The Five Lessons a Millionaire Taught Me About Life and Wealth

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INTRODUCTION

The Teacher

When the student is ready the teacher shall appear.

— CHINESE PROVERB

When I was twelve years old, my father, a building contractor, fell through a stairwell on a construction site and shattered the bones in both of his legs. He had no disability insurance and no medical insurance, and so the financial result was nothing short of catastrophic. I come from a large family, and with eight children, money was always tight; but as my father lay in bed, unable to work for nearly a year, we were in the direst of circumstances. We were forced to sell our home and move into a three-bedroom duplex. We lived off food storage and, to some degree, the generosity of those around us.

During this difficult time, I had a life-changing experience. One of our neighbors, a very successful businessman and financial adviser, invited the youth in our area to a lecture at the neighborhood Christian church. He wanted to teach us about money.

We were confident that he knew something about the subject. He owned a professional basketball team, drove an expensive car, and owned buildings and businesses all over the West.

He was also a self-made millionaire. He came from Ashton, Idaho, a tiny farm town with only two thousand residents — "if," he told us, "you count the dogs and chickens." He was born during the Great Depression, and like so many others at that time, his family was destitute. They rented two rooms in the back of someone else's house. They had no running water, and in the freezing northern Idaho climate, the only heat source was the small stove they cooked with. He learned to work as soon as he could walk, toiling as a common laborer picking potatoes on the area farms alongside the migrant workers. He had come a long way since then. He was the wealthiest man I knew.

The first thing he did that day was to pull a hundred-dollar bill from his wallet and hold it up in front of us. I stared at it in wonder. I had never seen one before. He asked, "Is money evil?"

Even though it was an evil we all wanted, sitting in the confines of a church we all quickly agreed that it was.

"The Bible," said a teenage girl piously, "says that money is the root of all evil."

He smiled. "You are referring to the New Testament scripture in 1 Timothy, chapter 6, verse 10," he replied. "And it does not say that. It says that the love of money is the root of all evil. There's a big difference. In fact, just one chapter earlier in Timothy, the apostle Paul says that if 'any provide not for his own, he hath denied the faith, and is worse than an infidel.' How can you provide for your own without money?

"How about the parable of the Good Samaritan? Jesus told us to be like the Good Samaritan, yet how many of you here today could afford to pay for a stranger's hospital treatment and housing for a week? The Samaritan was able to help because he had the financial means to do so. Without it he could only have offered minor assistance.

"For many, religion seems paradoxical on the subject of wealth. On the one hand, it seems to tell us that money is evil. On the other hand, God often blesses the righteous with wealth and material prosperity. For instance, in the Old Testament, after Job endured his many trials and proved his devotion to God, he was given back twice his wealth and possessions. So was God rewarding Job's righteousness with evil? Of course not."

Our teacher's tone became more serious. "Like most things, money can be used for good or evil. The church you are sitting in right now was built through substantial monetary contributions. Every week I see people in our area being helped through the generosity and financial ability of others.

"At your age, you have no idea how much money is spent on your behalf — oftentimes by people you will never meet and never thank. The day will come when you must make a decision: will you be one who helps others or one who looks to others for help? It's your choice. You can be part of the problem or part of the solution. If you want to be the latter, then listen carefully, because what I have to tell you today will change your life."

Considering my family's plight at the time, I listened very carefully. The lessons he taught that day lit a flame of hope within me. For the first time, I believed that there might be more to life than the seemingly endless financial desperation that had been my family's lot. I thought about his words constantly and began living the principles he shared. I immediately saw a difference in my own life, and that made the belief burn still brighter. By the age of sixteen, I had become somewhat financially independent. I bought my own clothes, my own car, and paid for my own entertainment. By eighteen, I had saved the equivalent of $7,000, enough to finance my schooling and a church mission. By the age of twenty-six, I had saved enough to put 25 percent down on a house on a beautiful tree-lined street. By the age of thirty-one, I had paid off my home.

Less than twenty years from the time my millionaire friend gave that talk, I returned to him with several million dollars I wanted his help in investing. He smiled when he saw me. "I understand that you've done all right for yourself."

"I have you to thank," I said. "You taught me what it takes to succeed financially."

"You have yourself to thank," he replied. Then his smile turned to a look of concern. "I'm afraid you were the only one who listened to me that day."

"Maybe I was just the only one who thought he had to."

THE MILLIONAIRE IN THE MIRROR

Why is it that wealth seems so distant from most people? Recently my eight-year-old daughter asked my wife if she'd ever seen a millionaire. My wife smiled and said that she had.

"Was he wearing a crown?" she asked.

"No."

"Was he in a limousine?"

"No, he was just walking."

"Were people dancing around him saying, 'Go millionaire, go millionaire?'"

Millionaires are not as removed as you might think. There are more than three and a half million millionaires in the United States alone. In fact, if you have an average American's income, you will earn more than a million dollars in your lifetime. So will you someday be a millionaire? According to current financial trends, it's not likely.

Recent statistics given by the Federal Reserve indicate that household debt is at a record high relative to disposable income. In 1946, household debt was 22 percent of personal disposable income. Today it's roughly 110 percent. Not surprisingly, personal bankruptcies in America have more than doubled in the last decade. In fact, more Americans now declare bankruptcy each year than graduate from college.

What about our retirement? If we take one hundred Americans and follow their financial path to age sixty-five, fewer than four will have an income above $35,000, while five times that number will live below the poverty line. More than 50 percent will be wholly dependent on relatives, Social Security, and welfare. In America, the discrepancy between the haves and have-nots has never been so wide.

If Americans' individual financial prospects seem so dire, then who and where are these millions of millionaires? They are not all businesspeople, doctors, lawyers, or white-collar professionals. Some are hairstylists and welders and farmers. So what's their secret? What is it that makes these people wealthy and others not?

IS IT LUCK?

"Fickle fate" is a vicious Goddess who brings no permanent good to anyone. On the contrary, she brings ruin to almost every man upon whom she showers unearned gold. She makes wanton spenders who soon dissipate all they receive and are left beset by overwhelming appetites and desires they have not the ability to gratify.

— George S. Clason, The Richest Man in Babylon

Wealth is more than just luck. Only 2 percent of today's millionaires inherited all or any part of their homes or property. Fewer than 20 percent inherited even a small portion of their wealth. And those victims of luck-induced wealth don't often retain their prizes. One study showed that of those who came into fortunes through lotteries, more than 80 percent were bankrupt within five years. The fate of those receiving other windfalls, such as insurance claims and inheritance, isn't much better.

IS IT INTELLIGENCE?

If wealth were simply a matter of intelligence, a disproportionate number of millionaires would have stellar IQs and academic merit badges. This is not the case. Most of today's millionaires did not graduate with high honors. Most of them did not even qualify for a top-rated college. In light of this, it is not surprising, then, that Warren Buffett, the self-made multibillionaire investor, was rejected by Harvard Business College. In fact, research shows that millionaires' average grade point average is lower than a B.

On the other hand, highly academic, well-educated people often act like complete fools when it comes to personal finances. It is common knowledge among financial consultants that America's most educated citizens — doctors and lawyers — are notoriously bad at handling their money.

WHAT IS IT?

If it's not luck or superior intelligence that makes the millionaire, then what is the common denominator (besides money, of course) that the wealthy have and the rest of humanity does not? It's simply this:

Some wealthy people learned the principles of accumulating riches through trial and error. Some — like myself — learned from mentors or parents. And for some, it just came naturally. But whatever this knowledge's source, I do not know a single self-made millionaire who does not understand and apply the five principles my millionaire friend taught us that day.

This is good news for everyone else. Because it means that wealth is less a matter of circumstance than it is a matter of knowledge and choice. It means that we can choose to live the lives we desire. So ultimately it comes back to you. Where do you want to go?

Copyright © 2004 by Richard Paul Evans

"Would you tell me, please," Alice asked, "which way I ought to go from here?"

"That depends a good deal on where you want to get to," said the Cat.

"I don't much care where — " said Alice.

"Then it doesn't matter which way you go," said the Cat.

" — so long as I get somewhere," Alice added as an explanation.

"Oh, you're sure to do that," said the Cat, "if you only walk long enough."

— Lewis Carroll, Alice's Adventures in Wonderland

Who Wants to Be a Millionaire?

Heather and James sat across from me in the Japanese restaurant, hopeless, irritable, and visibly upset. They couldn't figure out what had gone wrong. They had increased their income by nearly 35 percent in the last year, but were further in debt than ever before. They couldn't figure out how their expenses had increased so dramatically, or how their life had gotten so out of control. Now it looked like things were going to get worse. Their car, which they had just refinanced to cover credit card debt, was on the verge of breaking down. They had already taken a second mortgage on their home and were now looking at refinancing their home to meet their rocketing debt. Stress was at an all-time high, and they had been fighting a lot.

"What do you want from life?" I asked.

"Not this," Heather replied cynically.

"You make a lot of money," I said. "In fact, together you'll earn close to four million dollars by the time you retire."

They looked at me in disbelief.

"Do the math," I said. "Unfortunately, with your current lifestyle you'll be bankrupt in less than two years."

Heather shook her head. "If not sooner."

"If you really want to change, I can help. But you need to do something first."

"What's that?"

"I want you to decide to be wealthy."

"Wealthy?" Heather said. "Out of debt would be nice."

"It's a mind-set," I said. "It's all or nothing."

"Wealthy sounds good to me," James said.

"Wait a minute," Heather said. "Does this mean that we have to live in poverty for the next twenty years? Because I don't think I can do that."

"Not at all. In fact, the beauty of this program is that you won't really miss anything."

"How is that possible?"

"Trust me. I started doing this decades ago. But remember, it's all or nothing. If you can't decide, then I'd rather not waste our time."

"I'm in," James said.

"Me too," Heather said.

"Then let's get started."

For the next hour I shared with them the Five Lessons I'd learned years before from my millionaire friend. At the end of the hour, we sat over empty plates in a nearly empty restaurant.

"So what do you think?" I asked.

"I feel hope again," James said.

"We can do this," Heather said.

"I know you can. Anyone can. If they'll just decide that's what they want." I picked up the check. "And don't worry, I'll pay for dinner. You can buy next time."

Fifteen months later, we met again. Same restaurant, same city, different world.

"So tell me, how are things?"

Heather was all smiles. "Not only have we paid off all of our debt, but we've saved more than thirty thousand dollars. I also bought a new wardrobe, and took an incredible trip to Italy I couldn't possibly have afforded before."

"It doesn't sound like you've had to cut back on your standard of living."

"Cut back? We've given up a few things, but all in all, it's never been so good. Especially if you consider that we don't fight over money anymore. And our kids have lost weight since we stopped eating junk food every night. This last Christmas was great. It was the first time we didn't use our credit cards and, frankly, we bought more for our kids than ever. I'm the happiest" — she stopped and looked fondly at her husband — "we're the happiest we've been in years. We work together and we have more than we've ever had."

James nodded in agreement. "Life is so much better. I can even envision a time when I'll be able to help others financially."

They looked at each other and smiled.

"Any regrets?" I asked.

"Only one," Heather said. "I wish that we'd started ten years earlier."

This time they paid for dinner.

Life isn't about money. It's about God. It's about love. It's about family and relationships. It's about personal evolution, learning, and growth.

Part of that growth is learning balance between the different forces of life. Money, like health and spirituality, is part of that symmetry, and for those who do not accept responsibility for financial matters, life is thrown out of balance. As a dentist friend once told me: "Those who don't think about their teeth are those who later in life spend the most time thinking about them." It's no different with money.

It's not surprising, then, that the people I know who are the most obsessed with money are not the millionaires or even the billionaires. Rather, the most obsessed with money are the ones who are living paycheck to paycheck. To the financially enslaved, life becomes all about money. It's not.

In order to be truly happy, we must live balanced lives. To be in great fiscal health is very much like being in great physical health: it allows you to do more and be more, and it permits you to live your life free of constant pain and bondage.

Money is a powerful ally. With money I've been able to provide life's necessities for my family and loved ones: food, comfortable shelter, as well as superior education and medical care. I've been able to retire my parents. I've provided jobs and income for others. I've helped friends in tough circumstances. I've been able to build shelters to help abused children and support other worthy causes all around the world. It has also allowed my family and me to see the world. Wealth has brought freedom of choice and opportunity.

Lack of money is the root of all evil. — George Bernard Shaw

On the other hand, the cost of financial distress is astronomical. The American Bar Association has indicated that nearly 90 percent of all divorces over the last decade can be traced to quarrels and accusations over money. Some marriage experts have estimated that 75 percent of all divorces result directly from clashes over finances.

Debt and poverty contribute to other serious social issues, as well. Studies by the Children's Welfare League of America have demonstrated a direct correlation between financial problems and domestic abuse.

And there's more bad news for the fiscally challenged. Numerous studies have shown the connection between debt and disease. One study published in the Journal of Law, Medicine and Ethics found that "nearly half the debtors reported that debt troubles had affected their health."

In the end, what wealthy means is up to you. To me, when you no longer have to think about money, then you are truly wealthy.

The good news is that, for the most part, whether to be wealthy or not is ultimately your choice. As my millionaire friend said, you can either become part of the problem or part of the solution. That is the first lesson I learned. My life changed the day he taught me about wealth, because that was the day I decided to be wealthy.

Extravagant Wealthy?

The most substantial people are the most frugal and make the least show, and live at the least expense. — Frances Moore

Before you make the life-changing decision to be wealthy, you must discard whatever media-engendered notions you may have acquired concerning what it means to be rich. From a public relations standpoint, America's wealthy need an image remake. They are too often stereotyped as having gaudy, extravagant lifestyles and irresponsible fiscal habits. The media perpetuates this caricature by focusing on the small percentage of wealthy individuals who do live such ostentatious lives: Lifestyles of the Rich and Famous wannabes. While such people do exist, they are the exception, not the rule.

Two groundbreaking books have done much to shed light on the reality of America's millionaires. In The Millionaire Next Door by Thomas J. Stanley, PhD, and William D. Danko, PhD, and The Millionaire Mind by Thomas J. Stanley, PhD, these scholars reveal that today's millionaires are remarkably frugal and careful with their money. In fact, in many cases even their own children do not know of their wealth.

Living lives of excess, exorbitance, and waste are counter to the message of this book. And, as I discuss later, such overindulgence is often short-lived. Most people you see trying to look wealthy are doing just that. An expensive car or home does not make one wealthy. In fact, the inverse is more likely true. The path I'm recommending teaches individuals how to achieve a real and enduring affluent lifestyle based on spiritual and life-centered values.

The Power of Commitment

As simple as this First Lesson seems, it is my experience that it is the primary reason most people fail to achieve wealth. They simply never decide to be wealthy.

Choice is the beginning of all journeys. And, as with all first steps, it is the most important step of all. It is also the easiest. As Napoleon Hill wrote in his classic book, Think and Grow Rich:

"Riches begin with a state of mind, with definiteness of purpose, with little or no hard work."

There is something remarkably powerful about commitment. Commitment to a plan or thought carries with it a force that can influence the unconscious mind and bring about the desired effect. In other words, once we decide to have something, the mind unconsciously begins to create the reality necessary to bring to pass what we desire. The opposite is true as well. If we believe that we can't do something, we can't. If we think we will fail, most likely we will.

To illustrate the unseen power of commitment, try this simple experiment. Take a piece of string and tie it to a key. Hold one end of the string with your clenched fist, dangling the key in front of you. Now look at the key and mentally tell it to rotate clockwise. Don't move your fist; just watch the key. It will begin to move in the direction you desire. Then desire the key to stop. Then tell it to change its direction to rotate counterclockwise.

The key's movement seems almost mystical. But what you are really seeing is your body moving in almost imperceptible ways to grant your desire. What you have desired to happen is, in fact, happening.

Ask and You Will Receive

I believe the power of desire has even greater, spiritual implications. About fifteen years ago I had the desire to travel to China. I didn't have sufficient funds at the time to justify such an expensive trip, but I wrote my desire down on a list of goals for the year. Four months later, a friend called me out of the blue. She had just won an all-expenses-paid trip to China for two. Her husband didn't really want to go, so she asked if my wife and I would like to take the trip instead. Of course you could call that a coincidence, but the odds of something like that happening would suggest otherwise.

To Choose the Path Is to Choose the Destination

After one of my seminars, a man approached me. "Your presentation was insightful, but you're wrong on one point," he said. "I've never decided to be a millionaire. But I am."

"How did you become a millionaire?" I asked.

He thought about it. "Well, pretty much by living the other four lessons you taught tonight."

"Let me ask you this: if you decide to live a healthy lifestyle, are you in fact deciding to be healthy?"

"Probably. Yes."

"Exactly. You decided to be wealthy when you decided to live the principles of accumulating wealth."

He smiled. "I guess I did decide."

One Small Step

It's within your power, right now, to take the first step to wealth. Decide to be wealthy. Declare your intention by saying it out loud, then writing on a card:

Put that card in a nightstand or next to your toothbrush. Look at it and read those words every morning when you get up and every evening when you go to bed. Keep a copy of it in your wallet next to your credit card. Do this for the next two months.

Then congratulate yourself. You've just made a life-changing decision.

Copyright © 2004 by Richard Paul Evans