It wasn’t that long ago that the most popular television show in America was named “Who wants to be a Millionaire?” Before that, in the 1980s, we were enamored with “Lifestyles of the Rich and Famous.” There’s something about the idea of becoming a Millionaire that fascinates us. But what is it about the wealthy that sets them apart from the rest of the population? How are their choices different from the average investor? If you’ve ever read Thomas J. Stanley’s The Millionaire Next Door, you might have a bit of an idea. We recently read The Next Millionaire Next Door by Dr. Stanley’s daughter, Dr. Sarah Stanley Fallow, to learn about new insights into the minds of the next generation of millionaires. If you’re curious about the strategies, discipline, and characteristics of millionaires and how they may have changed over the past 20 years, you’ll want to listen to this episode.
It may be surprising to find out that wealthy people are just like you and me. Most millionaires that were surveyed drive practical cars like Toyotas, Hondas, and Fords that are about 3 years old. Remember millionaire is a term that describes wealth, not income. Your income is what you have today, and wealth is what you have tomorrow. In the U.S. in 2018 there were 11 million households with a net wealth greater than a million dollars. The book separated the wealthy into 3 groups, under accumulators of wealth (UAW’s), average accumulators of wealth (AAW’s), and prodigious accumulators of wealth (PAW’s).
What Are the Most Common Characteristics of the Wealthy?
There are 5 important characteristics of the wealthy.
- Wealthy people are well-disciplined.
- Millionaires are resilient and can persevere.
- Rich people are honest with others.
- Millionaires understand how to get along with others and work well with others.
- 90% surveyed were married and had a supportive spouse. (Divorce decreases wealth by 70%!)
Do you have these characteristics of rich people?
What are Some Success Factors That Lead to Wealth?
There were many interesting findings of the characteristics of millionaires in the book. Not surprisingly, education was critical to the success of most millionaires. 93% of those surveyed had a college degree and 60% had a graduate degree. What may be surprising to some, is that attending a private school or even a top-rated school was not important. The ability to focus is a key factor in the success of the wealthy. Another important characteristic mentioned, is the ability to track spending. The vast majority understand where their money goes.
These are the least important success factors of the wealthy.
- Attending private school
- Attending a top-rated college
- Graduating at the top of the class
- Undertaking an internship in college
How do Millionaires Spend their Time?
It sounds like wealthy people spend their time just as carefully as they spend their money. Wealthy people work more than the average American. They work about 38 hours a week on average, whereas the rest of Americans average 32 hours a week. Millionaires read more too. Books build a framework of knowledge for you to look back upon and analyze. Wealthy spend much less time on social media than the average Joe. They average only 2 hours a week and other Americans average 14 hours a week. Truly rich people also exercise more and spend more time caring for their family. How do you compare to the millionaires around you?
Outline of This Episode
- [6:07] What are the different groups of millionaires?
- [6:29]What are some characteristics of the wealthy?
- [14:08] What are some success factors that lead to wealth?
- [18:52] How do millionaires spend their time?
- [22:06] Where is rich people’s money invested?
- [26:08] What is Chad’s takeaway from the book?
Resources & People Mentioned
- BOOK –The Next Millionaire Next Door by Thomas J. Stanley
- BOOK – The Millionaire Next Door by Thomas J. Stanley
- BOOK – Deep Work by Cal Newport
- Article – Lessons from the Millionaire Next Door
- Article – Top 5 Millionaire Investing Mistakes
- Episode 79
Connect With Chad and Mike
- Connect on Twitter @csmithraleigh@TeamFSINC
- Follow Financial Symmetry on Facebook