This year marks the 25th anniversary of the publication of the landmark book, The Millionaire Next Door. The author Thomas Stanley compiled volumes of data and statistics about millionaires who live in America that defied what many people thought about people who have a two-comma net worth.
This makes now a good time go back and reexamine some of the key findings of the book, as well as some current statistics with regard to millionaires in America.
How Many Millionaires Are There?
According to MillionaireFoundry.com, which publishes statistics about millionaires, there are 18.6 million millionaires in the U.S. today. This represents about 14% of U.S households. It took these millionaires an average of 32 years to reach the millionaire mark and 80 percent of them didn’t reach millionaire status until they were 50 years of age or over.
The median wealth in the U.S. is $65,904, which means that a millionaire household is worth about 1,500 times more than the median U.S. household.
According to The Millionaire Next Door, most American millionaires came from low- to middle-income families. In other words, they weren’t born with a silver spoon in their mouth — instead, they worked hard, saved their money and invested wisely. In fact, millionaires save about 25% of their income on average.
Here are a few more common characteristics of millionaire household, according to the book:
- Most millionaires have a college degree and are still in their first marriage.
- More than half of all millionaires own a business and work at least 50 hours per week.
- About two-thirds of millionaires work with a financial planner to help them build wealth.
- About half of the investable assets of millionaire households are held in stocks.
- Most millionaires create and live by a household budget, which means they live beneath their means.
How to Become A Millionaire
MillionaireFoundry.com outlines a simple four-step process for becoming a millionaire. While the process itself might be simple, it’s not necessarily easy.
- Lower your burn rate. In other words, save more money. As noted above, millionaires save an average of about 25% of their income. Saving more doesn’t necessarily mean you have to live a life of frugality. The key is creating a budget that allows you to track where your money is going each month so you can keep your spending under control.
- Maximize the value of “you.” In other words, advance your career. You, yourself, are your most valuable wealth-generating asset, and your income is tied directly to the value you are able to create for others. The best way to advance your career and thus increase your income is to identify which unique skills and talents you can leverage to create value for others.
- Build your wealth generating machine. In other words, invest and grow your assets. MillionaireFoundry.com likens a wealth generating machine to a personal ATM. This is a repeatable investing approach, operating within your risk tolerance and with your investing timeframe in mind, that produces a steady return on investment over the long term. The goal is to build wealth steadily over time, not to try to hit it big on a “secret” stock tip or get-rich-quick scheme.
- Create a wealth success plan. This step speaks for itself. Many people say they want to become a millionaire or achieve some other financial goal, but they don’t have a formal, written plan for achieving their goal. As the saying goes, a goal without a plan is just a wish. If you don’t currently have a wealth success plan, taking the time now to create one would be a good first step on your road to becoming a millionaire.
Get Started Now
It’s never too late to get started on the journey to becoming a millionaire. Give us a call if you’d like to talk about these and other millionaire strategies in more detail.