Come to think of it: it is a hairline that divides millionaires from common people. The hairline that divides millionaires from common people is their spending habit. While many of us may think that millionaires are actually fortunate people, there’s little truth in it. How they earn their money, how they spend their money, how they save their earnings, and how they invest their savings are the secrets that they hold close to their chest to become millionaires.
In fact, many of us who have the potential to become a millionaire fail to get there because of our spending habits. If we learn to budget our income and learn to spend our money the way millionaires spend their earnings, many more of us may actually find ourselves on the road to becoming millionaires and billionaires.
It is all a question of how we spend the money we earn. The whole thing depends on how much we spend on our needs; how much we spend on our wants; and, how much we save; and, above all—howwe invest our savings.
On a rough estimate millionaires spend about 25% of their earnings on basic needs. Then they spend about 10% of their earnings on wants. That makes it 35%. They save the balance 65% and invest the same to generate further income. That forms a huge chunk of their earnings. That’s what makes them millionaires and help them to grow richer and richer by the day.
An average person, on the other hand, spends about 40% of the earnings on needs. Then the next 55% of the earning goes into wants. That leaves 5% for investment. With such a poor investment rate they are hardly able to generate enough income to become rich—letalone become a millionaire.
In other words, millionaires wrap up their necessities, comforts and luxuries within 35% of their income whereas the average person spends 95% on the same.
Unless we make a concerted effort to review our spending habits and make considerable changes to get into the millionaire mindset, we would find it difficult to become millionaires.
In order to become a millionaire, we must learn to earn the way they earn; spend the way they spend; save the way they save; and, invest the way they invest. That is the best way tobecome a millionaire.
