How Many of the Six Factors of Wealth Do You Have?

Did you know there are six factors, or personality traits, that will make you more likely to build and retain wealth over time? Don’t worry; if you weren’t born with them, you can develop them.

Sarah Stanley Fallaw, daughter of Thomas Stanley, and whom I’ve written about here, has continued her father’s work of surveying millionaires in the book The Next Millionaire Next Door. The idea is to locate individuals or families who have assets of $1 million or above, and survey them about their habits, expenses, and values.

The results of the surveys she and her father have undertaken have led Fallaw to conclude that there are six key factors to assist millionaires in wealth building. Here they are, copied from Business Insider:

  • Frugality, or a commitment to saving, spending less, and sticking to a budget
  • Confidence in financial management, investing, and household leadership
  • Responsibility, which involves accepting your role in financial outcomes and believing that luck plays little role
  • Planning, or setting goals for your financial future
  • Focus on seeing tasks through to their completion without being distracted
  • Social indifference, or not succumbing to social pressure to buy the latest thing

Let’s break these factors down a little more to understand what it takes to build wealth.

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The Golden Rule of Building Wealth

Everyone wants the magic formula, the hat trick, the secret, to becoming wealthy. And no, it’s not “you attract to you what you think about.”

The golden rule of building wealth is simple. It’s so simple, it’s been repeated ad infinitum by the personal finance community, financial planners, and people who actually have wealth.

It’s been systematically attacked, hacked, subjugated, by practically every other entity in our society.

Ready? Here it is: spend less than you earn.

Oh, and we can’t forget the corollary: invest the difference.

Boom. We’re done.

Oh, if only, dear reader. If only it were that simple. If only I hadn’t felt dread course up and down my body yesterday as I calculated how much we’ve gone over budget in March. If only Payday Loan Centers didn’t sprout like fire ants across the small rural communities of this country.

If only we didn’t have the hear the siren call of advertisements fill our every waking moment, to peruse the endless streams of social media promising you’ll be better, faster, and stronger, if you click here and buy it now.

Spending less than you earn, as simple as it sounds, is one of the hardest things to do as a human being living in our modern (especially first world) society. It involves saying “no” one hundred, one thousand, ten thousand times per day to what can feel like everyone and everything around you. It involves staying true to a distant goal for a distant self, living like you’re in a different economic class, developing copious amounts of will power over time, and not letting it all fall apart if your life becomes unglued, through death, divorce, or some other tragedy.

It sometimes feels like an impossible task. And yet, people accumulate wealth every day. People save; people retire; they pay off their mortgages.

In my experience, as a reformed spend-a-holic, we’ve been able to slowly accumulate wealth in the face of all these temptations because of a couple of behaviors that have allowed us to practice “The Golden Rule of Building Wealth” while still existing in a consumerist society.

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Building Wealth for Freedom

I’ve written a lot about getting out of debt. That was the first step for Mr. ThreeYear and me on our journey to financial and location independence.

Or maybe it wasn’t.

Fishing on the beach building wealth freedom www.thethreeyearexperiment.com

When I was in college, my dad started reading a lot about stocks. I was curious, and began reading a bit myself about investing.

I knew nothing about the saving side of the equation, but investing extra money had me curious. I opened my first Ameritrade investing account when I was a senior in college. I invested the money I received as a graduation gift into this account, in some stocks that my parents and grandparents recommended (Coca-Cola, MedImmune, and some others I can’t remember). I picked up the occasional book on investing, such as The Only Investment Guide You’ll Ever Need, and The Little Book that Beat the Market.  I left my money to grow and forgot about it. Continue reading “Building Wealth for Freedom”