Dollars and Hops

027 | Introducing: Winning Mindsets - Delayed Gratification | The "Millionaire Next Door" Explained

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Headline of the week:

Are you a millionaire next door?

Story from the Atlanta Journal Constitution - Wes Moss

  • This is an article about what the typical millionaire family actually lives like by studying the book “Millionaire next door”
  • You may be thinking millionaires drive around in porsche/Bentleys, BMW’s, order dinner out every night, but it’s actually quite the opposite.
  • The average millionaire didn’t inherit their millions, they worked for it and came up in the low/middle class lifestyle.
  • Millionaires likely:
    • Have a college degree
    • 50% of millionaires own a business
    • Still in their first marriage
    • Millionaires save on average 25% of their income
    • Hold at least half of their investable assets in stocks/mutual funds/etfs
    • Millionaires budget and live below their means
    • Millionaires keep track of where their money goes
    • Takeaway: The habits of a millionaire are not based upon how much money they make, its how much money they SAVE.

      • Delaying gratification - Forgoing SOMETHING now - for a future reward (often far better).

      • Powerful tool in life to learn EARLY to teach yourself impulse control.
      • As children we are hardwired to have instant gratification.
        • As we get older we’re able to rationalize risk vs reward and the value of delaying gratification.

          • Are we born with the ability to delay gratification? Most likely not.  Start small - maybe if you eat lunch out 4 times during the week, cut it back to 3 - invest the difference.  Here are some tips:

          • Tip No.1 –  Focus on your goals. Reminding yourself of the goals you are saving for is a great way to improve your willpower. By visualizing achieving your goals, you will find it easier to stick to saving.
          • Tip No.2 –  Surround yourself with people with willpower. As social animals, we are heavily affected by others around us. If you hang out with people with poor self-control, you are setting a low bar for yourself. On the other hand, if you surround yourself with people who are also working towards bigger goals, you will find it easier to say no to temptations.
          • Tip No.3 –  Research shows that healthy eating, sufficient sleep, and exercise can improve your ability to delay gratification.

            • What does our culture say about delayed gratification?

            We have a culture built on instant gratification and debt, AKA, buy/experience now - pay later. 

            Instant gratification - instant everything - the opposite of delayed gratification.


            Delayed Gratification and everyday purchases:

            Assuming you’re retiring at 65.  Average rate of return is 10%

            Every $1 you forgo becomes this much at 65 years old:

            20 year old: $1 becomes $72

            25 year old: $1 becomes $45

            30 year old: $1 becomes $28

            35 year old: $1 becomes $17

            40 year old: $1 becomes $11

            45 year old: $1 becomes $7

            ...more
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