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In a recent post on his site, online marketing guru John Chow got into a discussion about money and frugality, and why he chooses not to live beyond his means unlike so many of the other folks out there spend as much or more than they're raking in.

For those people he offers the best piece of financial advice that he ever received.

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John Chow

It’s Not What You Make, It’s What You Keep It really doesn’t matter how much money you make. What matter is how much you get to keep at the end of the day. There are tons of people who make a lot of money and spend every cent they make and more. They drive all the fancy cars, go to the fancy clubs and live a “millionaire’s lifestyle”, only they’re not millionaires. In Miami, they’re known as $30,000 millionaires. They make $30K a year but live like they make a million.

Thanks to low-cost leasing and zero down financing, anyone with even a modest income can project the image of a millionaire. The only problem is, the debt will eventually catch up to them and that’s when it’ll all come crashing down. This was what caused the US financial meltdown. Too many people were spending more than they make and leveraging their debts to the hilt.

In the comments of that same post Darren Rowse of problogger.net fame agrees with John completely.

Darren Rowse

One of the best things you’ve written John.

Financial stability has more to do with what you spend than what you earn.



I’ve had people over the years ask me why I don’t drive a better car, living in a better suburb, wear better brands etc too – but I guess ultimately for me it’s about living within my means – which for me means not only spending less than I earn but also about thinking about the future and using what we don’t spend in a way to produce income.



Of course you can take this principle to the extreme where you never spend any of your money on nice things and live like a scrooge – for me it’s about balancing things. We try to enjoy life by taking some good holidays, eating out in a nice place from time to time etc without going over the top.

Of course not everyone has the luxury of being able to earn enough to invest – but many people could certainly cut down spending.

To me it's encouraging to see these two blogging bigwigs talking about personal finance in such a responsible way. They are displaying the true attributes of those with a millionaire mindset, people who live like true millionaires, and not those who are pretenders.

Why encourage people to live a high-flying lifestyle when you know it isn't the way to true success?

What Do People With A Millionaire Mindset Look Like?

So what does a true millionaire look like? In his book The Millionaire Next Door Thomas J. Stanley takes a look at things that millionaires have in common.

“In the course of our investigations, we discovered seven common denominators among those who successfully build wealth..

The Seven Factors

1. They live well below their means..

2. The allocate their time, energy, and money efficiently, in ways conducive to building wealth.

3. They believe that financial independence is more important than displaying high social status..

4. Their parents did not provide economic outpatient care..

5. Their adult children are economically self-sufficient..

6. The are proficient in targeting market opportunities..

7. They chose the right occupation.. Thomas J. Stanley

John and Darren have the right idea in mind.

They're living well below their means, allocate their time efficiently (I'm sure they have to being as busy as they are), they don't really care about displaying social status, and they definitely chose the right occupation. And of course they're both extremely good at targeting market opportunities.

I feel like I'm on the path to do the same as well, and I feel like I know what it takes to truly succeed.

It all comes down to the execution, however, and I just hope I can continue doing well as these guys are.

Do you feel like living below your means is one of the best pieces of financial advice you could give someone? What advice would you give, and where do you think people should focus in order to be successful?

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