Advice from our Net Worth Millionaires
Oct 27, 2019
I’ve had my millionaire questionnaire available since July and to date have had 81 responses. I’m pretty happy with that, considering that I asked my sister if she thought me creating a questionnaire would be a good idea and she said she didn’t think that anyone would respond! Ahh, nothing like family to offer a frank opinion!
But I knew people would respond because I know two things:
People are proud of their achievement and want to share their financial success and also to teach others, but who can they share with?
Kiwis are voyeurs and want to know what others are doing as they are looking for ideas for their own life, yet they are reluctant to ask others directly.
So, all I’ve done is to try to bring the two together.
If, by filling out a simple confidential questionnaire, someone can get it off their chest and perhaps say out loud and proud for the first time “I’m a millionaire” and through my blog, I can share a little of what they think helped them achieve it, then I’m all for it.
Once again I just wanted to take the opportunity to say both congratulations and THANK YOU to all those who have so generously shared their information with you and I.
I thought I’d look at a couple of the questions in particular and see if there are any common threads that we can draw on and I’ve read through each response and gleaned the following advice for you. I have repeatedly tried to edit this list down but it turns out that people have A LOT of advice to offer in regards to what you should and could do. And also what they would do if they had their time over again.
So maybe make yourself a coffee and get yourself comfy as the list is long.
I have combined three of the questions from the questionnaire:
What advice do you have for others?
If you want to build wealth do this…
If you want to build wealth avoid doing this...
Avoid thinking that it’s harder to get started than it actually is.
Just get started NOW and stop procrastinating: start small, be disciplined, start young, stay focussed and never quit.
Enjoy the journey and don’t compare yourself with others, particularly the Joneses because they are probably broke.
Live simply, live within your means, be frugal, always save and invest. And learn to cook.
Live a happy, healthy life and if you are not happy, then make changes.
Be generous and kind with your time and contribute to your community. If you help millions, you make millions.
Spend what money you do spend on your family and remember you don’t have to spend money to have fun.
Find a life partner with a similar approach to life and money as human connections reward us the most. Nurture your relationships. Experience life and find someone to love. Get your partner on board and do it together.
Remember that money is only one measure of value, it is not a measure of happiness.
Prioritise being great parents and great members of society and find balance in your life.
Think hard before you have (more) kids. Kids are expensive.
Teach your kids financial literacy so they don’t repeat the same old mistakes.
Know your financial independence ‘number’ and avoid saying (or doing), “just one more year”.
Enjoy what you do and don’t worry about having the flashiest house or the best car.
Women should learn to negotiate their salary - practice your speech on your friends.
For the women - don’t be scared to think hard about complex financial things.
Remember that it’s never too late to change your financial situation.
Don’t rely on your day job and always have different streams of income.
It’s OK to talk about money, especially to your partner and children.
Work multiple jobs and work really hard.
Owning crap does not bring you happiness and for goodness sake, pay cash for the crap that you do buy.
Buy memory forming experiences rather than things - you don’t need all that stuff that you think you need.
It’s ok to spend on things that return an income.
Don’t feel like you “deserve” that car/pool/dress/jewellery/holiday.
Keep your car forever.
Buy property, but not too much and make sure you own it outright.
Buy second hand.
All of the little spending decisions add up to a lot of dollars.
Find a free alternative instead of spending money.
Keep your living costs as low as you can go.
When you are about to spend money, think about how many hours you need to work for a boss and weigh up whether this expense is worth trading your time for money.
Budget Budget Budget
Track your earnings, expenses and net worth so you can see your progress over time and find your sweet spot.
Tracking your spending and earning makes you feel in control and gives you clarity and purpose.
Do a household budget, monitor it regularly and cut out waste.
Always have an emergency fund.
Automate your money and get on with your life.
Maximise your savings by minimising your expenses - it’s not what you earn, it’s what you save.
Work out how much you need in retirement and then come up with a plan to reach your goals.
Avoid debt. There is no such thing as good debt and bad debt, it’s all just money you owe someone else. Use debt to your advantage and pay it down aggressively.
Removing debt gives you the freedom to think and act.
Understand the power and risk of leverage.
Always pay off your student loans and mortgages quickly and early.
Only borrow for a house or a business, never for a car or a holiday.
Pay off your credit card every month or don’t have a credit card at all, have a debit card instead.
Don’t gamble and don’t borrow to invest.
Save Save Save
Know ‘why’ you are saving.
Start saving a reasonable percentage from your very first paycheque - create a habit young.
Save 75% of your income... or at least 50%.
Have financial goals and long term plans and be intentional about working towards them.
Invest Invest Invest
Understand compounding interest - those who understand interest, earn it, those who don’t, pay it.
Don’t start an investment unless you know how to get out of it.
Start small so you don’t panic, make small regular payments that you increase over time.
Invest in index funds when you are very young and stay the course, don’t get cold feet when the market goes down, hang in there.
Own a business and run it debt-free and create something you can sell in the future.
Don’t have all of your money in housing, housing is illiquid.
Invest to create a passive income to make your day job optional. Passive income is the goal.
Read widely and get as much education as you can about personal finance.
You don’t need to know everything before you start investing, DOING is a great teacher.
Invest in YOU first - your education, your health and wellbeing.
Create value for your employer - educate yourself for better employment opportunities.
Read the Mr Money Mustache blog post - The Shockingly Simple Math Behind Early Retirement
Read the book Affluenza
Follow The Happy Saver and The Barefoot Investor
Read JL Collins and Warren Buffet
Read the Millionaire Next Door
Learn the 4% Rule
Use Sharesies, InvestNow, SuperLIfe, SmartShares and Hatch to invest in shares/ETF’s
Don’t follow what the banks or financial advisors say - listen to them then make your own decisions and do it yourself.
Neither a borrower nor a lender be.
Stop Stop Stop caring what other people think.
Work harder than you currently do, earn as much as you can. Use your interests and strengths to make extra money.
Look after your career and don’t shy away from working hard.
Find your passion and create a business out of it.
Make sure you’re paid what you are worth and always up-skill to make yourself indispensable.
Be content and stay humble.
Study Mr Money Mustache
Buy second-hand EVERYTHING - you are recycling everyone else's spending decisions.
When the share market drops, index funds are on sale, buy more.
Live within your means, live on way less than you earn. Save lots, invest sensibly. Repeat Repeat Repeat
Trying to do it alone is tough - build a support team, partner, accountant, lawyer, financial mentor - ask for support and advice.
Spend less, save more and invest the difference in index funds.
Set BIG goals. Short term, Medium term, Long term.
If you set a goal that’s too big, just break it down into sub-goals so you don’t get despondent and give up.
If you receive a windfall put almost all of it towards debt or investments. And have a little fun with some.
Always pay your bills on time.
When interest rates drop either keep paying the same on your debt or pay more if you can.
Pay yourself first into savings before spending.
Save a percentage of every dollar from the day you start work - it’s not about how much you earn, it’s about the percentage that you save.
Spend less than you earn, invest the rest in long term assets, think ten years plus. And don’t touch it.
Just remember that a bank is in the business of making money: off you.
Get a flatmate or international student for both the money and the company.
Take the bus instead of buying a car.
Live simply and that way you will enjoy the splurges even more.
Operate an inner scorecard - don’t concern yourself with what everyone else is doing or valuing.
Take your long term savings out of the bank and put them into highly diversified ETFs.
Buy and hold real estate but diversify into other investments like broad-based index funds.
Settle in for a long slow and steady investing ride, build wealth slowly and surely - boring but effective.
Buy a modest/cheap first home with the smallest mortgage you can get. Pay it off fast.
Be in KiwiSaver in a low fee fund appropriate to your stage in life.
If what you have been doing does not work, stop doing it. Learn from your mistakes and don’t repeat them. Think for yourself, don’t follow the masses.
Keep an emergency fund, cash reserves in case things go south, you never know what’s around the corner.
Live frugally, spend wisely, buy quality, repair instead of replacing.
Don’t take investment advice off people who have no money.
Don’t commit to things you don’t fully understand and avoid all ‘get rich quick’ seminars.
Stop being lazy, stop instant gratification and know the difference between wants and needs.
Avoid comparing yourself to others, someone will always be better off than you. Just do you.
Avoid lifestyle creep and lifestyle debt, that includes the “bigger house” syndrome, the temptation to move to a bigger house and then fill it with crap.
Avoid taking out a mortgage with a 30-year term or keep re-borrowing for new cars when the value of your house increases.
Don’t sit on a big mortgage with minimal payments.
Put a line in the sand and say “I don’t borrow money, I’m done”. If you can’t afford it, don’t buy it.
Avoid spending your money on STUFF to make you happy - the happiness of buying fades fast.
Don’t buy brand new cars, they depreciate too quickly, instead, buy a car worth less than half your annual income.
Don’t borrow money for depreciating assets like vehicles or holidays and avoid dining out too often, holidaying too often (make these special events instead).
Avoid putting everything on credit cards - the only interest you should pay is on your mortgage.
Personal loans, payday loans, easy credit, hire purchase, high-interest consumer debt - all are a terrible idea. Avoid consumer debt at all costs.
Don’t be a stinge and make sure you pay your own way.
Don’t save, instead, invest.
Don’t try to time the market, automatically invest at a set time each month and never stop.
Avoid unnecessary high-risk investments, don’t borrow to invest and don’t gamble (including Lotto).
Stop spending money on dumb shit you don’t really need. Before spending ask yourself “is it really necessary”.
Try not to focus on only one investment stream i.e. property OR shares
Phew, that’s a heck of a long list. Apologies for that, I tried to edit it and shorten it BUT people had a lot of wisdom to share and I didn’t want to miss a thing.
But, have we missed anything? If you think we have, just leave a comment below.
The key takeaways for me are the fact that I need to settle in for a long ride, making a series of small decisions regarding income, investment and lifestyle choices, that add up to significant savings and investments over time. And above all it is to just keep life simple, spending less than we earn, investing the rest and letting it compound over many years and showing kindness to those around me, because money is just one small piece of the giant puzzle that we call life.
