions. But you need to have an end target. And you see that with successful people, is they wanted to achieve X, whatever that was. And they're solely focused on getting there. And that's what it takes.
You look at athletes. They have to put in the time and the effort, everything we talk about discipline and all that matters but if you don't have that end point, you lose your momentum, you lose your desire to get there. And so you need to have a goal, you need to have a focus. And you could be flexible on it, it may change, but you need to know where you're heading to. So if it is putting that dollar sign there saying, "Hey, I want a million dollars by X date." It gives you a target and an objective and it allows you then to work backwards. It's set up what you need to do to get there.
Austin Wilson:
And I would say that this is a great thing, obviously when we're talking about these things, these are things that we would suggest you should be doing with your spouse also. All of these different habits, you could go from 20 to 10 million if you're not on the same page.
Josh Robb:
The other direction. Yeah.
Austin Wilson:
But being on the same page is going to be huge. So when it goes to your goals, that's something you should be sitting down with your spouse looking far ahead saying, "Hey, here's where we want to be in 10 years, in 20 years and 30 years, and what do we need to do to get there?" And it is amazing what two people can accomplish if they're on the same page.
[15:54] - Millionaires Have Strong Networking & Relationship-Building Skills
Josh Robb:
And the last of my normal list before the bonus is networking and relationship building. And so the idea there is who you know matters. And the successful people spend time getting out there and interacting with others. And so when it comes to the business world, that's very important is to network, is to make those connections because you never know down the road where there may be a way of doing business or working with somebody.
But I saw one thing that says they spend five hours a week networking, something like that for successful business people. And it doesn't take a lot seeing them at events or grabbing coffee with somebody, those type of things. But connecting with people matters and those networks will help you down the road.
Austin Wilson:
And I would argue that the type of people you are connected with is what matters the most.
Josh Robb:
Yes.
Austin Wilson:
So don't connect with and don't surround yourself with people who aren't helping you get to those places that you want to go. So if you're surrounding yourself with people who are not motivated, who don't have goals, you're probably going to take on certain parts of that, you're going to be surrounding yourself with that saying, "Oh, that's just how people do things."
No, these people that we're talking about who are networked and connected professionally with people, they're surrounding themselves with people who are like-minded and those like-minded people are going to help them and encourage them to do the right thing over time.
Josh Robb:
And the bonus one.
Austin Wilson:
Bonus.
[17:25] - Millionaires Understand Their Risk Tolerance
Josh Robb:
Bonus is risk tolerance. And what I'm talking about here is most successful people understand how much risk they're able to tolerate and actually take risks. Most successful people took a risk to get there, whether it's especially starting your own business, taking those leaps and taking that risk, there's a risk reward. If you want the reward, you got to take the risk. And so I think of people that I've met and they've talked about early on when they were starting their business, they had to use their savings or get a loan or all those things and they were taking a risk.
If it didn't work, it was going to be an issue. It motivated them to succeed, but it also enabled them that opportunity. And so understanding how much risk you're willing to take and being willing to step out on that ledge and say, "Okay, this has the potential to get me closer to where I want to be. Am I willing to take that risk?" And that's important.
Austin Wilson:
I would go as far as saying that it is going to be extremely difficult, if not impossible, to become a millionaire without taking risk.
Josh Robb:
That's right.
Austin Wilson:
Because you know what you don't get without taking risk? Any return.
Josh Robb:
Yes.
Austin Wilson:
You are not going to outpace inflation without return. And this feeds directly into how you invest your money because most millionaires, they work with an advisor, that's going to be another bonus that we need to talk about. But most millionaires have invested in financial assets, likely the stock market for a long time. And they know that the risk is not that stocks are going to go down over time. They know the risk is not holding stocks because that's the only way to grow their money and over time that is proven, stocks bonds to outpace inflation.
Josh Robb:
Right. And like you mentioned, and I think this becomes apparent, not when you become a millionaire, but on your way towards it is working with a financial advisor like you mentioned. It just helps someone alongside you who has some expertise and knowledge to make sure you are making those right decisions to help advise you along the way in getting there. But then once you do achieve that, you're right, is that can then I take less risk, work a little less and let my money work for me. And that's a great place to get to where then you can have it compound on itself and provide what you need.
Austin Wilson:
Yeah, for sure.
Josh Robb:
Final thoughts, Austin, any other thoughts when it comes to millionaires and how they got there?
Austin Wilson:
I just think you need to take... It's all about time horizon, right? So no, I would not listen to anyone who says you can become a millionaire overnight, because there are a lot of those people on social media and TikTok and Instagram and Twitter. No, no, no, no. That's not how a million dollars is made. That's not how millionaires are made. This is made through long time horizons and little right decisions every day. Just make little right decisions along the way and continue to make those little right decisions and you're going to have success.
Josh Robb:
Yes, for sure.
Austin Wilson:
So long-term, small things every day beats big things at one instance, right?
Josh Robb:
Yes, for sure. And in the end, I never want anybody to get caught up on that number because happiness, satisfaction does not just come from the dollars. Understanding what your purpose is, why you're here on earth, what your strengths are? That's really where you're going to see the most satisfaction in your life. But all those traits that got people to that point are useful for that. And so I think, again, millionaires are great because it's just an exciting threshold, but people who are dedicated to get there show those traits that will help anybody in whatever situation they're in get to their end point.
Austin Wilson:
Absolutely. Well, thank you for listening. Please remember that you can share these episodes with your friends. Maybe you had someone saying, "Oh, what does it take to be a millionaire?" Well, here's six, and change, items that you can use to do that. And maybe you have an idea for an episode or someone else does. Feel free to send that to hello@theinvesteddads.com. We would love to hear from you. And until next episode, have a good one.
Josh Robb:
All right. Talk to you later.
Thank you for listening to, The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn't have to. Head over to the investeddads.com to access all the links and resources mentioned in today's show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe and don't miss the next episode.
Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin or any podcast guests are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast.
There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.