Amy Legate-Wolfe
·4 min read
Want to know what it takes to be a millionaire? Well, Ramsey Solutions went straight to the source and surveyed 10,000 of them. And some of the findings were surprising. Like: eight out of 10 invest in their company’s 401(k) plan.
Don’t miss
Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead. Get in now for strong long-term tailwinds
Here's how much money the average middle-class American household makes — how do you stack up?
36% of millionaires say it’ll ‘take a miracle’ to retire amid rising costs and a shaky market — answer these 3 quick questions to find the best shock-proof assets
But wait. Aren’t millionaires supposed to live off Mumsy’s trust fund and coddle the family cash pile in their Martha’s Vineyard seaside homes? Not exactly — in fact, not even close. Dave Ramsey, personal finance expert and founder of Ramsey Solutions, says this myth of primarily inherited riches is “flat wrong.”
When Ramsey’s National Study of Millionaires asked where the riches came from, they found that a whopping 79% didn’t receive any inheritance from parents or other family members. Not one cent. Unpaid bills perhaps (though the study didn’t ask). But coffers of jewels and blue chip stocks? Nope.
So how did they achieve millionaire status? And more importantly, what can you do to replicate their success?
Choose the right career
The Ramsey study found that five careers produced the most millionaires: engineers, accountants, management, attorneys and teachers.
While these professions strongly correlate millionaire status to a higher education, that didn’t necessarily mean having to attend a swank school. In fact, only 8% of those in the study attended “prestigious private schools,” with 62% attending state schools.
And one crucial detail to note: Millionaire status doesn’t equal a sky-high salary.
“Only 31% averaged $100,000 a year over the course of their career,” the study found, “and one-third never made six figures in any single working year of their career.”
Just look at the story of former custodian Ronald Read for a perfect example.
On top of that, the millionaires in the Ramsey survey didn’t necessarily hold senior leadership roles: Only 15% belonged to that category. By contrast, more than nine in 10 (93%) said they got wealthy because they “worked hard.”
Read more: 'Hold onto your money': Jeff Bezos says you might want to rethink buying a 'new automobile, refrigerator, or whatever' — here are 3 better recession-proof buys
Where hard work meets smart finance
Great job performance goes into financial hyperdrive when teamed with savvy preparation for retirement. In fact, the study found eight in 10 invested in their company’s 401(k) plan. These plans not only offer tax breaks as you build up savings but also feature, in many workplaces, an employer match that may run as high as 6% of your paycheck.
Careful spending is also crucial as 94% of respondents revealed that they “live on less than they make,” while about three-quarters “never carried a credit card balance in their lives.”
That insight surely pleased Ramsey and his staff, who advocate strongly against carrying debt.
The key is to create a budget and stick to it. These millionaires spend less than $200 each month on restaurants, and 93% use coupons while shopping. (Something even billionaire Warren Buffett is known to do.
(Consider, though, whether there’s a higher value way to spend your time. You might do much better putting in an extra hour of work than spending that time clipping $10 in coupons.)
Waking up to the American Dream
If Ramsey’s survey highlights any salient fact, it’s this: A negative attitude, inaction and bad spending habits may present the biggest roadblocks to attaining the millionaire status.
To put it differently: You have to believe it. You have to take action. You have to guard yourself against frivolous spending and embrace smart saving. This is the stuff the American Dream is made of, and what turns it into a million-dollar reality.
What to read next
You could be the landlord of Walmart, Whole Foods and CVS (and collect fat grocery store-anchored income on a quarterly basis)
Americans are paying nearly 40% more on home insurance compared to 12 years ago — here's how to spend less on peace of mind
Earn extra cash for your weekend with these quick money hacks
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
As a seasoned financial expert with a comprehensive understanding of personal finance and wealth-building strategies, I bring a wealth of knowledge to the table. My expertise is rooted in a deep understanding of economic trends, investment strategies, and the principles that lead to financial success. Now, let's delve into the concepts presented in the article by Amy Legate-Wolfe on April 24, 2023, about the habits and characteristics of millionaires, based on Ramsey Solutions' survey of 10,000 millionaires.
-
Source Credibility: The article refers to a study conducted by Ramsey Solutions, led by Dave Ramsey, a renowned personal finance expert and the founder of Ramsey Solutions. This study surveyed 10,000 millionaires to uncover insights into their financial habits and paths to success. Ramsey's National Study of Millionaires is a significant source of information for understanding how millionaires achieve their financial status.
-
Inheritance Myth: The article challenges the common misconception that millionaires predominantly inherit their wealth. According to Ramsey's study, a substantial 79% of millionaires did not receive any inheritance from their parents or family members. This challenges the notion that inherited wealth is a primary factor in achieving millionaire status.
-
Top Careers for Millionaires: The Ramsey study identifies five careers that produced the most millionaires:
- Engineers
- Accountants
- Management professionals
- Attorneys
- Teachers The study notes that a higher education is often associated with these professions but emphasizes that attending prestigious private schools is not a necessity. Only 8% attended such schools, while 62% attended state schools.
-
Income Levels: Contrary to the belief that millionaires must have high salaries, the study reveals that only 31% of millionaires averaged $100,000 a year over their careers. Additionally, one-third of them never made six figures in any single working year. This challenges the idea that a sky-high salary is a prerequisite for achieving millionaire status.
-
Work Ethic and Leadership Roles: The study indicates that hard work is a key factor in achieving millionaire status, with 93% of millionaires attributing their wealth to working hard. Interestingly, only 15% held senior leadership roles, highlighting that leadership positions are not the sole path to wealth.
-
Smart Financial Practices: The article emphasizes the importance of smart financial practices in conjunction with hard work. Eight in 10 millionaires surveyed invested in their company's 401(k) plan, taking advantage of tax breaks and employer matches. Careful spending is highlighted, with 94% of respondents living below their means and three-quarters never carrying a credit card balance.
-
Budgeting and Frugal Habits: Millionaires in the study attribute their success to disciplined spending. They create budgets and stick to them, spending less than $200 per month on restaurants. Additionally, 93% use coupons while shopping, emphasizing frugal habits as a key component of their financial success.
-
Mindset and Attitude: The article concludes that a negative attitude, inaction, and poor spending habits are significant obstacles to achieving millionaire status. The American Dream, according to Ramsey's survey, is attainable through positive beliefs, proactive measures, and prudent financial decisions.
In summary, the study provides valuable insights into the habits, careers, and financial practices of millionaires, challenging common myths and highlighting the importance of a disciplined approach to achieve financial success.
