Here are two cars - can you guess which one is owned by a millionaire?

What about these two gentleman - can you guess which one is the millionaire?

If you have seen the title of this post, then you have probably guessed that the Toyota car on the left (top if using mobile) and the man on the right (bottom if using mobile) are the millionaires. You would be right.

However, if you saw these men and vehicles out in public, you would probably assume that the man on the left (top if using mobile) owned the car on the right (bottom if using mobile) and that he was rich. You would be wrong about the rich part, but right about the car.

Don’t confuse income and wealth

High income does not equal wealth.

Income doesn’t matter if you spend it all. What you do with your income matters.

Someone earning $200,000 a year with annual expenses of $180,000 is worse off than someone earning $60,000 a year with expenses of $40,000. Person A has a savings rate of 10%, whereas person B has a savings rate of 33%.

Savings rate has a huge significance on our ability to attain financial freedom. The higher the percentage, the quicker we can reach financial independence.

Sure, a higher income helps. But only if you don’t increase your expenses with your newly found income. It is not uncommon for us to increase our spending as we earn more. We buy nicer houses. We travel more. We generally splash out more. This is referred to as lifestyle inflation.

Just because you don’t earn as much as someone else, it doesn’t mean you can’t be the next millionaire. It just means you have to try and stop looking rich, and start acting rich.

The millionaire next door

There is a fantastic book written by Thomas Stanley, called the “millionaire next door”. If you haven’t read it, I recommend you visit your local library and have a read. It is chock full of statistics and mind altering information. You know a book is good when after reading it you have changed your view on something. This book did that for me several years ago.

I used to think how cool it would be to be rich. All the things I could buy. Like all the movie stars I grew up watching in their mansions with swimming pools and tennis courts.

These are the 1% millionaires. Because they are so visible and in our face on the television and media, we begin to think this is the millionaire life. High spend and fancy. As soon as we realise this won’t be us we give up. This is a shame.

The truth is we don’t notice the other 99% of millionaires driving around in their Toyota Corollas, living in the suburbs in a medium sized house. These are the secret millionaires and they have figured out the secret to success.

We can’t all earn hundreds of thousands or millions like the pro athletes or movie stars. To be a millionaire, most of us can’t spend to these levels or we will go broke very quickly. Heck, even many of these high income superstars go broke themselves.

The book focuses on the other 99% of people that you probably don’t even realise are millionaires. They are among us, and look just like you and I. They got there because they were responsible with their money.

The authors collected data about the behaviours, habits, actions and thoughts of 1,000 real world millionaires. Their aim was to find out how a millionaire differs to the rest of society.

The study dispelled the notion that millionaire status is unattainable, or only achieved by movie stars, CEO’s and lotto winners.

The results of the study shows a different reality. That most millionaires live below their means and carefully manage their finances. They prioirtise financial independence over social status. They do it on their own without help from the lotto powerball. That is why the majority of millionaires are millionaires. They don’t spend all their money and they don’t care what people think about their house or car.

Make the most of what you have

You don’t have to be the smartest, the most talented, or even the best looking to achieve financial and life success.

Sure, a higher income does make it easier. There is no doubting that. But it is more important what you do with your money, than it is how much you earn.

There are plenty of people with high incomes that are poor. And there are plenty of people with average incomes that are rich.

There are countless stories of ex sports stars and lotto winners blowing all their money and going bankrupt.

But there are also stories of average people becoming millionaires. We don’t hear those stories though. It isn’t sexy. It is the result of many years of hard work, discipline, and good decisions.

Final thoughts

Financial independence is not necessarily a million dollars. It could be more or less depending on your annual spending. The message of the millionaire next door still applies though if you want to take control of your finances.

Learn that becoming wealthy is by and large in your control. You are not required to be a superstar athlete, a corporate CEO, a lotto winner, or a famous actor. Some of them are poorer than you and I. And the ones that are rich beyond our wildest dreams are only the 1%.

Don’t dismiss wealth as something that is not possible. There are ‘common everyday’ people achieving great things and great wealth that we probably don’t even realise.

The sooner you can realise this, the sooner you can stop pretending you are rich, and start accumulating real wealth by saving and investing, not spending. Most rich people are rich because they are careful with their spending.

I’m not going to lie. For those of us that don’t have huge incomes, it is a long and hard grind. That is why so many fall off the wagon and remain in the vicious work, earn, spend cycle, with no money left at the end of the month.

Nothing worth having in life is easy though. So if you want to be wealthy, chances are you need a mindset of grit and perseverance. Make it happen.

The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here