Millionaires just inherited their money. All they do is drive their brand-new cars to the golf course while the rest of us slave away. Those evil rich people.
We’ve all heard statements like that about millionaires, right? Maybe from some politician making the rounds on cable news or your bitter uncle after one drink too many.
But what if everything we think about millionaires is all wrong? What if the mental picture we’ve created in our heads about millionaires and their lifestyles is really just fiction?
The Ramsey Solutions research team conducted the largest survey of millionaires ever done, called The National Study of Millionaires. Our team talked to more than 10,000 millionaires so we could finally get a clear picture of what a real millionaire looks like and what it takes to reach a seven-figure net worth.
And guess what? Many of our culture’s beliefs about how millionaires got their money are just flat-out wrong. Let’s bust through some of the most common millionaire myths so you can discover the truth: that anyone in America today can become a millionaire—including you!
Millionaire Myth #1: Millionaires just inherited their wealth.
This might be the most common millionaire myth out there. Many people want to think millionaires are just a bunch of trust fund babies sitting back and coasting by on old money. While that image of millionaires is something you might see on some dumb television show, it’s simply not reality.
Here are the facts: Nearly 8 out of 10 (79%) millionaires received no inheritance at all.1 That’s right—the vast majority of millionaires never received a penny from their parents and are first-generation millionaires who come from middle class or lower-middle class families.
Market chaos, inflation, your future—work with a pro to navigate this stuff.
The only thing most millionaires inherited from Mom and Dad was a strong work ethic and a fierce determination to reach their goals.
Millionaire Myth #2: Millionaires took big risks with money to get rich quick.
Take a wild guess at how most millionaires reached millionaire status. It wasn’t single stocks. It wasn’t getting in on the ground floor of their buddy’s exciting new “investment opportunity” (which probably never got off the ground). And it definitely wasn’t through cryptocurrency.
Ready for the answer? The number one contributing factor to their high net worth was investing in retirement plans.2 That’s right! Most millionaires used their 401(k) and IRA to build their wealth. It’s not flashy or fancy, but it’s tried and true—if you invest 15% of your gross income into tax-advantaged accounts over 25, 30 or 40 years, you will become a millionaire!
And speaking of “time,” you’re going to need time to become a millionaire! The average millionaire hits the $1-million mark at 49 years old after decades of working, saving and investing.3 So, if you thought most millionaires struck gold or won the lottery, think again. Building wealth is more like cooking with a crockpot than using a microwave—it takes more time, but the end result is much more delicious and satisfying!
We found that a special group of millionaires we call Baby Steps Millionaires— folks who followed the 7 Baby Steps to get out debt and build wealth—reached the million-dollar mark in 20 years or less from the very beginning of their journey.
On average, Baby Steps Millionaires took about two-and-a-half to three years to finish Baby Steps 1–3 (which includes getting out of debt and building an emergency fund). And then another 17 years or less to complete Baby Steps 4–7 (this phase includes investing 15% for retirement and paying off the house early) and reach a million-dollar net worth. This process has worked for millions of Americans all over the country, and it can work for you too!
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Millionaire Myth #3: Millionaires went to prestigious private schools.
News flash! You don’t have to go to Harvard or some fancy private (expensive) school to become a millionaire. Our research found that only a handful of millionaires got their degrees from Ivy League schools. Most millionaires (62%) actually graduated from public state schools.4 And here’s another fun fact: 1 out of 10 millionaires (10%) never graduated from college at all.5
While a college degree is a worthwhile goal (88% of millionaires graduated with a bachelor’s degree, compared to only 33% of the general population), don’t think for a second that a piece of paper is your golden ticket to success or building wealth.6
The truth is, millionaires come from all kinds of educational backgrounds. No matter what school you went to, you control your destiny. The path to a million-dollar net worth is available to anyone and everyone—no matter who your alma mater is!
Millionaire Myth #4: Millionaires got their net worth because they have high-paying jobs.
If we asked you to guess which careers were most likely to produce millionaires, you’d probably have doctors, business owners or senior executives on the top your list. After all, those jobs come with pretty big paychecks (which certainly doesn’t hurt). But surprise—none of those jobs made the top of the list!
When we asked those 10,000 millionaires what they did for a living, the top three answers were engineer, accountant and teacher.7 That’s right! Even though teachers are criminally underpaid, teaching is still one of the most common professions among millionaires. Maybe teachers understand better than most people how important it is to work hard and plan ahead with a long-term view.
Here are the cold, hard facts: Almost 7 out of 10 millionaires (69%) did not average $100,000 or more in household income per year—and (get this) one-third of millionaires never had a six-figure household income in their careers.8
When it comes to becoming a millionaire, it’s not about how much you make—it’s what you do with what you have that matters most.
Millionaire Myth #5: Millionaires live lavish lifestyles.
A lot of folks have this image in their head of what a millionaire looks like. They drive around in fancy sports cars. They wear the latest designer clothes. They eat at five-star restaurants every night. We hate to burst your bubble (actually, that’s a lie—we kind of enjoy it!), but most millionaires look more like your unassuming next-door neighbor than that fantasy we’ve created in our minds.
What do millionaires drive? The two most popular makes of cars among millionaires are Toyota and Honda, with nearly one-third of all millionaires (31%) saying they drive one of those brands.9
Do millionaires “wear their money”? Nope! The millionaires in our research said they spend an average of $117 per month on clothes.10 Meanwhile, the Bureau of Labor Statistics reports that the average American household spends $146 each month.11
Are millionaires eating steak, lobster and caviar every night? If they are, they must be getting a great deal somewhere, because the average millionaire spends less than $200 each month at restaurants.12 That’s less than the median American household, which spends about $265 eating out each month according to the Bureau of Labor Statistics.13
Here's the thing about millionaires: Many of them are simple, salt-of-the-earth folks who stay away from debt, live on less than they make, and save for their future. They developed habits that helped them build wealth over time, and those same habits are what also help them maintain their wealth.
Millionaire Myth #6: Millionaires built their wealth all by themselves.
It’s important to remember that building wealth isn’t a solo sport. Millionaires recognize that they don’t have all the answers—and they probably never will. That’s why most of them are lifelong learners who constantly seek wisdom and knowledge wherever they can find it.
Whether it’s reaching out to a mentor or setting an appointment with a professional, when they have questions about something they don’t fully understand, they’re not afraid to get help finding the answer.
That’s probably why 68% of millionaires said they used a financial advisor to help them achieve their net worth.14 And the truth is, you don’t have to be a millionaire to get help from a financial advisor—you can start working with an advisor wherever you are on your financial journey.
Our SmartVestor program can connect you with financial advisors and investment professionals in your area who can help answer your questions about investing and building wealth.
This article provides general guidelines about investing topics. Your situation may be unique. If you have questions, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros.