Frugality Helps Millionaires Build Wealth | Millionaire Corner

Frugality continues to be an important wealth building factor for U.S. Millionaires, according to a new Millionaire Corner survey that indicates many wealthy Americans live by the motto, ?A penny saved is a penny earned.?

Millionaires identify ?having a frugal lifestyle to allow me to save my money? as one of the best financial decision they had ever made, according to our survey of 1,400 investors conducted in May. Millionaires ? who have a net worth of $1 million or more not including their primary residence ? rank frugality higher than making good stock picks, buying a home or purchasing investment real estate. The only other financial decision to rank higher than frugality is ?making consistent investments in a retirement plan.?

Frugality has played a traditional role in building wealth, according to ongoing Millionaire Corner research on the attitudes and behaviors of wealthy investors. Millionaires consistently rank frugality as one of their top wealth creation factors, along with hard work, education, smart investing and taking risk. Managers, educators and professionals ? a group that includes doctors, lawyers, dentists and accountants ? are the occupations most likely to be Millionaires.

Few Millionaires rank inheritance or family connections as significant wealth building factors, and describe themselves and their spouses as coming from relatively modest backgrounds.? (They placed their parents near 39 on a 100-point scale, with zero being poor and 100 being wealthy, and their spouses? parents at 34, in a wealth study conducted by Millionaire Corner over the first quarter of 2012.)

In the current economic climate Millionaires appear unlikely to take big risks with their investments. Nearly half (49 percent) of those participating in our first quarter study said they believed ?it is more important that I protect my principal than I grow my investments,? compared to one-third who said they were will to take on ?significant investment risk? to earn a higher return.

The level of risk associated with an investment emerged as the top investment selection factor of Millionaires studied in the first quarter. Diversity of investments, a factor closely related to risk ranked second, followed by the ?reputation of companies where investments are made? and the ?past track record of investments.?

Millionaires express growing concerns over the prolonged economic downturn, political environment, national debt and inflation, and have become increasingly worried about the financial situation of their children or grandchildren. In 2011, Millionaires ranked maintaining their own financial position as their top concern. This year they worry most about the financial well-being of future generations, a concern shared by 68 percent of Millionaires this year compared to 65 percent last year. In the face of continued economic uncertainty, it appears likely Millionaires will continue to view frugality as a key strategy to building wealth.

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