The most commonly searched terms around this concept are all about “how to become a millionaire fast” or “how to become a millionaire overnight” or even “how to become a millionaire in 5 years.” Everyone wants to get rich quick… but what Chris Hogan found after interviewing thousands of millionaires in America for his latest book, Everyday Millionaire, is that’s not how most millionaires did it. Read on to learn more about the findings from the millionaire survey, commonly held myths about millionaires, and more.
FFM Book Club Pick: Everyday Millionaire
This quarter’s FFM Book Club Pick was Everyday Millionaire by Chris Hogan. The book is based on the results of The National Study of Millionaires conducted by Ramsey Solutions. It is an update to a study of millionaires conducted 25 years ago by Dr. Thomas Stanley, published in his book, The Millionaire Next Door.
Chris Hogan and a team from Ramsey Solutions undertook the study to see if the findings from 25 years ago still held true decades later… why? Because according to the broader population, becoming a millionaire was becoming more and more difficult. So they set out to find out if this was in fact true, and if the lessons from the original millionaires’ study still held in today’s world.
The book itself is broken into two parts. The first few chapters provide statistics to dispel commonly held millionaire myths. The second half of the book outlines the mindsets and disciplines employed by millionaires today.
How People Think Millionaires Become Millionaires
The whole reason Chris Hogan set out to update the study of millionaires was that the national narrative around how to become a millionaire seemed to be shifting. People didn’t think it was possible for everyday people to get there.
The first three chapters seek to dispel the three biggest myths about millionaires out there:
- The wealthy all inherit their money or you have to be born wealthy
- The wealthy take big risks with their money
- The wealthy have an advantage in education and careers
Millionaire Myth #1: Millionaires Inherit Their Money
Many think the wealthy are just born into it. They come from wealthy families, who leave them their money. If that’s your mentality, you may consider yourself resigned to whatever fate you are born into… but it isn’t true.
Not only do the vast majority of millionaires have no inheritance, but more millionaires also came from lower and lower-middle-class families than from upper-middle and upper-class families.
Millionaire Myth #2: Millionaires Take Big Risks With Their Money or Got Lucky
Another commonly held belief about how to become a millionaire? That millionaires are celebrities who just got lucky, or investors or business owners who risked everything they owned to make it happen.
It turns out, if you ask millionaires how to become a millionaire, they will point to discipline and consistency as the most important factors. And that plays out in the vehicles they used to get there too.
Millionaires say the single most important tool in attaining their net worth was their employer-sponsored retirement plan. And 80% of them used it.
They invested consistently, over time, and the median millionaire achieved a net worth of $1 million by age 50, after working for roughly 2.5 decades.
Millionaire Myth #3: Millionaires Have An Advantage in Education and Careers
Many believe to become a millionaire, you have to go to an Ivy League school and get a big six-figure job. As it turns out, the majority of millionaires did not. 62% of millionaire graduated from public state schools, 8% attended community college, and 9% never graduated college at all.
They do, however, disproportionately value education. 88% of millionaires graduated with a bachelor’s degree compared to 33% of the general population, and 51% of millionaires have a graduate or terminal degree compared to just 12% of the general population.
It’s important to note that these millionaires were frequently the first in their families to go to college – they weren’t Ivy League legacies who got in because their parents went there. Only 25% of millionaires had both parents go to college, and almost half said neither parent went at all.
Furthermore, while education was important, it didn’t mean they earned massive salaries. One-third of millionaires never had a six-figure income in a single working year, and only 31% averaged $100,000 household income a year over their career.
So what did most millionaires do for work to become millionaires? The top three jobs were engineer, accountant and teacher.
How to Become a Millionaire
Are you as shocked by that last fact as I was? My mom is a retired teacher. My mother-in-law is too. I know how underpaid teachers are… the fact that they are among the top three most common careers of millionaires just goes to show that how to become a millionaire has nothing to do with how much you make. It’s all about what you do with the money you make.
After dispelling the commonly held myths about millionaires, Hogan goes on to share the findings from the National Study of Millionaires that speak to the behaviors, characteristics, and mindset of millionaires.
The single biggest thing that sets millionaires apart from the general population? 97% believe they control their own destiny. Millionaires believe in personal responsibility and personal accountability.
While 56% of Americans are losing sleep worrying about their retirement, and 8 out of 10 wish they were investing more toward retirement and wealth-building… millionaires are doing it.
They plan, set goals, and use discipline to follow through on those plans and make them happen. Here are the habits they use to stay disciplined.
The single most important habit to become a millionaire? Live on less than you make, and invest the rest. 94% of millionaires say they live on less than they make vs. 55% of the general population.
They play ahead for big expenses, spend $200 or less per month on restaurants, use coupons, and 85% still use a shopping list when buying groceries. Living within their means also means they don’t use debt.
And not just once they became millionaires – they use less debt than the general population, even before they were millionaires.
And contrary to what social media might have you believe, millionaires live in modest homes, in modest neighborhoods, just like yours and mine. They use and stick to their budgets.
So, if you want to know how to become a millionaire, the answer isn’t as exciting as you might want it to be. It’s simple. It comes from hard work, discipline, living well within your means, and investing over time for your future. It’s the long-term execution that makes it hard for everyone to get there.
Family Finance Mom Book Club
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Related Post: Awesome Finance Books Every Woman Should Read
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