How a millionaire is made

Cover art Samantha Gonzales

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Lifestyle Upgrade 101

Ever wondered how people end up being millionaires?  Thomas Stanley and William Danko gave us an inside look in the thought process of 1,000 actual millionaires over a 20‑year period in their iconic personal finance book, “The Millionaire Next Door.”

Here are our favorite takeaways from that book:

Millionaires believe that financial independence is more important than displaying social status.

The truly wealthy are not out there to impress. They need not display their new cars, latest appliances, and most updated gadgets just to let others know how well‑off they are.  Buying expensive things is not about the image it will build but the quality it provides. Think about a product’s durability and longevity instead of merely the brand. After all, it’s better not to be perceived as rich and actually have money, than to look rich but not actually have much.

Millionaires live within their means.

Living within your means is pretty simple and practical, but some people struggle with this because of their habits. Spending much more than what you have—no matter how big your salary, commission or dividend is—will still leave you broke. Practice frugality in managing your personal expenses. This isn’t to say that you should be unreasonably kuripot or extremely cheap. What this means is you have to be more discerning with your purchases. Weigh your options and save for more important things.

In doing business, living within your means takes a different meaning. It’s not merely limiting your spending to what you have but knowing the potential reach of your money. Find ways on how to achieve something, and not just live within your means.  For example, if you want to acquire a property or get into a business, find ways to purchase it or to get it started instead of just waiting for your savings to be enough before starting.

Millionaires become wealthy without much support from their parents. They even train their kids and other family members to be more self‑sufficient.

Eighty‑percent of the wealthy, according to Stanley and Danko, are first generation. Meaning, they did not acquire the wealth by inheriting it from their parents. They themselves made it happen. If your mind is trained, you can just make money again even after losing it. But, if money came from your parents, you cannot gain back what you’ve lost. If you’re not financially literate, then it’s difficult to bounce back.

What’s even better about millionaires is that the learning is passed on. The knowledge that they’ve gained is shared with family members and children. They, too, end up being financially literate and more self‑sufficient.

Millionaires allocate their time, energy and money efficiently in ways conducive to building wealth.

It’s not enough that you’re rich now. Finding ways to make you and your money grow is a continuous process. Up until today, we keep learning from seminars and classes we attend. Before we invest, we study what we’re getting into. Currently, we’re into classes and seminars on value investing, property investing and online business. This is precisely why the rich gets richer: they are financially literate and do not stop learning more.

Millionaires choose the right occupation where they can be self‑employed or business owners.

The book also distinguishes Successful Wealth Accumulator, Average Wealth Accumulator and Under‑achievers. Under‑achievers spend household expenditure proportionate to their annual income while Successful Wealth Accumulators have pre‑determined annual budgets they operate on and limit their spending to be less than their annual income. Most people think that wealth is the same as income, but it really isn’t. Making good income and spending it all do not get you any wealthier. You are just living high. “Wealth is what you accumulate, not what you spend.”

Millionaires are proficient in targeting market opportunities.

Combining your financial literacy with timely and appropriate networking will land you good market opportunities. Millionaires have an eye to spot market opportunities which separate the trained investor from all the rookie investors. It’s a skill you learn over time and one that is only achievable by immersing yourself more and more into the world of money.

Most people choose the path to wealth by generating high incomes, but this not the only thing that makes a millionaire. Millionaires know how to leverage the value of their income stream by studying their lifestyle expenditure and investing the balance based on their studies and research. The key here really is to understand that the road to becoming a millionaire is built on a series of sound and reasonable financial decisions based on frugality, discipline, sacrifice, and hard, smart work.

Clarissa Seriña‑de la Paz and Sharon W. Que are financial literacy advocates and the bestselling authors of “I Wish They Taught Money in School” and “Money Grows on Trees.” Check out their books at