How to become a Millionaire

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how to become a millionaire

Thomas Stanley’s studies of the everyday lives and habits of millionaires found that most have a particular set of attitudes. They are disciplined, live below their means, believe in long-term investments, and know how to manage their money.

Stanley’s books* are a result of decades of data collection on the wealthy. Stanley focused his research on those who had been raised poor but eventually achieved millionaire status.

The first book was published in 1998 when a million dollars was worth considerably more. But most of the subjects in Stanley’s latest book were multi- millionaires, and the lessons are timeless.

The first study asked people who claimed to be millionaires how they made their money. The second study compared those responses with how others’ actually became, or did not become, millionaires. His recent book Millionaire Women Next Book* examined the habits and behaviours of women millionaires and compared them with the males studied previously.

There were striking differences between what the financially successful believed about wealth building and how their peers responded to questions on the topic.

How to Become a Millionaire: Upbringing

Stanley found that the majority of millionaires are not raised in wealthy households. These individuals did not inherit large sums of money nor were they born into wealth and privilege either. Instead many came from very average backgrounds where financial deprivation was commonplace. In a 2018 study, only 2% of millionaires came from wealthy families!

Furthermore, these same individuals often worked odd jobs while attending school to support themselves or even worked full-time while still enrolled at university. Over 61% of women millionaires fully funded their own tertiary education. The majority of millionaires grew up in supportive families, but were not spoilt, coddled kids.

Some even achieved early financial independence through this work ethic. Mark Zuckerberg achieved millionaire status by age 27 years. He was busy creating Facebook whilst attending Harvard University, until dropping out to work on it full time.

How to Become a Millionaire: Grit over Intellect

Most millionaires surveyed indicated they were not exceptional performers at school. They did not consider themselves unusually intelligent but considered grit to be the primary factor in their success.

Stanley’s work points out that while some people are born to privilege, most millionaires had to work hard for everything they have achieved. Anyone, therefore, has a chance at achieving financial success even if you weren’t raised with it yourself! Consequently, no one is guaranteed wealth without good money management and /or work to achieve it.

Even if you are a “trust fund baby” you need to manage money well and invest wisely to avoid death by inflation. There seems to be no limit to the size of an inheritance that can be lost or squandered.

Similarly, a large income does not equate to wealth if none of it is captured and invested. Thankfully the Australian employees get a helping hand with their discipline through compulsory super contributions.

It would, however, take over 50 years in the workforce to retire with a 10% savings rate. Whilst the aged pension helps shorten this for lower-income earners, higher-income earners will be ineligible for the aged pension for a long time due to the asset test.

What’s more, if higher-income earners have never learnt to save more than 10% of their income, they are going to struggle to reduce spending in retirement. Most high-income earners also had a delayed entry into the workforce due to tertiary education, making a 50-year career a bit of a push!

Despite doctors usually having been top performers at school, they have a reputation for a low financial IQ. Don’t fall into the trap of thinking you have money sorted because you have a good salary!

How to Become a Millionaire: Take Carefully Calculated Risk

People who become millionaires also tend not to take big risks with their earnings. Instead of chasing the next big thing, they invest over time.

Women millionaires were found to be particularly good at researching their investments and minimising transaction fees – factors most strongly associated with the best returns.

How to become a Millionaire: Practice Frugality

Millionaires who live below their means also believe that financial success is defined differently than how most people view it. Self-made millionaires were generally not driving around in Bentleys and living in mansions, as many would expect.

A millionaire doesn’t see being rich as how much they earn each year but rather how many years they can live solely off their investment income.

Millionaires see how little happiness materialistic purchases bring instead compared with relationships, meaningful careers and how much joy can come from simple activities. Shopping is an annoying necessity to these people, not a hobby.

Most millionaires interviewed did not drive expensive cars. A typical millionaire paid less than 2% of their net worth on a car. Most owned a car worth less than $75,000, the median maximum paid for a car in women surveyed was under $40,000.

Most millionaires had paid up to $400 for a suit, and the most popular watch was a Seiko, not a Rolex. Between just 3 (for women) and 4% (for men) was the median amount of income spent on holidays.

The frugal habits of these millionaires seem to be personality traits, and even after they had accumulated significant wealth.

“If you want to become wealthy to consume, you are unlikely to ever be rich.”

Thomas Stanley

Millionaires are Goal Directed

Men and women interviewed were highly goal-directed. Women tended to have multiple goals over different time scales. Men tended to be focused on a single goal. Some (usually over the age of 65) had accomplished all their goals.

Women interviewed for Stanley’s book averaged 49+ hours of work per week, woke up before 6 am and exercised frequently. Most continued to work despite financial independence, for personal fulfilment. 95% found work provided them with great satisfaction.

Many (but not all) Millionaires Owned Businesses

The book continues to expel millionaire myths and stereotypes. Millionaires in both books were generally business people. But not all self-made millionaires did it by building a business.

Among employees, teachers (particularly female teachers) have a high propensity to accumulate wealth. Extremely impressive given the reputation teaching has for poor pay (particularly in the US). A 2018 study confirmed that the 2nd most common career for millionaires was teaching! Here is the top 5:

  1. Managers
  2. Teachers
  3. Financiers
  4. Lawyers
  5. Doctors

Millionaires are Humble

The truly wealthy individuals Mr Stanley interviewed were not prone to showing off or bragging. These highly successful people were not insecure enough to social signal wealth to their peers.

On the contrary, most practised stealth wealth. Many of these millionaires made their wealth in blue-collar businesses and continued to blend in with neighbours and friends until their fortunes were revealed by large donations to charities after death.


Charitable donations were a consistent feature of male and female millionaires. Women on average donated more money (7% of income) than men and also were more likely to volunteer their time to worthy causes. Financial supporting family members was also common.

How to Become a Millionaire (or Multimillionaire)

Live below your means by avoiding lifestyle inflation or growing accustomed to an increasingly luxurious standard of living. Reject social signalling and “fitting in” for living life based on your own priorities. Practice gratitude for the simple pleasures in life.

Save and invest wisely over time. Understand your household budget. Take carefully calculated risk. Practice patience and avoid chasing the next big investing fad. Avoid false economies.

And for the next generation? Nurture individual, confident and self-sufficient children with good money management skills and a lack of entitlement. Avoid outpatient economic care!

If you haven’t read Thomas Stanley’s books* I would recommend them. For those wanting to grow wealth in order to show off, it includes a well-needed dose of realism. For those living a relatively frugal life in our world of excess, this book provides reassurance that it’s OK (even great) to be different from those around you.

Your wealth accumulation journey starts as soon as you make the first step. Subscribe to Aussie doc for a weekly email to keep you up to date on track to your goals.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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