4 Things the Modern-Day Millionaire is Doing That You May Not Be

4 Things the Modern-Day Millionaire is Doing That You May Not Be

At ARQ Wealth Advisors, we’ve seen more and more young people get started with their financial planning. They’re taking control of their spending early, putting a plan in place and following guidelines specifically created for them that will help them reach their goal of joining the millionaires club one day.

Seeing young people start to save and invest early is inspiring. And, according to reports, it’s one of the top characteristics of today’s millionaire.

According to Wealth Engine, the modern-day millionaire is no longer the old, stuffy businessman with lots of toys and fancy cars. Many of today’s millionaires are actually much younger, drive a gas-efficient vehicle and started their financial planning early. They are taking advantage of the wonder of compound interest and following a budget that makes sense.

If you too aspire to join the millionaires club one day, we’ve put together a few trends we’ve seen in the modern-day millionaire, things you may want to consider doing yourself.

 

Ready to discuss your plans with a trusted financial advisor? Contact ARQ Wealth Advisors to see how we can help.

 

1. They Don’t Waste Money

Fortunately, the secret to becoming a millionaire isn’t rocket science. It’s discipline and self-control.

We encourage clients to follow 3 pretty simple rules consistently:

  • Always live below your means.
  • Save and invest consistently.
  • Avoid emotional money mistakes.

In other words, you have to do the opposite of what most people do.

Instead of throwing money away on big purchases that don’t really bring you any value, many of today’s millionaires spend very carefully and avoid the trap of immediate gratification and impulse buys.

As financial advisors, we see people all the time spend on auto-pilot. But when they realize that many of their purchases are actually taking them farther away from their financial goals, not closer, people tend to change their habits.

That’s one of the major benefits of working with a financial advisor. Most of us do better when we have an accountability plan or partner. I believe that the right financial advisor should offer both.

 

What today’s millionaires are doing: 

According to Wealth Engine, most millionaires in the United States aren’t driving around in expensive luxury vehicles anymore. Instead they’re opting for cars that are more economical and gas-efficient. The top car makes and models among millionaires today are Toyota Camrys, Ford Truck F Series and Honda Accords.

 

2. They Maximize Their Tax-Advantaged Savings

Millionaires make their money in a number of different ways, but there are a few very common ways people lose money each year. The good news here is that if you’re making these mistakes, correcting it now could be a quick and easy way to improve your financial picture fast. 

The big mistake is getting a hefty tax return.

According to IRS data, in 2016, about eight out of 10 Americans received an average refund of more than $2,800. How is this a mistake? Well, while getting a check in the mail is always nice, remember, this isn’t a bonus or a gift. It’s actually a return of your money. If you’re receiving the average $2,800 refund, this could equate to $200 or more extra on your net paycheck each month, which you could be saving and investing in your future.

By investing early, compounding allows you to take a little bit of money and turn it into a whole lot of money down the road. When you combine compound interest with the investment that historically has returned the highest amount over time (stocks), you have a formula for a great future. Your retirement account is another place to put it, since you may get additional tax benefits. Increasing your contributions, even just a little, can make a big difference in the long run.

Remember: It’s not as much about the amount you put away as the fact that you start early and contribute regularly.

 

What today’s millionaires are doing: 

If you receive a tax refund every year, talk to a financial advisor about adjusting your tax withholding with your employer. We encourage clients in the ARQ Wealth Millionaires Club, to put that money to work either paying off high-interest debt or investing it in their future.

We also help them look closer at their retirement plan and take advantage of their employer’s full match every year. Most companies that offer a retirement plan also offer something called an “employer match,” which matches the money an employee invests up to a certain percentage. This is basically free money! It sounds ridiculous to intentionally turn that down every year, but people do it all the time! It is estimated that more than $24 billion is lost by employees due to not contributing enough to get their full employer match. 

 

3. They Pause Before Spending

Bottom line: People spend too much.

In order to save money, it makes sense that you need to spend less than you earn. While the concept is pretty simple, a majority of Americans live outside their means.

We encourage clients to practice mindful spending. For us, that looks like this:

Anytime you feel the urge to buy something, pause, stop what you are doing and take a couple deep breaths. Then, without judging it as good or bad, ask yourself why you want this particular thing. Will this purchase make you feel better overall, or just for a short time?

 

What today’s millionaires are doing: 

Many of today’s millionaires understand this. Saving money now provides you with a lot more money later. They are making smart purchases and not living off of more than they bring in.

 

4. They Work with a Financial Advisor Early 

According to Wealth Engine’s report, Millennials are one of the fastest growing millionaire segments. And they’re seeking the help of experts to ensure their money lasts.

Think about it: What is the most expensive commodity on earth? The answer: Bad advice. When it comes to financial planning, bad advice can undermine the achievement of your financial goals. You could end up with a flawed financial plan; pay outrageous fees for advice and services; and expose yourself to unnecessary investment risks, among other things.

 

What today’s millionaires are doing: 

How do millionaires mitigate these issues? Many use a very disciplined process when they select their financial advisor. They look for factual information when they interview advisors, and know what answers they’re looking for. Millionaires (and those hoping to join the millionaires club someday) select experienced advisors who are financial fiduciaries, experts in their fields, are compensated with fees like other professionals and have clean compliance records. And they require documentation, because they understand how easily verbal information can be manipulated when there is no written record.

What today’s millionaires don’t do is select advisors based on verbal sales pitches, personality traits and undocumented sales claims.

If you’re looking to work with a financial advisor in the Scottsdale area, contact ARQ Wealth Advisors to see how we can help you.

 

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