So many people end up in trouble financially by not properly managing their money. Many wonder how they will ever be able to retire—and relatedly, many never achieve financial independence. The reality is they could if they knew a few facts and principles and used them consistently.

 Yes, things can happen to people that are out of their control. But too many people end up having financial problems because they are spending and borrowing more than they can afford. According to Thomas Stanley, author of a new book, “Stop Acting Rich…and Start Living like a Real Millionaire”, over 80% of luxury cars are driven by people who are not millionaires, and three times more millionaires are living in homes valued under $300,000 than there are living in $1 million plus homes!

The truth is, most self-made millionaires never choose to live in upscale neighborhoods, buy prestigious new cars, and wear expensive clothing and watches. Instead they chose to live modestly and quietly as they build towards their goal of financial independence. Fewer than 4% of Americans achieve millionaire status in their working life times—yet many more could if they followed the example of these self-made millionaires.

The key is that if you want to become truly wealthy—a real millionaire—you need to stop acting like you are wealthy. Pretending to be rich by buying expensive status symbols instead of focusing on building real wealth by saving and investing in growth and income assets like stocks, bonds, and investment properties, you will not likely ever achieve financial independence. Instead, like so many Americans in our consumption-oriented society, you will have chosen to live from paycheck to paycheck while not saving and investing much for the future.

An important point is that wealth or net worth is not the same as income–even high income. Wealth consists of those investments that you accumulate for the future that naturally increase in value over time. Monthly income that many people spend way to much of for expensive non-appreciating assets such as status cars, lavish clothing and jewelry, and exotic vacations is not wealth—it only gives the impression of wealth.

Here is a real eye opener: Stanley found that those who are among the least productive in transferring their income into wealth are in the highest income occupations! Yet, many members of lower income occupations such as teachers achieve millionaire status—about 350,000 according to Stanley!

So, it is not how much income you make, it is what you do with it based on your goals, priorities, and chosen life style. If people would stop acting rich to impress people with their expensive life-style, they could start on the path to real wealth-building while enjoying those simple inexpensive things in life that really matter.

There is really nothing magic about building wealth and financial security. However, it is a very disciplined and straightforward process that has worked consistently well in building wealth for self-made millionaires who represent about 80% of all American millionaires.

In summary, what did the real millionaires do to achieve their financial status and then maintain it?

1. They firmly believed that achieving financial security and independence is more important than displaying high social status with expensive trappings of affluence.

2. They lived a frugal lifestyle well within their income level.

3. They controlled their expenses with a disciplined budget

4. They regularly saved and invested up to 20% or more of their total income in appreciating assets

5. They continue their disciplined wealth-building habits and modest life style throughout their lives while maintaining their accumulated wealth

 Bottom Line

• Many people who display a high consumption life style never achieve even modest wealth.

• Those few people who have accumulated substantial wealth have not lived a high-consumption life style, preferring to save and invest to build financial independence.

• Self-made millionaires live frugally and are very disciplined in controlling their expenses and investment of their savings.

• If you forgo a high consumption lifestyle and commit to a disciplined budget, saving and investment program, you too can achieve financial independence while enjoying the simple inexpensive things in life that really matter. It is all up you.