5 Money Lessons From Millionaires


There's an aura of intrigue about people with money. Millionaires seem above and beyond the normal problems of electric bills, consumer debt, and budgeting. But are they really?

While the jet set lifestyle may conjure up images of chartered planes, multiple residences, and a lot of Hermes, the people who afford these luxuries work just as hard to keep their money as they (or a family member) did to earn it. "More money, more problems" sounds like a cliché, but more money at least equates to a lot more work to stay wealthy.

Being rich sounds like a cakewalk until you witness a simple monthly investment meeting turn into a three ring circus with no fewer than eight legal, tax, and financial advisors, all offering financial planning advice to the client. There are worse hardships, but it does make you think twice about just how millionaires hang on to their wealth through marriages, divorces, and last but not least, children. (See also: How to Build Wealth in a Depressed Economy)

In a past life, I worked closely with high net worth families and investors. (In investment terms, this translates to liquid assets in the eight-digit range and above.) True, millionaires have culinary-institute-sized kitchens, nice cars, and take amazing vacations. But when it comes to managing their money, millionaire tactics tend to contain a surprising amount of common sense and frugality versus impulse spending. Here are a few consistent tactics millionaires use to hang on to wealth for several generations (and in many cases, increase it).


The ultra-wealthy aren't out to just make double-digit returns or sitting on a pile of gold coins cackling and twiddling their hands. Multi-millionaire clients aim to preserve accumulated wealth while still earning a healthy rate of return. That means slow and steady growth versus trying to get rich quick. While risk can be a good thing, in financial terms it's best to avoid it. And if there's one thing worse than missing out on the next big thing, it's losing money.

Mind the Gap

Be realistic about budgeting and only buy what you can afford. If a hot private equity deal comes along but you're a few hundred thousand short from last month's trip to Biarritz, that's a gap in a millionaire's budget. On the non-millionaire side, maybe you inadvertently realize you've spent a grand total of $550 at Target in the past 30 days on things you don't recall actually needing. Big, big gap. Either way — don't buy what you can't afford. Don't make big purchases without planning ahead. Be proactive about expenses and keep track of how much you spend versus what you earn. Hey, even trust fund babies have a spending limit.

Have Cash on Hand

Billionaires and trust fund babies refer to this as "liquidity." The rest of us can refer to it as "make sure you don't end up living in a cardboard box." Even the most aggressive high net worth investors I've worked with kept a large chunk of liquid assets ("cash") on hand for emergencies. It seems like a no-brainer, but having an emergency fund is one lesson millionaires and the rest of us should always heed.

Avoid Fees...Even Small Ones

A client with a portfolio well past the multi-million dollar mark once remarked that despite the fact that $25 to him roughly equated to what a nickel is to me, small bank fees were the bane of his existence. As it turns out, bank fees annoy the heck out of millionaires just as much as those of us who sweat and toil for a living. Even if it's a nickel. (Good luck finding that on a bank fee sheet.) You work hard to earn a paycheck, so watch for fees like a hawk. If the charge seems exorbitant or isn't justified, ask politely for a reversal or reduction.

Consider the Source

There's no shortage of people willing to offer their opinions regarding personal finance. Millionaires and their sizable liquid assets tend to get a lot of unsolicited financial advice that they mostly meet with a polite smile or a curt nod. That's not to say information from these sources is necessarily bad, but take it with a grain of salt. News organizations often sensationalize the stock market and data to enhance ratings and entice viewers. Millionaires are cautious investors. They remain incredibly skeptical about anything that sounds too good to be true or claims not to carry any risk. Follow suit, so to speak, and compare financial products before jumping in.

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Guest's picture

I do believe that having more money can equate to more problems if not handled properly. Studying the way successful millionaires operate is great advice, and using this tips you outlined will help everyone be just as capable too.

Guest's picture

"make sure you don't end up living in a cardboard box." sounds like a shrude strategy to me! :D

Guest's picture
Millionaire Next Door

Watch the spending every day, but treat yourself occasionally. As an example, filling up at a gas station that's a few cents cheaper (times 20 gallons times 52 weeks) adds up to a nice bottle of New Year's bubbly, and a bit left over. My dad used to say there's nothing dumber than living poor so you can die rich.

Guest's picture

I completely agree with the coment about having liquid assets, in this day and age it is so easy to rack up debt and not having anything to fall back on. I have managed to save up a few months salary so that if anything does go wrong I have the money to hand.

Guest's picture

This is BS...people living in poverty don't have enough money to be "liquid". One major crisis can take them out of the game. Rich people can get loans from their rich friends/bankers/etc. Puh-leeze! Scale, is the issue here, not nickels and dimes!

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