3047: Lessons from Millionaires by ESI of ESI Money on Early Retirement

Summary

Podcast Episode Summary

Podcast Title: Optimal Finance Daily
Episode: 3047: Lessons from Millionaires by ESI of ESI Money on Early Retirement
Host: Diania Merriam
Date: February 20, 2025
Guest/Featured Blogger: ESI (of ESI Money)
Theme: Insights and actionable lessons from self-made millionaires, as learned through extensive interviews, focused on the core habits and mindsets that foster financial independence and early retirement.

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Overview

In this episode, Diania Merriam reads and discusses ESI’s blog post "Lessons from Millionaires," summarizing key takeaways from interviewing over 40 everyday millionaires. The episode emphasizes practical wisdom learned directly from those who have achieved significant wealth without extraordinary circumstances, focusing on the key drivers: earning, saving, and investing. Diania enriches the discussion by tying in themes from classic finance literature and highlighting the importance of time, discipline, and realistic expectations on the path to financial independence.

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Key Discussion Points and Insights

1. Three Core Lessons from Millionaires

(Main Segment: 00:59 - 06:40)

• High Income is an Asset (01:40)

  • Many millionaires do earn high incomes, making it “easier” to build wealth, but self-control is even more critical.
    • Notable quote:

    “Even people with high incomes can spend it all. So while many millionaires have high incomes, they also have something more valuable self-control to limit their spending.” — ESI (02:18)

• The Necessity of Saving (03:05)

  • No matter the income, spending less than you earn is fundamental. The saving percentage needed for financial freedom depends on earnings but the discipline remains the same.
    • Breakdown:
      • Save 20% of $100k or 40% of $50k — both result in $20,000 saved yearly. Which route suits your reality?

• Invest Early and Often (04:00)

  • Consistent, large investments—mainly in index funds—paired with the passage of time, have a compounding effect on wealth.
    • Notable quote:

    “Time is your greatest investment weapon. Millionaires use this to their advantage. They invest early, often and at high amounts. Then they let this money sit and compound...” — ESI (04:08)

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2. Additional Qualities and Behaviors of Millionaires

(Supplementary Segment: 06:45 - 08:00)

• Avoiding Major Financial Pitfalls

  • Millionaires commonly sidestep:
    • Bad marital choices
    • Overspending on homes
    • Taking on heavy, expensive debt
  • This prudence saves them hundreds of thousands over their lifetimes.

• Proactive Financial Habits

  • They track spending, have a plan, consistently control their lifestyle, and focus on career development.

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3. Key Book and Influences

(Brief Reference: 08:07)

• The Millionaire Next Door
  This book had a dramatic impact on ESI and is touted as essential reading.
  • Notable quote:

  “It's the one book that most changed my money life, as well as being one of the only five money books you ever need to read.” — ESI (08:08)

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4. Fascinating Millionaire Facts

(Informative Segment: 08:15 - 10:10)

• Origin of 'Millionaire'

  • Word first used in 1719 (French: ‘millionnaire’).
  • First English use: 1816, in a letter by Lord Byron.

• Defining a Millionaire

  • Net worth includes all assets minus debts.
  • Some more conservative definitions exclude primary residence and lifestyle assets.
  • Number of millionaires depends heavily on measurement standards.

• Inflation Perspective

  • $1 million in 1900 equals ~$28.8 million in 2016.

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5. Call to Action and Personal Reflection

(Wrap-up: 10:10 – 10:40)

• ESI challenges listeners to reflect and pick one area—earn, save, or invest—to improve.
  • Notable quote:

    “Let this be my encouragement to you. Develop a plan, work at it, stick with it, and you will become wealthier. Start now and by Millionaire Day next year, you'll be much better off than you are today.” — ESI (10:32)

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6. Host Reflection & Additional Commentary

(Host’s Commentary: 11:16 - End)

• The True Meaning of Wealth

  • Diania underscores that true millionaires often live modestly, not extravagantly.
    • Notable quote:

    “Many people who live luxurious lives are actually drowning in debt and have very little wealth. For those of us who want to become wealthy, it would benefit us to see through the smoke and mirrors that is consumerism and focus on saving and investing instead.” — Diania Merriam (11:35)

• No Shortcuts — The Magic Button Myth

  • Citing a conversation with Frank Vasquez (Risk Parity Radio), Diania laments the common wish for a “magic button” to sudden wealth. The hard truth: time and consistency are irreplaceable.
    • Notable quote (paraphrased):

    “There are no real shortcuts... You need time and regular contributions to allow compound interest to do its thing.” — Diania Merriam (12:10)

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Notable Quotes with Timestamps

• On Self-Control and Wealth (02:18):

  “Even people with high incomes can spend it all. So while many millionaires have high incomes, they also have something more valuable self-control to limit their spending.” — ESI

• On Wealth-Building Simplicity (04:08):

  “Time is your greatest investment weapon. Millionaires use this to their advantage. They invest early, often and at high amounts. Then they let this money sit and compound...” — ESI

• Transformative Impact of Reading (08:08):

  “It's the one book that most changed my money life, as well as being one of the only five money books you ever need to read.” — ESI

• Encouragement to Listeners (10:32):

  “Let this be my encouragement to you. Develop a plan, work at it, stick with it, and you will become wealthier. Start now and by Millionaire Day next year, you'll be much better off than you are today.” — ESI

• Reality Over Appearances (11:35):

  “Many people who live luxurious lives are actually drowning in debt and have very little wealth. For those of us who want to become wealthy, it would benefit us to see through the smoke and mirrors that is consumerism and focus on saving and investing instead.” — Diania Merriam

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Key Timestamps for Segments

• [00:59] Episode and source introduction
• [01:40 – 04:40] Three lessons from millionaires
• [06:45 – 08:00] Avoiding mistakes; positive money habits
• [08:07] Essential book: The Millionaire Next Door
• [08:15 – 10:10] Historical and statistical facts about millionaires
• [10:32] Motivational challenge to listeners
• [11:16 – End] Diania Merriam’s reflections, the magic button myth, and close

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Concluding Message

The episode distills years of millionaire interviews into timeless advice: grow your income, master saving, and invest consistently over time. Both ESI and Diania debunk the myth of overnight riches, emphasizing discipline, time, and steady habits over flashy consumerism. Listeners are encouraged to take concrete steps now, with the promise that gradual improvement is both attainable and transformative.

Transcript

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[ESI (esimoney.com Host)]

This is optimal finance Daily Lessons from millionaires by esi of esimoney.com I originally had this post planned for Be a Millionaire Day. Yes, they do have a day for everything. Then I moved things around. I wanted other posts to publish sooner and messed it all up. So consider this a belated tribute to Millionaire Day with a post on what we've learned so far from my millionaire interviews. Between this site and my former one, I've interviewed over 40 everyday millionaires. Not surprisingly, there are patterns in their answers regarding how they became well off. So let's look these over as I'm sure we can learn something from these wealthy individuals. What Millionaires have Taught Us Here are the main lessons millionaires have taught us. Number one, having a high income is a great asset. Many people like to poo poo. The fact that several millionaire interviewees make good incomes. Their line of thinking is of course it's easy to become a millionaire if you have a high income. I have several reactions to this. Firstly, yes, it is easier. That's why I post quite often on the power of growing your career. Secondly, even people with high incomes can spend it all. So while many millionaires have high incomes, they also have something more valuable self control to limit their spending. In other words, they live like no one else. And thirdly, okay, so you've seen that it's easier to become a millionaire with a higher income. Are you doing anything to grow your income or are you simply raising an objection to make yourself feel better about your situation? Number two. Savings is vital. As noted before, you must spend less than you earn because anyone can spend it all. So Whether you make $50,000 a year or $500,000, you need to spend less than that. Turns out millionaires are great at saving no matter how much they make. In addition, the more you make, the lower percentage you have to save to reach financial independence. The less you make, the higher percentage you have to save. So you can make $100,000 a year and save 20% or $50,000 a year and save 40%. Either way, you've saved $20,000 that year, which sounds easier. And number three invest early and often. Time is your greatest investment weapon. Millionaires use this to their advantage. They invest early, often and at high amounts. Then they let this money sit and compound, usually in index funds, year after year and decade after decades. This supercharges their wealth. As you might imagine, these findings mirror the ESI scale and the theme of this site. Funny how that turned out, huh? Seriously, it's because these principles work. Apply them over years and you will become wealthy. That's all there really is to being a successful money manager. Doing the right things and avoiding the bad in addition to those main three qualities, there are a couple other things that millionaires seem to have in common. 1. They tend to avoid the worst money mistakes. On average. They don't marry the wrong person, don't go wild on buying a house, which can be a killer by itself, and don't take on massive amounts of expensive debt. All of these are very costly. And by avoiding them, millionaires save themselves hundreds of thousands of dollars over a lifetime. They tend to make the best money moves. They track their spending, have a financial plan, and have the discipline needed to control spending and grow their careers. Many of these moves make them hundreds of thousands of dollars over a lifetime, and they put them to work in growing their net worth. And of course, no millionaire day would be complete without mentioning my favorite millionaire book, the Millionaire Next Door. It's the one book that most changed my money life, as well as being one of the only five money books you ever need to read. Millionaire Facts and to top things off, here are some facts about millionaires according to Wikipedia. Number one, the word was first used as millionaire with a double n in French in 1719 by Stephen Fetiman and is first recorded in English millionaire as a French term in a letter of Lord Byron of 1816, then in print in Vivian Gray, a novel of 1826 by Benjamin disirelly. An earlier English word millinery was used in 1786 by Thomas Jefferson while serving as minister to France. He wrote, quote, the poorest laborer stood on equal ground with the wealthiest millinery. The first American printed use of the word is thought to be in an obituary of New York tobacco manufacturer Pierre Lorillard II in 1843. 2 There are multiple approaches to determining a person's status as a millionaire. One of the two most commonly used measurements is net worth, which counts as the total value of all property owned by a household minus the household's debts. According to this definition, a household owning an $800,000 home, $50,000 of furnishings, two cars worth $60,000, a $60,000 retirement savings account, 45 grand in mutual funds and $325,000 vacation home with a $250,000 mortgage and $40,000 in car loans and $25,000 in credit card debt would be worth about $1.2 million and every individual in this household would thus be a millionaire. Number three however, according to the Net Financial Assets Measurement used for some specific applications such as evaluating an investor's expected tolerance for risk for stockbroker ethics, equity in one's principal residence is excluded, as are lifestyle assets such as the car and furniture. Therefore, the previously mentioned example household would only have net financial assets of $105,000. Number four another term used is net investable assets or working capital. These practitioners may use the term millionaire to mean someone who is free to invest a million units of currency through them as a broker. For similar reasons, those who market goods, services and investments to high net worth individuals are careful to specify a net worth not counting principal residents. Number five at the end of 2011, there were around 5.1 million high net worth individuals in the U.S. while at the same time there were 11 million millionaires and a total of 3.5 million millionaire households. Including those 5.1 million High Net Worth Individuals and number six, depending on how it's calculated, a million U.S. dollars in 1900 is equivalent to 28.8 million in 2016. So what? Some of you might be yawning at this point. Heard it all before, right? My challenge to you is to ask yourself which of the tips mentioned you are missing. Which of these can you attack and just get a bit better at over time? My focus these days is on investing more than the other two ESI steps. Specifically what can I do to manage my investments so they perform better? So let this be my encouragement to you. Develop a plan, work at it, stick with it, and you will become wealthier start now and by Millionaire Day next year, you'll be much better off than you are today. Perhaps I'll even be interviewing you then for my Millionaire series. You just listened to the post titled Lessons from millionaires by esi of esimoney.com this message is brought to you by Apple Card. Does this sound familiar? You're in line at checkout, cart full of items, your toddler is screaming for a treat, and you left your wallet in the car. Or was it at home? No need to panic. With your iPhone in hand, you can tap to pay using Apple Card with Apple Pay and you'll earn 2% daily cash back when you do so. If your credit card is an Apple card, maybe it should be subject to credit approval. 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But why? Many people imagine that the benefit of being a millionaire is the ability to buy a bunch of luxuries. But what if being a millionaire didn't look the way you imagine? Esi mentioned the great book the Millionaire Next Door, which is based on a long term study of people who are actually wealthy. The main thing I got out of this book is that many people who live luxurious lives are actually drowning in debt and have very little wealth. For those of us who want to become wealthy, it would benefit us to see through the smoke and mirrors that is consumerism and focus on saving and investing instead. Everyday millionaires oftentimes are very modest when it comes to material possessions. This article also reminded me of a conversation I had with my friend Frank Vasquez over at Risk Parity Radio. He tirelessly answers personal finance questions that come up in the various Facebook groups we're a part of. So one day I asked him which personal finance question does he see often that bugs him the most? And he answered that he commonly sees people who are looking for a magic button. Perhaps they haven't saved anything for retirement and now they're in their 60s and want to retire. So they're looking for advice on which stocks are going to give the most aggressive growth that might allow them to do so but there are no real shortcuts when it comes to becoming a millionaire. You need time and regular contributions to allow compound interest to do its thing. And that should do it for today. Have a happy rest of your day, and I'll see you on the Friday show tomorrow, where your optimal life awaits.