Millionaire Next Door

¶ … Millionaire Next Door: The Surprising Secrets of America's Wealthy" When most Americans think of millionaires, they most likely conjure images of flamboyant characters leading exciting lifestyles. Most people probably believe that the majority of millionaires inherited their money and that few have put in an honest day's work in their lives. Millionaires are imagined shopping at designer stores and would easily be picked out in a crowd. Moreover, most believe that millionaires drive expensive cars and live in posh homes in upscale neighborhoods.

Common belief is that millionaires would never shop at WalMart or bargain hunt at the local flea market. This is the stereotype image of the American millionaire. Far from it according to Thomas Stanley and William Danko, authors of "The Millionaire Next Door: The Surprising Secrets of America's Wealthy." Their research found that these stereotype images are far from reality.

Stanley and Danko focused on individuals with wealth of at least $1 million and discovered that their lives are quite different from the stereotype American millionaire and moreover, possessed qualities that seem at odds with the average earn and consume culture of most Americans. Their findings reveal that eighty percent of American millionaires are first generation, self-made, with only nineteen percent receiving any outside income from an estate or trust fund and another twenty percent inheriting roughly ten percent of their wealth.

More than fifty percent never inherited even a $1 inheritance and ninety-one percent never received as "much as $1 of the ownership of a family business" (Stanley 1998). According to Stanley and Danko, their findings are not unlike those of Stanley Lebergott in 1892, who reported that eighty-four percent of American millionaires were self-made, first generation. The authors' findings revealed neither luck nor inheritance, nor advanced degrees or intelligence is the key to accumulating wealth, but rather hard work, discipline and sacrifice.

From their research, Stanley and Danko compiled a typical profile of an American millionaire. He's married, lives under his means, in a modest home that he has owned for over twenty-five years and drives an older car. "His neighbors were postal clerks, firemen, and mechanics" (Stanley 1998). They are business owners of small factories, chain stores, and service companies, or they may be "welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors" (Stanley 1998).

Stanley and Danko also discovered that America's millionaires are well educated and hardworking. "Only about one in five are not college graduates...eighteen percent have master's degrees, 8% law degrees, 6% medical degrees, and 6% Ph.D.'s" (Stanley 1998). Although, only seventeen percent attended a private school, fifty-five percent of their children do. Roughly two-thirds work forty-five to fifty-five hour weeks. Moreover, the authors discovered that the average millionaire invests nearly twenty percent of realized yearly income. The members of this group are avid savers of the dollar.

Most have a 'go-to-hell-fund,' meaning that they have "accumulated enough wealth to live without working for ten or more years...with a net worth of $1.6 million could live comfortably for more than twelve years" or longer if they have saved at least fifteen percent of their earned income (Stanley 1998). The authors also discovered that on average, millionaires are six and one-half times wealthier than their non-millionaire neighbors, although, their neighbors outnumber them three to one. The difference is that the millionaires accumulate wealth while their neighbors accumulate possessions.

The results of Stanley and Danko's study certainly puts the old saying 'a penny saved is a penny earned' into perspective. Most Americans live above their means in houses they can.