I recall reading, long ago, a book entitled “The Millionaire Next Door”. It wasn’t so much a “how to” book as a study of characteristics common to most millionaires. As I best recall, they were:
- Contrary to popular belief, most millionaires didn’t inherit anything.
- Most millionaires had their own businesses, and most of their wealth was in their business, not in the bank.
- Virtually every millionaire lived substantially below his/her means. This is probably the most common and perhaps most important factor among them. If he/she could afford a $500,000 house, he/she would buy a $200,000 house or less. They did not live in ritzy neighborhoods. They drove older cars. They rarely ate out or went on vacation, and when they did, it was always modest in scope. They did not spend much on clothing.
- Most were religious and observant.
- Almost none ever divorced. (Divorce is the #1 financial wrecker) Almost all had the same spouse through life.
- Most were charitably generous.
- Most were quite happy with their lives, but the happiness was in making their businesses work, and in their families, not in their wealth.
- Most never think about wealth as such.
- Of those who were not in their own business, most were not high earners.
- Most of their spouses were also engaged in their business in some way as well, even if only in an advisory or supportive role. But their spouses knew what they were doing and how it all worked, and both were “on the same page” when it came to life tasks and lifestyle.
- Most were reasonably well educated, but not lavishly so. Some were self-educated.
Interestingly, the authors found no correllation between high earnings and wealth. People with big earnings can waste it just as readily as someone with lower earnings, and far and away most do.
I can’t remember the percentage of millionaires in the country, and it has undoubtedly changed now because of inflation. But it wasn’t very high…maybe 5-10%. The interesting thing, though, was how unlikely we are to guess who is a millionaire and who isn’t. That’s why the book was entitled the way it was. We all know millionaires, we just don’t know that they’re millionaires. We think they are just ordinary folks of modest means. Most of the people we think might be millionaires because of the way they live…aren’t.
In my occupation, I run across “secret millionaires” frequently, and I believe that with few exceptions the book’s descriptions are true.
Correction: Just looked it up. About 3% of the population of the U.S. are millionaires.
