Retirement Income

4 secrets of self-made millionaires

4 secrets of self-made millionaires

When you think "millionaire", what image comes to mind? For many of us, it's a flashy 1980s entrepreneur who flies a private jet, and lives the kind of decadent lifestyle that most of us can only dream about.

But many modern millionaires live in middle-class neighbourhoods, go to work and shop in discount stores like the rest of us. What motivates them isn't material possessions but the choices that money can bring.

"For the rich, it's not about getting more stuff. It's about having the freedom to make almost any decision you want," says T. Harv Eker, author of Secrets of the Millionaire Mind. Wealth means you can send your child to any school or leave a job you don't like.

According to the Australian Bureau of Statistics, more people are living the good life than ever before: more than a million households boast a net value of more than $1 million. Most of our millionaires are self-made.

And the very rich are getting richer. According to the BRW rich list, our top 200 wealthiest people are worth on average $698 million apiece – up more than $10 million on the previous year. If more people are getting richer than ever, why shouldn't you be one of them? Here, four people who have at least a million dollars in liquid assets share the secrets that helped them get there.

1. Educate yourself
Tracy Harvey grew up on welfare and the cycle was repeating itself. A single mother of two children, one of whom was autistic, in 1996 she fled an abusive relationship in Adelaide, relocating to Brisbane, where she hit rock bottom.

She was living on a mattress on the floor of a rented property in a bad suburb. She couldn't afford to get her abscessed tooth fixed and her car was not roadworthy, so she couldn't take her little girl, Hayley, to school.

"I had taken a handful of pills and I wasn't thinking properly," says Harvey. "Hayley put her arms around me and gave me a hug and said 'Mummy, I love you.' It really was my turning point." Realising that she was the only person who could fix her predicament, Harvey enrolled in a university course to study social work. She also started a small business making theatrical costumes to supplement her pension.

"I saved every penny and put it into a fixed managed fund and started to look for a place to buy," she says. The banks knocked her back, but she found a finance firm prepared to loan her the money to buy her first unit, a run-down dump that had been on the market for a few years. Even though it had no kitchen and holes in the walls, moving in was the best day of her life. She paid as much on the mortgage as she could every week.

Gradually the unit was done up; its value doubled. As soon as she saw the market start to move, she knew it was time to buy again. Because she had made extra repayments and her first home had risen in value, Harvey managed to borrow the money for a second and, almost immediately, a third property.

"I was carrying a huge debt," she says. She took out a line of credit and used that to fix up the properties, and rented them out for more than the mortgage repayments. Then she studied for a real-estate licence so that she could manage all of the properties herself.

Today, Harvey is up to her 14th property and is worth around $4 million. She lives in a beautiful house with a pool, but she's still ultra-careful with her money: "We live within our means," she says. "I drive an average car. My only goal is to get my daughter through uni and give both my children the skills and know-how to ensure a comfortable financial future.

"So many of us go through a divorce or lose a job – one minute we can have an income and the next minute we don't. We have to know how to take care of our money."

2. Passion pays off
For 38-year-old Justin Herald, the journey to wealth began one Sunday morning at a church in Sydney's northwest, when he had an altercation with a member of the congregation.

"You have an attitude problem," she told him.

The accusation sparked something in him, and the cheeky then-25-­year-old borrowed $50 from his brother to have four T-shirts printed with the slogans: "I don't have an attitude problem, you have a perception problem" and "When I want your opinion, I'll give it to you".

"It was the best $50 I ever spent," laughs Herald. By the end of the morning he'd sold three of the four T-shirts. With the money he made he had another six printed, then 12, then 24. "That first year the turnover was $980,000," he says.

His business, Attitude Inc, is now a multi- million dollar concern with a wide range of products selling in 3500 stores across Australia. His success was due to clever marketing – the public loved the slogans – but also, he admits, luck. In those days there was very little competition in his sector of the clothing industry, and he was in the right place at the right time.

The media spotlight also helped, with people picking up on Herald's likeable personality and infectious passion for his business: the night of one TV appearance, 187 stores rang to get his products into their shops.

"The consumer liked the bloke behind the product. They really did support me as an individual as well as the brand," he says.

Herald sold the business three years ago, by which time it was turning over $30 million a year, and now spends his time as a motivational speaker. His message: anyone can be financially successful if they set their mind to it. "You have to have a lot of stickability – not everything is going to work the way you plan it."

Still living in Castle Hill with his wife and two children, Herald believes too many successful people become caught up on the trappings of wealth. "I have lived here since I left school at 16," he says. "In this area, you don't forget where you came from."

Money has meant he has been able to indulge his other passion – fast cars – but essentially he says he's the same person he's always been. "Time and freedom and choice are more valuable than having a lot of money in the bank," he says.

3. No guts, no glory
Many of us harbour a dream of becoming our own boss, but rarely spot an opportunity to do so – and this desire is what prompted Annah Stretton, 48, to take a risk.

Twenty years ago, Stretton was working as a product sourcer for a clothing company. She flew around the world, spotted fashion trends, brought samples back to New Zealand and sold redesigned replicas in bulk to department stores. "I was really good at it," she says. "I knew how to pick styles and wheel and deal."

Then when the opportunity arose, Stretton decided to set up her own wholesale clothing business. She converted buildings on her family's farm in Tatuanui, on New Zealand's North Island, and her father guaranteed an overdraft of $24,500. Stretton then got busy contacting business connections and before long, she started getting orders – her first being for 20,000 dresses. "It was a hell of a task for one woman sitting on a farm," says Stretton. "But I never doubted I could do it."

There were times when Stretton couldn't make monthly payments, but she communicated with her creditors, telling them why, and when she'd have the money. "I was very upfront with them," explains Stretton.

By the end of its first year of trading, Stretton Clothing Company had turned over $817,000. However, Stretton was too consumed with the business to enjoy her new-found success. She worked hard, driving around in her Mitsubishi L300, sourcing fabrics and visiting customers. But as the Asian import market started to grow, many of the big retailers began buying through their parent companies rather than independently for the New Zealand market. "I wasn't prepared to follow the same path," says Stretton.

To strengthen her business, she broadened her product line and launched a boutique collection line of clothing, Sam & Libby. Stores were paying a wholesale price of about $33 a garment and selling them for about $150. Eventually, she decided to open her own boutique. "I planned to go into rural areas that were fairly affluent, and offer them services that they would expect from a city store, such as a quality tailor and exciting visuals."

Within two years, she had seven stores. Today, there are 32 Annah S. and Annah Stretton stores in New Zealand, her company exports to around 150 boutiques throughout the world and generates over $8.17 million in revenue a year. As her business grew, so did Stretton's public profile and she started writing a monthly column in Her Business magazine. One day the editor of the magazine e-mailed her saying the future of the magazine was uncertain, cheekily adding, "You don't want to buy it, do you?"

Stretton made the snap decision to do precisely that. "I didn't know much about publishing, but I quickly became passionate about it," says Stretton. Her publishing company now produces three magazines.

Today, the mother of two runs both companies, is heavily involved in charity fundraising and mentors women on how to succeed in business. Stretton's top tip: "If you don't love what you are doing – get out and find something you do!"

4. Set your sights on where you're going
At the age of 40, Paul Counsel from Leederville in Western Australia hardly seemed on the road to wealth. A potter and ceramics artist, he was used to scraping by on whatever work was on offer. Then in 1994 he was invited to a major art exhibition in Perth, where he exhibited 40 beautiful pieces. The show was a success, but still he only sold seven, coming out with just $1500 – not including the cost of the materials.

"I thought, 'Hang on, I want be wealthy'," Counsel recalls.

Thinking like a millionaire is a crucial first step to becoming one. "Most people retire financial underachievers," he says. "You have to see the world differently from the way other people see the world." Counsel borrowed enough money for a deposit on a house, fixed it up and invested the money he made in the share market. In just three years and eight months he'd made his first million.

What counts most, he says, is mindset: freeing yourself from society's conditioning and becoming economi­cally and personally free.

"As soon as we earn an income, we're encouraged to buy things we can't afford," says Counsel. "Credit and buy-now-pay-later schemes lull us into a life of debt servicing rather than experiencing the freedom that income should provide." Today he has more money than he'd like to mention, but still lives in the same Californian bungalow in the suburbs and shuns the trappings of luxury that so many of us aspire to. "My neighbours don't have a clue how much money I have," he says. "Everybody teases me about my Hyundai car… but it's bloody comfortable."

Written by Helen Signy and Sarah Etchells. This article first appeared in Reader’s Digest. For more of what you love from the world’s best-loved magazine, here’s our best subscription offer.