I’m finally reading The Millionaire Next Door, a book that I’ve been wanting to read for a long time but just never got to it before now for whatever reason. A main premise of the book is that millionaires can be pretty hard to spot because they aren’t necessarily the same people who live in expensive houses and drive luxury cars. The authors have studied how people become wealthy and have discovered that fewer than 20 percent of Americans have inherited 10 percent or more of their wealth.
The rest are self-made millionaires.
They are also typically very frugal and less likely to spend their money on a lot of expensive stuff. That’s not to say that they never do, but the person you see driving around in a high performance car with an expensive suit and an even more expensive watch is probably not the millionaire, doesn’t have a lot of accumulated wealth, and is likely only living paycheck to paycheck to continue keeping up the extravagant lifestyle.
In contrast, the typical millionaire is the regular guy living next door in a modest neighborhood with a ten year old Ford and a wife who clips coupons.
Since this latest recession began, many more Americans are saving and investing their money rather than just spending it on stuff and more stuff. Of course, popular media would have everyone believing that saving more money is an economic disaster, but I think it’s great! Let the economists rant! While a lot of people may still not become millionaires (especially overnight), they will become financially healthier over the long-term.
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