Gut Check Time: 5 Secrets of Self-Made Millionaires

I read a great piece in Money Magazine a while back.

It’s more about mindset than the market, but I found it to be highly relevant to what we’re doing in REI, so I wanted to pass along their analysis.

The author stated that he gleaned his information from his 5-year study on the habits of 233 self-made millionaires.

His two biggest takeaways were:

  • Nearly every one of the millionaires attributed their success in life to habits they learned primarily from their parents or some mentor in life, and
  • The secret to success is daily habits.

He says that he’s identified more than 300 of what he calls “Rich Habits,” and he wrote about 5 of them in the piece. At first I was surprised how much they aligned with real estate investing. But then as I thought more about it, I realized that it’s about focus and habits, and that those are transferrable to anything we do.

So here’s his top five “Rich Habits.” Some of them are no brainers, and #3 is huge, but the point is to make this worthwhile to your business, why not take a critical look at what you’re doing to see if it aligns with what the 233 self-made millionaires are doing? I’ll bet you’ll find, like I did, that there’s a lot of room for improvement.

1. They Create Multiple Streams of Income

Self-made millionaires do not rely on only a single source of income. They develop multiple streams. Three seemed to be the magic number in my study. Sixty-five percent had three or more streams of income that they created over time.

Diversifying your sources of income allows you to weather the economic downturns that always occur in life. These downturns are not as severe to the rich as they are to the poor. The poor put “one pole in one pond” and when their single income stream is negatively impacted in some way, they suffer financially.

Conversely, the rich have “several poles in several ponds” and are able to draw income from other sources when one source is temporarily impaired.

2. They Dream-Set Before They Goal-Set

Dream-Setting is the act of clearly defining a dream. Sixty-four percent of the millionaires in my study were pursuing one single dream. Here’s the 2-step process to Dream-Setting:

Step 1 – In 500 words or less, write down what you’d like your ideal life to be 10, 15 or 20 years out. Include specific details of your ideal future life: the income you earn, the house you live in, the boat you own, the car you drive, the money you’ve accumulated, etc.

Step 2 – Using this script of your ideal future life, make a bullet-point list of each one of those details that represents your ideal life. These would be the income you earn, the house you live in, the boat your own, etc.

These details represent your wishes or dreams.

Only after you’ve defined your wishes or dreams does the Goal-Setting process begin. Fifty-five percent of the millionaires in the study set goals around their dreams.

This Goal-Setting process requires you to build goals around each one of your wishes or dreams. In order to build goals around each wish or dream, you need to ask yourself 2 questions:

Question #1: What would I need to do, what activities would I need to engage in, in order for each wish or dream to come true?

Question #2: Am I capable of performing those activities? Do I have the necessary skills and knowledge?
If the answer to Question #2 is yes, then those activities represent your goals. Goals are only goals when they involve physical action and you have the capability to perform the action required.

3. They Avoid Time-Wasters

When most people think of risk, they think of it in terms of some financial investment they make: investing money in a new business; investing money in stocks, mutual funds, bonds etc.; playing the lottery, gambling or lending money to someone.

But financial risk is not the greatest risk most take. You can always earn more money. Money can be recouped.

There is another risk almost everyone takes for granted. This is a risk that, when made, can never be recouped. It’s gone forever. What is it?

The greatest risk we all take is time. When we invest our time in anything, it’s lost forever. It never gets renewed or returned to us. Yet, because we are all given what seems to be an abundance of time, it has very little value to us. So we spend an enormous amount of our time engaged in wasteful activities such as sitting in front of a TV, on Facebook, watching YouTube videos, sitting at a bar, lying in bed or engaged in some other time-wasting, non-productive activity.

And when we waste time, it’s gone. It will never return. We don’t consider how precious time is until we are older and we realize our time is running out.

Time needs to be invested wisely in pursuing goals, dreams or some major purpose in life. Any investment we make of our time should pay dividends down the road in the form of happiness events, financial security, creating a legacy or in helping improve the lives of others.

When you see time as the greatest risk of all, it forces you to become more aware of exactly how you invest your time. Invest it wisely, because you will never get it back. Sixty-seven percent of the self-made millionaires in the study watched less than one hour of TV each day and 63% spent less than one hour a day on the internet (recreation-related). This freed up time for them to pursue their dreams, goals, read, learn, exercise, volunteer and network.

4. They Found at Least 1 Success Mentor in Life

The average net liquid wealth of the 233 rich people in the study was $4.3 million. If you do the math, finding the right mentor in life is like someone depositing $4.3 million into your bank account.

Ninety-three percent of the self-made millionaires in the study who had a mentor in life attributed their wealth to their mentors. Sixty-eight percent said that the mentoring they received from others was the critical factor in achieving success.

Success Mentors do more than simply influence your life in some positive way. They regularly and actively contribute to your success by teaching you what to do and what not to do. They share with you their mistakes and valuable life lessons that they learned either from their own mentors or from the school of hard knocks.

Finding a Success Mentor in life is one of the least painful ways to become rich. It can put you on the fast track to success.

5. They Never Quit on a Dream

Self-made millionaires are persistent. They never quit on their dream. They would rather go down with the ship than quit. Twenty-seven percent of the self-made millionaires in the study failed at least once in business. And then they picked themselves up and went on to try again. They persisted.

Persistence requires doing certain things every day that move you forward in achieving your goals or life dream. Persistence makes you unstoppable. No obstacle, mistake or momentary failure can stop you from moving forward if you keep at it.

These millionaires learned to pivot and change course, growing in the process. Persistence allowed them to learn what didn’t work and continuously experiment until they found what did work. Persistence is the single greatest contributor to manifesting good luck. Those who persist eventually get lucky. Some unintended consequence emerges, something unexpected and unanticipated happens to those who persist.

Sometimes, those closest to you will urge you on and encourage you. But more often, those closest to you — those directly impacted by the obstacles, mistakes and failures that are part of the success journey — will try to stop you from persisting. It takes superhuman effort to continue to pursue success when there are so many forces fighting you. That’s what makes successful people so special — and also so rare…

If you want to be successful in life, you must persist in the face of unrelenting adversity. Successful people are successful because they never quit on their dream.

The author’s position, based on his research, is that habits dictate your circumstances in life.

They unconsciously program us for success, failure or mediocrity in life. They can determine our social status – rich, poor or middle-class. Habits, he says, can be changed. The key to habit change is awareness and tracking. You need to become aware of the habits you currently have and would like to change and then you must track your new habits until they take hold.

It takes an average of 66 days to replace an old habit with a new one. When you eliminate old bad habits and adopt new good habits, your life will begin to change for the better. It takes time, but it’s worth the effort.

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Dennis is an active real estate investor based in Metro Detroit.

In addition to his day job, at present he holds a portfolio of rental houses and he's an active wholesaler who has closed deals in real estate markets throughout the country.

He's also a published author of a book on rental house investing called "How to Buy Your First Set and Forget Rental House", and has trained over 1000 new real estate investors on how to get started with real estate.

You can reach him directly at dennis at dennisfassett dot com