Best-selling author Tom Corley interviewed 177 self-made millionaires to find out if they built their wealth using similar strategies. Turns out, there werecommonalities in every case.
Corley wrote about these similarities in his book ‘Change your Habits, Change your Life’, so anyone can adopt the same strategies as the world’s wealthiest.
Here are the key takeaways.
The study of self-made millionaires is described in Corley’s newest book, ‘Change your Habits, Change your Life.’ The American author wrote it on the back of the success of Rich Habits,which depicts the daily success habits of wealthy people.
The beauty of this book is that Corley follows the success of ordinary people, who were able to significantly transform their wealth using clear strategies that mostly rely on patience, consistency and time.
In fact, Corley reports that 80% of the self-made millionaires he interviewed did not achieve their wealth until after the age of 50. All of them were very targeted about their savings and made sure to put away a certain amount in a certain way.
Corley is a certified public accountant and financial planner located in the USA. The individuals he interviewed held at least $3.2 million USD ($4.78 million AUD) in net assets and grossed at least $160,000 USD in annual income ($238,843.40 AUD).
177 of the 233 people he interviewed were self-made.
"The self-made millionaires in my study all set a goal of saving 10 to 20 percent of their income during their pre-millionaire years," he wrote.
According to Business Insider, the average American saves around 8% of their income. (Figure taken from the St. Louis Federal Reserve.)
The self-made millionaires all adopted what Corley called, the ‘bucket system’, which involves channelling savings into 4 different places:
These are funds that generate growth, which can be relied on later in life. For example, annuities, IRAs, 401(k)sand other retirement savings.
The second ‘bucket’ is for costs that are expected in a person’s life. For example, future education, a wedding or a deposit on a home.
This is an emergency fund. Money is kept in a separate account, and used just in case something unforeseen happens, like unemployment or a medical emergency.
This ‘bucket’ is for holidays, birthday gifts and other ongoing costs a person is likely to incur over their lifetime.
Corley said that nearly half of the millionaires interviewed were eventually capable of living on less than 80% of their take home income. They also stayed consistent and did not make a habit of flaunting their wealth.
According to Corley, time was their greatest asset.
"Self-made millionaires make a habit of saving," he wrote.
"The more you are able to save at an early age, the more wealth you'll accumulate."
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