12 Wealth-Building Secrets You Need To Know

By following these tips, you can become the millionaire next door

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If you haven’t read the book "The Millionaire Next Door: The Surprising Secrets of America's Wealthy," by Thomas J. Stanley, Ph.D., and William D. Danko, Ph.D., you must put it on your reading list. The best-selling book identifies several common traits that show up many times over among those who have accumulated wealth.

If the word "wealth" conjures up images of mansions and yachts, think again. The "millionaires next door" are people who don’t look the part. They are the people standing behind you in the grocery store line or pumping gas next to you into their not-so-fancy car.


You also might want to read the follow-up book, "The Next Millionaire Next Door: Enduring Strategies for Building Wealth," by Thomas J. Stanley, Ph.D., and Sarah Stanley Fallaw, Ph.D.

For the most part, the millionaires next door are underconsumers. They spend far less on material things than their peers. And they have achieved their status because they have consistently employed several wealth-building strategies that any of us can use—beginning today. Here are twelve things the millionaires next door do to gain their wealth.

They Set and Achieve Goals

Wealthy people don’t simply expect to make more money; they plan and work toward their financial goals. They have a clear vision of what they want and take the necessary steps to get there.

They Actively Save and Invest

The majority of wealthy retirees began making the maximum contribution to their 401(k)s in their 20s or 30s. The dollars you put into your 401(k) are pre-tax, so they reduce the total amount of your earnings you must pay federal income tax on. Many companies also offer to match all or a percentage, perhaps 50%, of your contributions to your 401(k) up to a certain percentage—6% is typical—of your salary. That's an added bonus.

They Maintain Stable Employment

The wealthiest retirees stayed with one employer for 30 to 40 years. Staying with the same company can offer big rewards, including a very nice ending salary, significant pension benefits, and hefty 401(k) balances.

It's getting harder and harder to find stable employment, but there are still a number of people who are fortunate enough to have that job security, especially teachers, firefighters, and other government workers. They prove you don’t have to be in a high-powered, fast-paced career to be wealthy.

They Surround Themselves With Experts

Wealthy people often don’t do their own taxes, and they usually aren’t do-it-yourself investors. They know what their strengths are, and if their strengths don’t lie in tax preparation and financial planning, they leave those matters to dedicated experts.

They Protect Their Credit Score

These people guard their FICO scores closely so they can keep lower interest rates on major purchases, such as mortgages and car loans. They also do this by limiting their debt.

They Value Having Multiple Sources of Income

Considering the prime importance of income, wealthy retirees go a step further to secure at least three income sources. Those sources tend to come from a combination of Social Security, pension, part-time work, rental income, other government benefits, and, most important, investment income.

They Believe in Keeping Busy

Busier retirees tend to be happier pursuing their hobbies and social activities. A second job that fuels your passion and keeps you engaged mentally while also bringing in extra money is the ideal scenario. Think of how much money some of us spend simply out of boredom.

Your side gig doesn’t need to be a grind. Do something you would enjoy even if there were no paycheck attached to it, like ushering at local sports events or helping customers at a bookstore.

They Are Cautious About Their Spending

Wealthy people are careful not to become a target for scammers. They know that as you become wealthy, everyone from Internet hustlers to home improvement con artists is likely to target you. These retirees take their time and ask the right questions from service providers and seek out referrals before doing business with anyone.

They Are Not Wasteful

Wealthy people believe that if you aren’t using it, you should stop paying for it. It can be anything from a premium cable channel to a club membership to a home security system. They follow a monthly budget that helps them see where their money goes, so they can make cuts when necessary.

They Recognize Money Does Not Buy Happiness

There is, in fact, a diminishing return on happiness. Analysis of a 2010 Gallup survey of over 450,000 U.S. residents found that emotional well-being ceases to increase with annual income over $75,000.

They Pay Themselves First

Wealthy people understand the value of setting money aside for themselves first. For them, it is an essential tenet of personal finance and gives them a way to keep up financial discipline.

They Believe Patience Is a Virtue

Wealthy retirees get where they are through patience. They have an underlying belief that financial security comes gradually and accumulates through diligent saving, investing, and budgeting over multiple decades.

The Bottom Line

The wealth mentality is not as mysterious as many people think. Small tweaks, goal setting, and long-term financial planning can move you closer to a wealthy retirement.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Proceedings of the National Academy of Sciences. “High Income Improves Evaluation of Life but Not Emotional Well-Being,” Pages 16489–16493.

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