In order for people to believe they can accumulate wealth, Hogan first dispels the six top myths that people believe about wealth. These myths come from his team’s study of 10,000+ “everyday millionaires” hiding in plain sight.

Millionaire Definition: An individual or couple with net worth in excess of a million dollars. (Many people mistakenly believe that being a millionaire means having a million dollars cash sitting in a checking account.)

Disappointed? Sorry, but the typical millionaire does not go around making it rain 100-dollar bills at ritzy restaurants, exclusive boutiques (see photo above), and party like rock stars.

And you’ll learn that high income is not synonymous with wealth. In fact, the very opposite can be the case. Most of my students conflate high income with high wealth – perhaps part of the future 78% that live paycheck to paycheck. On with the myths…

Myth #1: Wealthy People Inherited Their Money

Truth? 79% of millionaires received no inheritance at all. That is, they are first-generation millionaires. Only 16% received an inheritance in excess of $100,000. Only 3% received more than a million dollars as an inheritance.

It should be noted that many who inherited larger sums were already on the road to millionaire status. They probably had parents that emphasized the importance of spending less than you earn, investing the surplus, and avoiding debt.

Myth #2: Wealthy People Are Lucky

Truth? 76% of millionaires believe that anyone in America can become a millionaire with proper discipline and hard work. Wealthy people don’t just wander into wealth the way broke people wander into debt. Building wealth is the result of the diligent practice of long position investing.

This myth reminds me of the fixed mindset of many students who think that the classmates with high grades were just born lucky and blessed with a fairy god mother. Sorry, not the case.

Myth #3: Wealthy People Make Risky Investments

Truth? 79% of millionaires reported that systematic investing through employer-sponsored retirement plans, like matching 401(k) plan, was the chief reason for their becoming millionaires. Slow and steady wins the race.

Again I am reminded of high academic achievers. There may be something to this diligence and hard work thing that teachers are pushing. (Do math to learn math.)

Myth #4: Wealthy People Swing for the Fence to Get Rich Quick

Truth? The typical millionaire hits millionaire status (net worth) at the age of 49 years old. So after decades of disciplined savings — somewhere halfway through the 3rd quarter of their earning life — millionaires are made. Only 5% of everyday millionaires got there in ten years or less.

Analogy time… Swinging for the fences by taking stupid risks usually results in striking out. Wealthy people focus on hitting singles and getting on base. Again, slow and steady wins the race. Think like the tortoise, not the hare.

The key to achieving wealth is to think like the tortoise, not the hare. Click To Tweet

Myth #5: Wealthy People Have Prestigious Private-School Educations

Truth? 79% of the millionaires studied did not attend prestigious private schools like Princeton or Yale. The majority (about 62%) graduated from public universities (like me!). About 8% attended community colleges. And 9% never graduated college at all. Wow!

I think this last statistic speaks to the skills gaps talked about by people like Mike Rowe. Does an individual really even need a college degree these days to achieve financial peace? No, especially not with the Internet and a little creativity.

Myth #6: Wealthy People Have High-Paying Jobs

Truth? A third of millionaires never had household incomes (that’s husband and wife combined) in excess of $100,000. Only 31% average $100,000. And only 7% averaged over $200,000 in household income.

Most millionaires work for companies and not for themselves. Only about one in five owns a business. This is higher than the general population, but it dispels the myth that they risked their life’s savings and got lucky starting multi-million dollar ventures.

The top three professions of millionaires are engineer, accountant, and teacher. (Did you know that teachers are notoriously good savers?)

Takeaways…

There are about 11 million millionaires in America. The typical millionaire is hiding in plain sight. It is often their frugal nature that was a large part of their becoming millionaires.

In fact, lavish displays — also known as “keeping up with the Joneses” — may even be an indicator of low net worth. Using debt to create the appearance of doing well is often why some people assume millionaires must have high-paying jobs and possess stuff they think only wealthy people possess.

As Always…

Thanks for reading! I hope this information provides food for thought. Remember that I am not a certified financial planner, a certified public accountant, a licensed real estate agent, etc. My content is for educational purposes. I am a math educator who happens to have a finance degree. Like they say, never take financial advice from a math teacher! (Do they really say that?)

But you should spend less than you earn, invest the difference, and stay out of debt!

I would so appreciate your sharing my content with anyone you feel could benefit. And if you would like a free exploratory conversation or just want to shoot the breeze about personal finances, call me and leave a message or send a text to 570-731-0425.