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Drs. Tom Stanley and William Danko, both of SUNY Albany, wrote a seminal study of American millionaire lifestyle and spending habits in 1996. The Millionaire Next Door has had several updates since.
Let’s look a several millionaire (those with net worth of over $1M) facts:
Two thirds of millionaires are self-employed. Typical businesses include contractors, farmers, pest controllers and paving contractors. Where are the doctors?
The average home value of a millionaire is currently $350,000. What? They didn’t make their money on their home?
Most will not receive an inheritance. The average amount millionaires save per year is 20% of net income. Most millionaires make their own financial decisions.
What is the highest amount millionaires have ever spent for a suit? Shoes? A watch?
Stanley and Danko differentiate between under “accumulators of wealth” and “prodigious accumulators of wealth.” Two-thirds of doctors are under accumulators of wealth.
What are the four main worries of under accumulators of wealth? One is “experiencing a significant reduction in income.”
In the video below, Dr. Doug Carlsen takes a close look at two doctors, both will high incomes of $700,000 a year. They both are in their 50s, are married and have several children. Dr. South is an under accumulator of wealth. He has saved $400,000 and his net income is going down. Dr. North is a prodigious accumulator of wealth. He, at the same age and income level of Dr. South, has saved $7.5M. We quickly find out the differences between the two doctors.
The next installment will describe “the aspirationals” and the “glittering rich.”