How millionaires think differently about money

Instead of focusing on saving money, concentrate on making money

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Pile of pound coins

One of the most popular topics in personal finance is how to save money. There are programmes dedicated to it, thousands of articles online about how to do it and for many people it is a way of life.

Certainly, getting value for money and looking after the pennies will help to improve your financial position. However, for those people who are seeking to generate a seven-figure net worth, saving 10% on a weekly shop or using public transport instead of buying a car is unlikely to make a major difference in the long run.

That's a key part of how millionaires think differently. Instead of focusing on how to save money, they tend to concentrate on how they can make money. Doing so can open up your mind to a world of opportunities, since focusing on saving money often limits creative freedom and the development of new ideas. And of course it is new ideas which have historically been the major source of wealth creation.

In this sense, it could be said that millionaires focus on reward as well as risk. Although they may seek to get the best price possible for their products and services, it is the rewards which they covet the most. And on their way to achieving them, they rarely allow failure to put them off course. While for many people a failed business, poor investment decision or redundancy can mean a period of self-reflection and disappointment, millionaires have usually viewed such challenges as a learning process rather than defeat.

The same principle can be applied to investing. Many people try investing in shares but find they make errors and mistakes which end up losing them money. However, the best investors try to learn from failures such as a lack of diversification, being too short-termist and taking too much risk for too little reward.

As such, they tend to persevere with investing so that they eventually build a portfolio which covers a wide range of stocks and sectors, generates a healthy yield, focuses on long term growth opportunities rather than on making a quick buck, and balances higher risk with higher reward.

Undoubtedly there are many industries and arenas in which people have become millionaires. One of them is investing in the stock market, which is perhaps the most enticing of them all. That's because it is possible to buy shares in companies and allow the respective management teams to get on with the job of building your seven-figure portfolio. And over a long period of time, the effect of compounding could be sufficient to build a seven-figure portfolio.

Certainly, shares can be more volatile than other assets such as cash and bonds. But as mentioned, millionaires stay the course in the long run and can live with a degree of short term pain. In their eyes, the long term gain is well worth it.

How are you going to become a millionaire?

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