3 things self-made millionaires never do with their money (2024)

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• Almost 80% of the millionaires who the author Thomas J. Stanley interviewed for "The Millionaire Next Door" are first-generation affluent, or self-made millionaires who didn't inherit wealth.
• He found that these millionaires tended not to carry exclusive and expensive credit cards, instead opting for more basic cards with lower fees.
• Many self-made millionaires also shied away from assisting their adult children financially, as it can hurt both the parents and the children.
• And most practice buy-and-hold investing, holding onto investments for years before selling.
• Check out Vanguard Personal Advisor Services® to get the investment advice you need to help build the life you want »

While interviewing more than 500 millionaires and researching their habits for "The Millionaire Next Door," the author Thomas J. Stanley found most millionaires to be surprisingly frugal. They tended not to spend on luxury items, instead spending on investments and other things that grow their net worth.

He also found that most didn't get their wealth through family connections or inheritances. Rather, about 80% were first-generation affluent and were self-made through a combination of their habits, incomes, and investments.

Throughout the book, he charts the habits of millionaires, noting the things they tend to buy and spend on, and how much they give. He also identified three money habits that successful self-made millionaires avoid at all costs.

1. They don't have a wallet full of exclusive credit cards

When you think about a millionaire lifestyle, you might picture an exclusive card with a high fee and countless travel and luxury perks. But according to Stanley's research, that's not the card most self-made millionaires turn to — most go for lower-fee credit cards instead.

He found that only 6.2% of millionaires he surveyed had the Amex Platinum, and fewer had other high-level credit cards. While these elite cards can come with nice perks for traveling and spending, they also often have high fees.

That's not to say that millionaires don't use credit cards — they do. In fact, 59% of millionaires surveyed had a lower-fee Visa card, and 56% had a MasterCard credit card. It's worth noting, however, that while credit cards may have perks and benefits, they're useful only when a card's balance is paid in full each month so the card doesn't accumulate interest.

2. They avoid giving large gifts to their children, or supporting them financially as adults

Millionaires are always willing to spend on education for themselves, their children, and their grandchildren. Many have found their educations important for wealth-building, but most wealthy parents and grandparents also know where to draw the line with supporting adult children, Stanley found.

Stanley found that supporting adult children didn't benefit either group. He wrote that parents who provided some kind of help to adult children had "significantly less wealth than those parents of the same age, income, and occupational cohorts whose adult children were economically independent." And most self-made millionaires know this.

They also know it hurts their children to receive gifts and support often. "In general, the more dollars adult children receive, the fewer they accumulate, while those who are given fewer dollars accumulate more," Stanley wrote.

For the most part, millionaire parents tend to give only sporadic, large gifts — about 60% of millionaire parents helped their children purchase a home. But they don't tend to give to their children often. Only 32% of millionaire parents funded their children's graduate-school educations, and just about 18% gifted their children income-producing real estate.

3. They don't spend hours managing their investments

Stanley found that owning stocks was an essential part of most millionaires' wealth strategies — about 95% owned shares of stock. And he found that most had at least 20% of their wealth invested in the stock market.

But most of the millionaires he surveyed don't touch their investments very often. "Forty-two percent of the millionaires we interviewed for our latest survey had made no trades whatsoever in their stock portfolios in the year prior to the interview," Stanley says.

Millionaires tend to buy and hold investments for many years, allowing their investments to both appreciate and fall into a different category that excludes them from higher short-term capital-gains taxes. It also means they don't need to spend hours each week or even each month managing their investments.

For most millionaires, investing is a simple, hands-off process.