The Kind of Neighbors You Have Might Be Preventing Your Chances Of Becoming A Millionaire

Together with her business theorist father Thomas J. Stanley, industrial psychologist and writer Sarah Stanley Fallaw has been studying how financially well-off and self-made Americans found their success for years now. This is what she learned.

The Secret to Building Wealth

According to the ‘The Next Millionaire Next Door’ co-author, no other factor affects one’s wealth building as much as where they choose to live.

Surveying over 600 American millionaires, Stanley Fallow came to the conclusion that a good portion of these wealthy individuals never bought homes that cost more than three times their yearly income.

And this observation also applies to high-profile, wealthy personalities like tennis star Serena Williams and even Facebook CEO Mark Zuckerberg.

Settling down in a home they can easily afford gives them more room to increase their savings and further grow their wealth.

The Pressure to Keep Up

Seeing a neighbor buy non-necessities like luxury cars might also encourage one to splurge on similar purchases

The Affluent Market Institute director also noted how a person’s neighborhood has a great impact on the individual’s spending and saving habits. For example, setting down roots in an expensive home located in an affluent neighborhood might lead to one to fall into the trap of keeping up with their neighbor’s lavish ways. In the long run, this can prevent a person from accumulating wealth and meeting their financial goals.

Convincing Examples

Buffett’s well-guarded home reportedly spans 6,570 square feet and features five bedrooms

One good example of a wealthy individual living way below their means is investor and billionaire Warren Buffett. Despite being worth $82.1 billion, the 89-year-old business magnate still lives in a $31,500, which he bought back in 1958.

Considering inflation over the decades, the Omaha, Nebraska property’s original purchase price is equivalent to $274,357 in today’s money.

This amounts to just a mere 0.0003% of his current wealth. The home is currently valued at $652,619. No wonder Buffett cites is the third-best investment he’s ever made in his life.

Hsieh shared that he created Llamapolis to maximize the randomness in his life

There’s also Internet entrepreneur Tony Hsieh. The Zappos CEO, who has a reported $840 million fortune, takes living simply to a whole new level as he calls a Las Vegas trailer his home.

Built in 2014, Llamapolis was created by Hsieh himself in attempts of revitalizing the Nevadan city. The trailer park is made of a collection of dozens of tiny houses and Airstream trailers.

The latter usually goes for something between $25,900 and $139,900. Even if Hsieh chose the most expensive of these as his home, it would still only account for a mere 0.02% of his wealth.