Back in 2004, writer and financial expert Tom Corley began a five-year project in which he interviewed 225 wealthy people. His definition of the term included adults with “at least $160,000 in annual gross income and $3.2 million in net assets.”
After that many hours of listening to multimillionaires explain exactly how they bought their beach houses — which we can only imagine led to some migraines — Corley certainly earned his credibility on the subject (his Twitter handle is @RICHHABITS).
He managed to sort all his data and observations into two buckets: A) the four most common types of multimillionaires and B) the three strategies that they’re most likely to employ in order to maintain their wealth.
Here are the four distinct types:
- The Saver-Investor: regardless of job, prioritize prudent management of assets above all else
- The Company Climber: get in at a large company, climb the corporate ladder until salary is robust
- The Virtuoso: brilliant in their chosen pursuit, paid handsomely for years of degrees and years of expertise
- The Dreamer: entrepreneurs, actors, athletes — passionate (in a hell-bent fashion) on making money their way
You’d expect the Dreamer path to be the least bankable life plan, and the Saver-Investor the least risky (albeit far less sexy and exciting). Corley confirmed these assumptions. While the Dreamers technically become multimillionaires quicker and often accumulate higher net worths in the long run, their lifestyles before they “make it” aren’t so desirable — lots of late nights, ramen dinners and convincing friends/family that the sacrifices they’re making will eventually pay off.
Multimillionaire hopefuls will invariably fall into one of those quintessential types (the only one that seems to be missing is what we’ll call The Rich Kid — a wealthy adult who starts with money — but that doesn’t seem to be the point of Corley’s original experiment). Still, there are some strategies that anyone looking to accrue or grow their wealth can adopt, all of which find devotees across the types.
Here are three such strategies:
- Save 20% of your paycheck a month: automate a withdrawal of 20% from each month’s paycheck —10% to a retirement account, 10% to savings
- Invest a portion of those savings: later on, transfer the 10% that went to savings to an investment account, the money compounds over time
- Prize frugality: know what you’re spending on, spend the lowest amount on the highest quality possible
Fascinatingly, while the Dreamers didn’t typically follow these strategies before they started earning — they constantly spent their capital chasing their dream — the second they did, they fell in line with the other types. So if you want to not just become a multimillionaire, but remain one, these strategies are pretty much nonnegotiable.
One final takeaway: while the link between happiness/longevity and personal wealth is tenuous at best, it’s important to note that these habits can be beneficial for mental health. Financial stress takes a heavy toll on the brain.
Whether you want to be a multimillionaire are not — some are diametrically opposed to the concept in a society with stratospheric income inequality; that’s understandable — it’s hard to argue with day-to-day tips and tricks that will keep your savings headed in the right direction and your mind at ease.