94% of millionaires share this one habit

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Ask DALL·E to show you what a millionaire looks like and you’ll get something like this image.

A lavish lifestyle full of fancy cars, expensive watches, and a private jet (ignoring the fact the you'll need to be a millionaire many times over to afford that).

Understandably, the modern-day perception of millionaires has been defined by their only observable characteristic — what they spend.

I’m here to tell you this lavish lifestyle is not the norm for the rich.

Common traits of the modern-day millionaire

Most millionaires grew their wealth by maintaining the exact opposite of the habits that most people associate with being a millionaire.

• 94% of millionaires have and stick to a budget

• 75% attribute their wealth building to investing over a long period of time, and

• 93% stated that they regularly use coupons and store discounts.

It doesn’t necessarily fit with our perceptions of wealth, but logically, it makes sense.

People who are rich have built that wealth by saving and investing, not by spending.

This is the same reason that many lottery winners end up squandering all of their new-found wealth in a shockingly short amount of time — if you don’t have the habits to maintain wealth, it’s unlikely that a large lump-sum of cash will allow you to maintain long-term wealth.

The most foundational of all of these shared traits is budgeting.

Put simply, a budget is just a record of all income and spending over a certain period of time.

If you’re consistently “running in the red” (spending more than you make), it is mathematically impossible to build wealth, no matter how much your income is on paper.

5 common budgeting methods

While budgeting is simple in theory, getting into a routine with it isn’t always so easy.

If you don’t have a system, the likelihood that you’ll be able to maintain a budget is low.

Rich people figure out how to do this in a way that works for them.

There are many common methods for budgeting, which range from very simple to very detailed, and all you need to do is find the one that fits best with your habits.

1. Zero-based budget

The zero based budget is a budget where you assign every dollar of your income a specific purpose, ensuring that your income minus expenses equals zero (hence the “zero” in “zero-based budget”).

To use this method in practice, list all your income sources and allocate funds to various expense categories such as rent, utilities, groceries, and savings.

Adjust these amounts until your budget reaches zero, giving every dollar a job.

2. The envelope system

This method was originally intended to be a system where you divide your cash into envelopes designated for specific spending categories, and then limiting your spending to the amount in each envelope.

Given that holding physical cash in envelopes isn’t the safest method for many people, this method is more often utilized with a mobile application.

3. The 50–30–20 budget

The numbers in the name of this budget signify allocating

• 50% of your income to needs

• 30% to wants

• 20% to savings and investing

providing a simple and balanced approach to managing your monthly spending.

If you wanted to use this method, you would need to categorize your expenses into needs (housing, utilities, groceries), wants (entertainment, dining out), and savings (emergency fund, retirement, any investment) and then adjust spending within these percentages to maintain a balanced budget.

As your income increases, you can spend less on needs and wants and more on savings and investing.

4. Pay-yourself-first budget

This method works by prioritizing saving by allocating a fixed percentage or amount of your income to savings before addressing other expenses.

This could work by having a set amount of your paycheck automatically moved into a separate savings or investment account before it even reaches your checking account.

This is a great method if you find yourself having an issue of spending all of the money in your checking account when it is available.

With this method, the money will be gone before you are even able to spend it.

5. The no-budget budget

This final method is focused on conscious spending without a detailed budget, emphasizing awareness and flexibility.

I would only recommend this budget if you have a proven track record of maintaining reasonable spending and saving / investing.

With this method, each month you will monitor your spending habits without assigning specific amounts to categories.

Instead, you will regularly review your bank statements and adjust your lifestyle based on your financial goals.

This method prioritizes saving and essential expenses while allowing flexibility in discretionary spending.

Conclusion

Despite the modern day perception of millionaires, most are very fiscally responsible and have some sort of a budget to grow and maintain their wealth.

If you don’t maintain a budget, it is highly unlikely that you will build wealth over the course of your career.

Even if you were to stumble into a large windfall, without a budget, you are unlikely to retain that wealth.

By finding a budgeting technique that works for you, you can build confidence in your spending and ensure that your are on a path to financial security.

To your wealth,

Be Wealth Operators