Average Millionaires, Not Outliers
What I'm going to show you now is 44 facts about millionaires that will surprise you. You have this idea of what I will call outlier millionaires — people who are not your average millionaire. What I'm going to show you here are your average, normal millionaires. And if you want to have a nice life, you probably want to be an average millionaire and not one of the outliers, the outliers being somebody who's unusual, not like what's normal. So let's go straight down this list. They're in no particular order — or rather, they're in the order I took my own notes.
Number one: most millionaires live in average income neighborhoods. You might think millionaires live in these really expensive, fancy neighborhoods. Nope. Most millionaires are in regular neighborhoods with regular people. In fact, one third of millionaires live in neighborhoods with below average incomes. That means most millionaires are right up in there with regular people. There's a book called The Millionaire Next Door and another book called Everyday Millionaires, and these highlight that you almost certainly have millionaires living in your neighborhood — and you probably don't even know who they are, because they don't look any different than other people.
How Millionaires Actually Spend
Number three: most millionaires spend less than $200 a month on restaurants and eating out. This is a very helpful statistic to me because it gives you a good threshold. If you're spending more than $200 a month eating out and eating at restaurants, you can categorize that as wasteful spending. It is much cheaper to make your own food and eat at home, and millionaire spending behavior makes this clear. This isn't to say some millionaires don't spend more than that, but the majority of millionaires spend less than $200 a month on restaurants and eating out, because that is something that should be a luxury, done occasionally. It should not be every day that you're buying $10, $20, $30, $50 of food. I worked in corrections — I was a corrections officer making $20,000 a year — and I would blatantly call my coworkers out on how foolish they were being. I'm like, you're making the same money as me. How are you going to this Ruby Tuesday's and getting this $20 meal while making $20,000 a year? I'm bringing in a sandwich because I'm making $20,000 a year. You pissed away a significant amount of your total income today on one meal.
93% of millionaires still use coupons when shopping. That's how they got to be millionaires in the first place — because they are up there using coupons. And 97% of millionaires agree with the statement, "I can control my own destiny." The opposite of that would be believing you don't control your own destiny. This, to me, is what being a millionaire is about: being empowered, being in control of your life, not being a victim, not being helpless. That's what being a millionaire is about to me.
You Don't Need a Big Income
69% of millionaires earn less than a hundred thousand dollars a year. You might have this idea that millionaires earn a whole bunch of money. Nope. Millionaires earn money, invest a significant portion of it, and then spend the smallest amount possible out of what was earned. You don't need to earn a lot to become a millionaire.
Number seven: the top three millionaire professions are engineer, accountant, and teacher. Yes, teacher. Teachers, who are quote "notoriously underpaid" — if you actually look at how much doctors and teachers earn, teachers are more likely to become millionaires. Why? Because doctors get loaded up with debt, and doctors tend to do way more consumption spending. After all, if you're a doctor, do you want to be rolling in like me in some 16-year-old Toyota? And what are your clients going to think if you live in some average value house? Being a millionaire is about spending smart as much as it is about making money.
Let's keep looking at this. A third of millionaires never — never — made more than a hundred thousand dollars in one year. So if you're telling yourself, "I can't be a millionaire, I don't earn enough" — a third of millionaires have never made more than six figures in a year. I've made a quarter million in one year, which is why I know I've got the income down. All I need to do is invest wisely, and I've looked at what works for most millionaires with investing — we'll see that in the stats.
Debt, College, and Business Loans
68% of millionaires never took student loans. That was my first mistake financially — taking student loans. If I had to start over, and for my kids, I'll tell them: absolutely, under no circumstances take student loans. It's borrowing that first dollar that gets you in the cycle of debt. It's just like alcoholism for me. If you don't take the first drink, you can't get drunk. If you don't take that first loan, you can't get in debt.
88% of millionaires have graduated from college. So that means the majority of millionaires go to college and don't take student loans. How? By going to the cheapest college available — one they can live at home for, pay the tuition directly, and/or get a scholarship or cheap in-state rates. And 90% of millionaires have never taken a business loan. I've followed that one myself.
Millionaire Money Habits Over Time
The average millionaire hits $1 million in net worth at age 49. So it's important to realize this: being a millionaire is a long term goal. It's a long term vision, and it's generally not something you want to rush towards.
Number thirteen: most millionaires invest wisely and consistently over time. That's exactly what I've been doing on my Jerry Banfield crypto channel with my dollar cost averaging. I buy with 15% of my income every day, which ends up being, based on what I'm expecting in 2023, $50 a day. I'm not taking big risks. I'm investing wisely and consistently over time.
80% of millionaires come from middle class homes — not from super rich homes or rich parents. And right along with that, 79% of millionaires have never received an inheritance. You would think most millionaires inherited their wealth. Nope. Most millionaires are self made.
80% of millionaires have never bought a car costing more than $50,000. Now think about that. You see these Teslas driving around and all these fancy cars — most people driving them are not millionaires. Most millionaires don't buy cars that cost a lot. That's why they're millionaires. Most millionaires have also never bought a watch costing more than $500, which means the same thing: a lot of the people you see wearing fancy watches are not millionaires. They're dumb spenders, consumption spenders.
97% of millionaires own their own home, with half living in the same home more than 20 years. You buy a home and you stay in it. It costs lots of money to move, so the goal is to buy a very affordable home and then stay in it.
91% of millionaires hold their investment assets for at least a year, which is why, with the Jerry Banfield crypto strategy I've been putting out, I have a mandatory one year holding period for any asset. You pay much less tax that way.
Number twenty: most millionaires own a car rather than lease, and do not have the newest model. Now, on the average age I mentioned — I said before the average millionaire hits $1 million at age 49, and that was from the newest data. Some of these notes come from The Millionaire Next Door, which was done 20 years ago, and the average age back then was 57. Because of inflation, it's gotten much easier to be a millionaire than it was 20 years ago. The average age is now 49, so it's easier than ever to become a millionaire.
Household and Income Stats
Number twenty-two: most millionaires earn more than 80% of the income for their household, with lots of millionaires having a stay at home spouse, or a spouse that just works part time and makes a little bit of money. Only 20% of millionaires are retired, which means 80% are still working. Now this has changed a bit in the last 20 years — going back to the notes from 20 years ago, two thirds of millionaires were self employed, and three quarters of self employed millionaires considered themselves entrepreneurs. In the current environment, going forward, we're going to be seeing even more self employed millionaires.
Number twenty-six: half of millionaires' wives did not even work outside the home, while the top occupation of those that did work was teacher. Again, this was 20 years ago. I imagine working is more common now, although if you consider staying at home, this might be about the same.
The median household taxable income for millionaires is $131,000, while the average income is $247,000. That average is including a lot of outliers who make a whole bunch of money — $10 million a year, $100 million a year, and so on — dragging up the average. You would think that conflicts with the stats before, but this is the average, so the top 10% of millionaires are pulling this way up. Number twenty-eight: less than 15% of millionaires earn more than $500,000 a year, which makes sense with the stats we showed above.
Number twenty-nine: the average millionaire net worth is $3.7 million, with most at $2 million or less. Pretty logical. And here's a very important stat: average income is less than 7% of wealth. We often talk about millionaires without even having a clear definition. What is a millionaire? A millionaire is simply someone who has a net worth of $1 million. That means assets minus liabilities — assets being cash, investments, property value, and so on, minus debt: mortgage, student loans, business loans. A millionaire is someone whose assets minus liabilities equal more than a million dollars. Millionaires generally have a lot of assets compared to how much actual income is earned, and that comes through investing and through owning a home.
First Generation Wealth and Real Freedom
Most millionaires, as we gave more clarity on above, have never received an inheritance. 80% of millionaires are first generation wealthy, meaning their parents were not wealthy. And 80% believe that charity begins at home — by taking care of your loved ones and your family, and then, to me, my friends and community. Even though I'm on the path to millionaire and my net worth is just a little bit below zero — negative $40,000 — I consistently give $20 here, $20 there, which adds up to thousands of dollars a year to people who are homeless. Because charity begins at home and within my neighborhood.
Most millionaires can live without working for 10 plus years. This is called FU money, and this is about eliminating all the stress. I have a friend who just lost his job, and he's all stressed out about money. This is why we want to aim at becoming a millionaire. How does not needing to work for 10 plus years sound? That sounds real good to me. I don't ever want to have to work again. This allows you to do work you love — you can afford to work and not earn any money, doing what you love, and set money up to come in. And most millionaires enjoy six times as much wealth as their neighbors. Again, defying what we would think. We would think millionaires all live in these fancy neighborhoods with fancy cars and fancy houses. Nope.
The Millionaire Next Door Spends Way Below Their Means
Most millionaires have way more wealth than the person living next door to them, even if they look the same. The millionaire is spending way below their means, while the person next door is spending right up to their means.
Eighty percent have college degrees — that's the 2000 stat — with 18 percent having master's degrees, 6 percent PhDs, and so on. So you can see most millionaires do not have an advanced degree. Just a bachelor's degree is good enough. In 95 percent of cases, do not borrow money to get a master's degree like I did. Dumb move if you want to be a millionaire. And 83 percent of millionaires have never attended private elementary or high school — wow — while 55 percent of their kids do.
How Millionaires Work
Two thirds of millionaires work 45 to 55 hours a week. So we're talking a little more than a standard job, and this makes sense with the statistic of most millionaires having their own businesses. When you have your own business, you want to work as much as you can in it. I work as much as I have time for, which for me means less than that. I go to Alcoholics Anonymous every day, I'm a stay-at-home dad in a significant capacity — ask my wife for more data on that — and I do yoga an hour every day. That leaves me about four or five hours to work, six or seven days a week. So I work less than those millionaires do, but if I had more time to work, I would.
Investing Is the Main Difference
This is a key thing if you want to become a millionaire: investing a big percentage of your income every year. This is the main difference between regular people and millionaires. Regular people don't prioritize investing. Millionaires do, and that's the main way net worth gets built. Seventy-nine percent have an investment account, and 20 percent of their wealth is in stocks and similar assets. And here's the key — rarely selling. Every time you sell, you're potentially looking at tax liability, which cuts out your earnings. Another 21 percent of a millionaire's wealth is in their business.
Here's one of the last stats: 80 percent of millionaires have never borrowed money from a friend. And the number of millionaires is growing much faster than the average population. One of the ideal occupations you can have for the future is something that provides services to wealthy people — to millionaires.
It's Easier Than Ever to Become a Millionaire
Now, all of that was 20 years ago. Today, if you look online, there's something like 30 or 40 million millionaires. Millionaires are just blowing up. It's easier than ever to become a millionaire. If you want to see more of how I'm applying these lessons day to day, take a look at my Life playlist, where I share my journey as it happens.