According to the Global Wealth Report, only 8 percent of Americans are millionaires. That’s a relatively small sliver of the population, so it inevitably begs the question: What are these people doing right that everyone else is getting wrong? Before we dig in, I’d like to clarify one thing: true wealth is not solely about money. To me, that is only one component of Self-Wealth. As I’ve discussed in past blog posts, the other components are Purpose, Hope, and (eventually) Enlightenment.

But back to wealth (in the financial sense)…

While some wealth might have been inherited or earned by lucky happenstance (someone has to win the lottery, after all), many millionaires are self-made and have built their wealth in very ordinary ways, through plain old hard work and a disciplined investing approach.

According to Thomas C. Corley, who interviewed 233 millionaires (most of whom were self-made) for his Rich Habits book series, the ways people made their money could be broken down into four categories: Saver-Investor, the Big Company Senior Executive, the Virtuoso, and the Dreamer-Entrepreneur.

The Saver-Investor category is the most practical and applicable route for many people. It doesn’t involve being a high-level executive, becoming a sought-after expert in a particular field (Corley’s definition of a “Virtuoso”), or being an intrepid entrepreneur. For Saver-Investors, the path to financial wealth may be a little longer than, say, the path of a CEO of a Fortune 100 company, but it’s more accessible and reliable for a wider range of people.

There are two main components of this idea: saving and investing. That sounds simple (and it can be!), but it’s always a good idea to talk to a professional financial advisor before making any drastic changes. This will help you get started on the right foot with planning your savings and investment approach.

If you work with a financial advisor to build wealth, you will likely hear some variation of the following three guidelines:

1. Practice Smart Saving Techniques

To build wealth, it’s imperative to save more than you spend. That’s the crux of effective saving. But it doesn’t usually work to have a haphazard approach. If you’re not actively managing your spending or savings, you won’t have a good grasp of your financial picture.

Start tracking your spending (there are several apps that can help with this), figure out where you can start cutting back, and create a budget that works for you (and your family). Once your budget is in place, you can determine how much money you can shuffle into a savings account or allocate to investments.

Many people use a 50/30/20 budget for money management. As described by NerdWallet, “This approach means devoting 50% of your after-tax income to necessities, 30% to wants and 20% to savings and any debt payments. If one of your allocations exceeds these percentages, you can make some adjustments elsewhere.”

2. Diversify

Wealthy individuals do not put all their eggs in one basket. It’s rare for anyone to make their millions through only investing in gold, for instance, or cryptocurrency. A more common investing approach is diversification. Millionaires will invest in stocks (including mutual funds), bonds, real estate, and more. By spreading out your wealth, you’ll be more resilient to changes in the economy (both on a domestic and global scale).

Keep in mind: Although wealthy people may own entire companies, you can easily own a sliver of thousands of companies when you invest in mutual funds. This is a low-risk way to invest your money (talk to your financial advisor for specific advice about mutual funds).

3. Be Disciplined

The stock market experiences highs and lows. Commodities fluctuate. Interest rates rise and fall. The real estate market experiences booms and busts. These natural ebbs and flows happen all the time, and a disciplined saver/investor will not make radical decisions because of them.

 

Instead, it’s usually smart to stay the course, make small adjustments (if necessary), and don’t panic. If you’re well-diversified and have a solid saving and investment plan, fluctuations in the economy won’t derail you. I always advise my clients to think long-term, hold steady to their plan, and build up a robust emergency savings account to weather any truly hard times.

 

How do wealthy people make their millions? The answer is usually not terribly glamorous. Even billionaires like Warren Buffett take a relatively conservative approach to wealth-building (he famously has lived in the same modest house since 1958). If you practice smart saving, diversify your investments, and practice a little discipline, you’ll set yourself up for success. Remember: you don’t have to develop an investing plan on your own. Consulting a professional financial advisor is a great first step.

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