How do the wealthy get rich?  A few of us hit it big through God-given talents like singing or acting.  Others, like Mark Zuckerberg of Facebook, merge a skill, e.g. computer programming, with an innovative idea and buyers willing to pay mind-boggling sums for his or her creation.

Others try to become wealthy quickly by flipping houses or becoming day traders.  Eventually, however, most of these get-rich-quick dreamers crap out because the market they invested in has collapsed, they borrowed too much money, or they went out and spent every dime they had (and more) on fancy dinners, designer clothing, limousines, and extravagant trips.

Most wealthy people, however, do it the old “boring” way, choosing to accumulate their money slowly and steadily.  This is the thesis of the book, “The Millionaire Next Door” by Stanley J. Thomas and William D. Danko.  Through interviews with hundreds of millionaires, Thomas and Danko concluded that many of them accumulate wealth through living below their means, shunning conspicuous consumption, and allocating wealth in a productive way to make more money. 

I can see this from personal observation of my Uncle Frank, a self-made millionaire many times over.  He never read “the Millionaire Next Door” but seems to represent the classic example of one, with habits such as the following:

Living below his means:

• Has always socked money away, even as a civil servant making a paltry government salary with three kids to support.
• Refuses to buy coffee at Starbucks.  McDonalds coffee will do just fine.
• Has never incurred credit card debt.
• Has lived in the same home (like Warren Buffet) for decades, even after he became wealthy.

Shunning conspicuous consumption:

• Brushes off random comments by business associates that his clothes are not Brooks Brothers chic.
• Has never driven an expensive European vehicle like Mercedes or BMW.
• Doesn’t sport expensive cuff-links or a gold Rolex watch.

Allocating wealth in a productive way:

• Used savings from his job as a civil servant to start his business and make investments.
• Reinvests his profits in his business instead of spending it on purely consumer items, like a boat or a second home at the beach.
• Funded college and graduate school for his kids, instead of buying them fancy cars and clothes.
• When he travels for work, he’s more likely to stay at the Hampton Inn over the St. Regis, unless he gets a very good deal on the hotel rate.
• For international trips, he uses a consolidator to get the cheapest business class seats.

Some may ask “does this guy have any fun?”  Others may question why make money if you can’t enjoy it?  However, this presumes that everyone wants to buy Hummers and live in McMansions with debt up to their eyeballs.  People like Uncle Frank don’t get their kicks by going to the mall every weekend.  They derive enjoyment and satisfaction out of the challenges of building wealth and the accruing benefits of financial freedom.   They have shunned instant gratification to achieve their long-term goals.   

The wealthy approach money and their lives differently than the average working Joe.  Check out Ryan Taylor’s Millionaire Money Habits for ways that millionaires think about their money.