4 things millionaires have in common, backed by research

4 things millionaires have in common, backed by research4 things millionaires have in common, backed by researchWhat do millionairesdo differently?Are theyharder workers? Do they have brains that can bend spoons? Do they exhibit Bond Villain levels of cunning?Follow Ladders on FlipboardFollow Ladders magazines on Flipboard covering Happiness, Productivity, Job Satisfaction, Neuroscience, and moreFor their booksThe Millionaire Next DoorandThe Millionaire Mindthe authors surveyedover 700 millionaires to find out.80% were self-made, accruing all their wealth in one generation. And they were doing a number of things you and Iprobably arent.Here are a few patternsthe researchers saw1) Most millionaires are self-employedGot a great idea for a geschftlicher umgang? Make sure the profits are going inyourpocket, bedrngnis your bosss.ViaThe Millionaire Next DoorTwenty percent of the affluent households in America are headed by retirees. Of the remaining 80 percent, more than two-thirds are hea ded by self-employed owners of businesses. In America, fewer than one in five households, or about 18 percent, is headed by a self-employed business owner or professional. But these self-employed people are four times more likely to be millionaires than those who work for others.Sound risky? It is.Less than a third of new companiessurvive 10 years.ViaThe Illusions of Entrepreneurshipno matter how you measure new firms, and no matter which developed country you look at, it appears that only half of new firms departureed remain in business for five years, and less than one-third last ten years.But millionaires have a different perspective. They think its risky to work forsomeone else. You could get laid off. Your boss could make a bad decision.They want to be in control of their own destiny and yes - theyre quite confident. And research showsconfidenceboosts yourincome.Butnot only is entrepreneurship risky, its also hard work.Inonly two countries out of all the ones surveyed did the self-employed not work harder than salaried employeesWhy do something so risky and difficult? Research showsone of the main things that makes us love our work isautonomy.And this is definitely true here.Youd need to earn 2.5 times as much money to be ashappyas someone who is self-employed.ViaThe Illusions of EntrepreneurshipThese studies have found that people are more satisfied with their jobs when they are working for themselves than when they are working for others. In fact, the studies show that to be as satisfied when he is working for others as he is when he is working for himself, the average person needs to earn two-and-a-half times as much money(For more on what the most successful people have in common, clickhere.)So these arent salaried employees. But how do they decide what kind of companies to start?2) Millionaires choose their careers strategicallyThey dont start a business theyre necessarily passionate about. They dont even do something they necessarily understand or have experience in.They start a business that they think is going tomakemoney. They look for areas of big demand and small supply.Some of you are saying, Duh. Of course thats how you should pick a business. Yeah, but thatsnotwhat the vast majority of people do.ViaThe Illusions of Entrepreneurshipthere is no evidence that entrepreneurs select industries in which profits, profit margins, or revenues are higher.Sixty-three percent of new business owners admit their venture doesnt have a competitive advantage. Only a third say they really did a search for good business ideas.And the industry you start a business in is very importantsome industries are over 600 times more likely to be successful than others.ViaThe Illusions of Entrepreneurshipbetween 1982 and 2002, start-ups in the software industry were 608 times more likely than start-ups in the restaurant industry to become one of the 500 fastest growing private companies in the United States- 608 times more likelyOne of the authors o fThe Millionaire Mindis a business school professor. Every year he asks his students what the most profitable businesses are.And every year the students cant even name one correct answer. If smart, educated business students dont know, why would the average person?But millionaires pride themselves on thinking differently and looking for underserved markets and hidden opportunities.And, frankly, the companiesthey start usually arent sexy. They fall into the category of dull-normal. But they make bank.ViaThe Millionaire Next DoorMany of the fonts of businesses we are in could be classified as dull-normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.Despite thinking differently and doing things their own way, theyre not jerks. 94% of millionaires said getting along with people was key.(For more on hownotfollowing your passion can be the smartest career strategy, clickhere.)So they a ndrang their own shop and choose wisely what type of business to be in. But to make it a success dont they have to be brilliant? Nope.3) Theyre not geniuses but they have a strong work ethicWeve all heard the old saying, If youre so smart, why arent you rich?What was the average collegeGPA of an American millionaire?2.9 out of 4.0.(Not a lot of Phi Beta Kappa keys jangling around here, folks.)Few were ever called intellectually gifted and many were explicitly told they didnt have what it takes for medical school, law school or MBA school.But what most people dont know is that GPA is a very poor predictor of success.ViaThe Millionaire MindI find no substantial statistical correlation between the economic-productivity factors (net worth and income) and SATs, class rank in college, and grade performance in collegeAndthis may be part of the reason theyre so successful as entrepreneurs smarter people are less likely to take such risks.ViaThe Millionaire MindOverall, there is an inverse r elationship between taking financial risk and various measures of analytical intelligence such as SAT scores.And maybe this is why former drug dealers are more likely to start businesses.ViaThe Illusions of Entrepreneurshippeople who dealt drugs as teenagers are between 11 and 21 percent more likely than other people to start their own businesses in adulthood. And their higher rate of self-employment isnt the result of wealth accumulated dealing drugs, greater likelihood of having a criminal record, or lower wages.Inentrepreneurship, youre the boss. So it requiresleadership. And some research showsbeing super-smart actually makes youworseat being a leader.ViaMind in Context Interactionist Perspectives on Human IntelligenceCognitive ability tests have been notoriously poor predictors of leadership performance. Leader intelligence under certain conditions correlates negatively with performance.(Though research shows if you want to be a successful terrorist, definitelystudy hard in sch ool.)But futuremillionaires do work hard.When asked what their teachers did compliment them on, what was the most common response?Most dependable.When asked what they did learn in college, 94% replied a strong work ethic. And research showsself-discipline trumps IQwhen it comes to success.(To see the type of schedule successful people follow every day, clickhere.)So we know how they bring their money in. Is there another part to the equation? Yeah. Dont letthat money out.4) Theyre cheapWhen the authors ofThe Millionaire Mindinterviewed the wealthy, they didnt want them to feel uncomfortable.So they rented a penthouse in Manhattan, loaded it withfour types of pt, three kinds of caviar and plenty of fine wine.The millionaires arrived andfelt completely out of place. All they atewere the gourmet crackers.When offered the fancywine one interviewee said he only drank two types of beer free and Budweiser.The researchers were stunned.They quickly realizedthe media images we see of milliona ires arent representative.Expect a millionaire to be a fancy dresser? 50% have never paid over $399 for a suit. (10% had never paid $195.)In fact,if you do see someone wearing a $1000 suit, its more likely theyrenota millionaire.ViaThe Millionaire Next DoorFor every millionaire who owns a $1,000 suit, there are at least six owners who have annual incomes in the $50,000 to $200,000 range but who are not millionaires.Fancy car? More than half have never paid over $30,000 for a car.See someone in a Mercedes? They are probablynota millionaire.ViaThe Millionaire Next Doorapproximately 70,000 Mercedes were sold in this country last year. This translates into about one-half of 1 percent of the more than fourteen million motor vehicles sold. At the same time, there were nearly 3.5 million millionaire households. What does this tell us? It suggests that the members of most wealthy households dont drive luxury imports. The fact is that two out of three purchasers or leasers of foreign luxury motor vehicles in this country are not millionaires.Most millionaires live a lot more like you and me than Jay Z or Elon Musk.Theyrethrifty, not very materialistic, and they think a great deal about how much they spend.ViaThe Millionaire Next DoorThere is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning ones financial future.And the more materialistic people are, the less satisfied they are with their lives.Via100 Simple Secrets of the Best Half of LifeAmong participants in one study, those whose values were the most materialistic rated their lives as the least satisfying. Ryan and Dziurawiec 2001Research shows people are better with their money when theythink long term.Expertssay you should have asystem.Are you as money-conscious as a millionaire?Most millionaires answer yes to these four questions. Can you?ViaThe Millionaire Next DoorDoes your household operate on an annual budget?Do you know how much your family spends each year on food, clothing and shelter?Do you have a clearly defined set of daily, weekly, monthly, annual and lifetime goals?Do you spend a lot of time planning your financial future?(For more on research-backed ways to spend your money so it increases your happiness, clickhere.)So its clear how millionaires make their money. But what should we take away from all of this?Sum upBeing a millionaire must be nice. But we wont all get there. And thats okay. Money isnt everything.So even if you dont get rich, what lessons can we all learn from millionaires?Take control of your life asbest you can.Plan and be strategic, whatever your career might be.Work hard.Watch your money.Thats advice anyone can follow and everyone can benefit from.Join more than 300,000readers.Get a free weekly update via schmelzglashere.This articlefirst appeared at Barking Up the Wrong Tree.You might also enjoyNew neuroscience reveals 4 rituals that will make you happyStrangers know your social clas s in the first seven words you say, study finds10 lessons from Benjamin Franklins daily schedule that will double your productivityThe worst mistakes you can make in an interview, according to 12 CEOs10 habits of mentally strong people