Typical Millionaire according to Danko and Stanley (Millionaire Next Door)

PORTRAIT of a MILLIONAIRE

1. 70% of head of millionaire households make 80% of their household income. Meaning, most wives just stay at home.

2. 1 in 5 of millionaires are retired and 2/3 of those that work are self-employed.

3. 60% of millionaires that are self-employed consider themselves to be entrepreneurs.

4. Many of them have dull businesses: welding contractors, rice farmers, auctioneers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.

5. 50% of millionaires have stay-at-home spouses. The number one occupation of millionaire spouses, if they do work are teachers. Why? For one, it's a low-maintenance occupation. You don't have to dress expensively.

6. Their average household net worth is $3.7 million. Nearly 6% have a net worth of over $10 million. (1990s figure)

7. On average, their total annual realized income is less than 7% of their wealth. That means they only live on less than 7% of their wealth. Further, it means that their income so is so little compared to their wealth. If ever they need to spend all their earn, they can live 14 years without working (100/7).

8. 97% of them are homeowners (Cure number 5 for lean purse in Richest Man in Babylon: Own thy own home). Half of them have lived on the same home for more than twenty years and have enjoyed significant increases in the value of their homes (Buffett is a typical example) .

9. 4/5 of them are first-generation affluent. Meaning, they never received economic outpatient care from their parents. Most of their parents were never affluent.

10. They live well below their means. They wear inexpensive suits and drive American cars. Most don't drive current model year (12.3% drive cars which are 6 years or older). 17.1% of them patronize used cars. Only 1/5 of millionaires lease their cars.

11. Here it is: Millionaire wives are more conservative spenders than the person who brings home the bacon. "I can't get my wife to spend any money"

12. Millionaires are able to save/invest at least 15% of their income (Average is 20%).

13. Millionaires accumulated enough wealth, and are frugal enough, to live more than 10 years without earning any income. One such millionaire has a realized income of just 2% of his wealth. That means he can live 50 years without working, if he lives on all his annual income. But since they save 15% of their income, this will be longer.

14. More millionaires live in a low-profile neighborhood. They have more than 6x the wealth of their neighbors, but they look poorer than them, because they are more frugal.

15. They value education and are fairly well-educated. Many of them hold advanced degrees.18% have master’s degrees, 8 % are law degrees, 6% are medical degrees, and 6% are P.H.D.’s. Though more than half (55%) of their children went to (or are attending) private schools, only 1/6 of them went to private schools.

16. About 2/3 of them work between 45-55 hours a week. Meaning, they aren't lazy. They still work much even though they have reached a level of position that requires little, if at all, work.


Reference:

Stanley, Thomas and Danko, William (1996). The Millionaire Next Door. New York: Pocket Books.