How to become a millionaire? Save early, study says

[oracle]

Continuing from another thread I started some time back -

The power of compounding and 2% difference in investment returns

Another important factor on wealth building is saving early.

A study from PNC Wealth Management asked people worth $5 million or more in investible assets about the "actions that have most contributed to their financial success."

The No. 1 response? It wasn't income. It was "saving early and regularly." The second most common response was "making smart investment choices." In a distant third was "earning a lot of money." Ranked fourth was "controlling spending."

When asked to rank the greatest influences on their success, 63 percent said "hard work." That was followed by "good decisions" (16 percent). Only 9 percent said "luck" was the top influence on their success.

Very interesting statistics...

Full article here

It has been known and proven time and time again that wealth creation is just another skill which can be learned by anyone.

Cheers,
Oracle.

 

[mrdobalina]

Thanks for sharing. Good lessons to instill into my children at an early age...

 

[Alex P Keaton]

My 9 year old niece is going places!! She saves half of what she earns or gets as a present. We both love to talk money and business ideas

I told her the way she is saving she will have enough money for a deposit to buy a house when she is in her early 20's. She agreed and said she could rent it out like I do and like her mummy and daddy do. I can see she will be a real entrepeneur in the making

I joked with her we can go into partnership when she is older hehe & do some joint ventures . Oh and for her birthday guess what she has asked for...... Money that's right

But seriously I wouldn't mind her being my project manager she is one smart little cookie!!

 

[Ace in the Hole]

Also taken from the article:

Of course, every survey done by a financial institution should be taken with a grain of salt. Wealth management firms tend to promote the image of hard-working, heavy savers and investors among their clients. And clients sometimes say the right things in surveys, but act very differently in reality.

How can controlling spending be ranked a distant 4th when it is very closely related to saving? It's actually the first thing people consider when they make an active decision to save, by writing up a budget.
You can't save if you are spending all your money, which is what most people do.

 

[oracle]

Also taken from the article:

Of course, every survey done by a financial institution should be taken with a grain of salt. Wealth management firms tend to promote the image of hard-working, heavy savers and investors among their clients. And clients sometimes say the right things in surveys, but act very differently in reality.

How can controlling spending be ranked a distant 4th when it is very closely related to saving? It's actually the first thing people consider when they make an active decision to save, by writing up a budget.
You can't save if you are spending all your money, which is what most people do.

I think by saving early and regularly what they mean is they have a savings goal of say for eg. to save 20% of their pay each month without fail. Once that goal is achieved with the remainder 80% you can do whatever you want. So controlling spending is ranked 4th because what you do with the 80% is upto you, you can decide to spend it all or control your spending to save some more if you wish.

Cheers,
Oracle.

 

[Ace in the Hole]

I think by saving early and regularly what they mean is they have a savings goal of say for eg. to save 20% of their pay each month without fail. Once that goal is achieved with the remainder 80% you can do whatever you want. So controlling spending is ranked 4th because what you do with the 80% is upto you, you can decide to spend it all or control your spending to save some more if you wish.

Cheers,
Oracle.

This is true.
My financial light switched on after reading The Richest Man in Babylon.
Put away that 10% and don't touch it.
But then again, I always divert into investments as much as possible since reading the book, close to 90% of earned income during the past 5 or so years.

 

[spludgey]

But then again, I always divert into investments as much as possible since reading the book, close to 90% of earned income during the past 5 or so years.

That's crazy, and I thought I was doing well with ~50%!

 

[jackbak]

Also taken from the article:

Of course, every survey done by a financial institution should be taken with a grain of salt. Wealth management firms tend to promote the image of hard-working, heavy savers and investors among their clients. And clients sometimes say the right things in surveys, but act very differently in reality.

How can controlling spending be ranked a distant 4th when it is very closely related to saving? It's actually the first thing people consider when they make an active decision to save, by writing up a budget.
You can't save if you are spending all your money, which is what most people do.

They have shown how important the think saving is by ranking it number 1.

 

[Brady]

My spending is pretty close to a three way split

- 1/3 on everyday spend
- 1/3 on bills (IP and personal)
- 1/3 on long term savings