Are Millionaires Really Who You Think They Are?

When you picture a millionaire, what comes to mind? Maybe someone decked out in designer clothes, driving a brand-new luxury car, or sporting a high-end watch. However, the reality is often quite different. The common image of a millionaire is more myth than fact. For instance, consider the story of a vice president from a trust department who attended a dinner with ten first-generation millionaires. He was baffled by their modest appearance. He believed that millionaires should flaunt expensive suits, watches, and cars. Ironically, he spends more on his suits than most millionaires.

In fact, surveys show that most millionaires never spend thousands on a watch or lease luxury cars. They drive older models and prefer resident country-made vehicles. This contrast was strikingly highlighted by a Texan millionaire who, despite his wealth, drove a ten-year-old car, wore jeans, and lived in a modest house in a lower-middle-class neighborhood. His neighbors, including postal clerks and mechanics, had no idea of his financial success. When meeting his British business partners for the first time, they mistook him for a truck driver, highlighting how appearances can be deceiving.

The phrase "Big Hat No Cattle," coined by wealthy Texans, perfectly captures this phenomenon. It refers to people who look rich but lack real wealth. On the flip side, genuine millionaires often avoid flashy displays of wealth. They focus on accumulating assets rather than flaunting their success. This goes against the grain of popular belief but is a significant part of what sets true millionaires apart from those who merely look the part. The lesson here is clear: don't judge a book by its cover, especially when it comes to assessing someone's wealth.

Who Are the Real Millionaires?

Who exactly is the typical millionaire? It might surprise you to learn that they are often quite different from the flashy, high-spending individuals we see in the media. The average millionaire is a 57-year-old man, married with three children. Around 70% of millionaires earn more than 80% of their household's income. About one in five is retired, and among those who are still working, two-thirds are self-employed. Interestingly, while only 20% of workers are self-employed, they make up two-thirds of the millionaire population. These millionaires often consider themselves entrepreneurs, with many working in professions like welding, pest control, or owning mobile-home parks—businesses you might not typically associate with wealth.

Millionaires often live in homes valued around $320,000 and have been living there for over two decades. This long-term homeownership has allowed them to benefit from significant increases in property value. Their household income typically hovers around $131,000 per year, but their net worth averages a substantial $3.7 million. This wealth accumulation is not due to inheritance; approximately 80% of millionaires are first-generation wealthy.

The secret to their wealth lies in their frugal lifestyle. Most millionaires live well below their means, buying inexpensive suits and resident country made cars. They don't chase after the latest fashion or the newest car models. Instead, they focus on saving and investing their money. They believe in the principle of delayed gratification, where the focus is on long-term financial goals rather than immediate consumption.

Furthermore, these millionaires are meticulous planners. Many of their wives are budget-conscious and play a significant role in managing household finances. Millionaires save a significant portion of their income—often more than 15%—ensuring they have a financial cushion. This frugality extends to their daily habits, from their choice of clothing to their spending on cars and homes.

What Does It Really Mean to Be Wealthy?

When you think of wealth, what comes to mind? For many, the definition of being wealthy includes having an abundance of material possessions—luxurious homes, expensive cars, and high-end gadgets. However, true wealth goes beyond what meets the eye. The real measure of wealth is your net worth, which is the current value of your assets minus your liabilities. This means that wealth isn’t just about what you own but also about what you owe.

To be considered wealthy in the United States, your net worth needs to be at least $1 million. Currently, about 3.5 million households meet this criterion. Interestingly, 95% of millionaires have a net worth between $1 million and $10 million. This range of wealth is attainable by many within a single generation through consistent saving and investing.

True wealth lies in owning appreciable assets rather than high-consumption items. Many people who live a high-consumption lifestyle may not be truly wealthy. They might have little or no investments, appreciable assets, or income-producing assets like stocks, bonds, or private businesses. In contrast, those who are genuinely wealthy derive more satisfaction from owning substantial amounts of these assets.