Millionaires don’t necessarily live in a McMansion, drive a flashy car or vacation in Europe every year. In fact, as Thomas Stanley and William Danko told us long ago in their groundbreaking book “The Millionaire Next Door,” a lot of millionaires don’t look wealthy. Instead, they have worked most of their lives, lived below their means, saved their money and invested wisely. Here are seven common myths about millionaires, and how they actually accumulated their wealth.
Most millionaires inherited their money. A 2017 survey from Fidelity Investments found that 88 percent of millionaires are self-made. Only 12 percent inherited significant money (at least 10 percent of their wealth), and most did not grow up in exclusive country club neighborhoods. The majority of millionaires went to college and are married or partnered.
They make their money in high tech. While information technology jobs have produced some overnight millionaires, many people with $1 million or more in the bank are not working in software or social media. Plenty of other businesses also produce millionaires, including insurance, finance, health care and management. Self-employed professionals with advanced degrees, including doctors, dentists, lawyers and accountants, are also well-represented among millionaires.
They’re just lucky. Success requires some risk, and so in some sense self-employed millionaires have rolled the dice and come up winners. But most millionaires don’t win the lottery. They don’t take long-shot gambles. Instead, they examine opportunities and analyze risk, and often test out ideas before they invest a lot of time or money. They examine business opportunities and investment ideas realistically. Then if the odds look good, they aren’t afraid to go for the big win.
They live in luxury. Most millionaires admit that they’re frugal, and many do not live in big mansions or drive luxury cars. Many millionaires live in modest homes they can comfortably afford, and their car is probably not the current model year or subject to a pricey car loan. America’s most celebrated billionaire, Warren Buffett, still famously lives in the Omaha, Nebraska, house that he bought in 1958 for $31,500.
They are all men. Millionaires are actually split pretty evenly between men and women. However, their attitudes about money are a little different. Millionaire men are focused on reducing debt and achieving financial independence, according to a Shullman Research Center survey of millionaires. Women are generally more interested in having enough income for retirement and unexpected emergency expenses. Perhaps that explains why Fidelity recently reported that more women are participating in 401(k) plans at work and contributing at higher rates.
They’re probably Republican. The billionaire Koch brothers fund Republican campaigns. Billionaire George Soros puts his money behind Democratic causes. Political opinions among the rich are actually quite diverse, and income cannot accurately predict political opinions. But slightly more millionaires identify as Democratic than Republican. Hillary Clinton won more votes than Donald Trump among those earning over $200,000 a year, according to CNN exit poll data.
They were the smart ones in school. While most millionaires did go to college, they generally didn’t get top marks. School rewards people who comply with the rules. People who get As are responsible and conscientious. These students grow up to support the system and often do well in their career. But the people who run the system are those who don’t always play by the rules. They sometimes do things differently, succeed in changing the system and go on to lead the next economic boom. While the rules of school are clear, millionaires know that you don’t always earn the biggest paydays by following rules.
Tom Sightings is the author of “You Only Retire Once” and blogs at Sightings at 60.
More from U.S. News