Ten Things Millionaires Won't Tell You

Smart Money lists 10 things millionaires won't tell you as follows:

1. “You may think I’m rich, but I don’t.” A recent survey by Fidelity found 46% of millionaires “do not feel” wealthy.

2. “I shop at Wal-Mart . . .”  Millionaires know what it is to be frugal. About 84% say they spend with a middle-class mindset, according to the AmEx/Harrison survey. That means buying luxury items on sale, hunting for bargains – and even clipping coupons. In fact, affluent households, including those with income above $100,000, tend to be heavier coupon users than those with lower incomes, according to a 2009 study by Nielsen and market research firm Inmar.

3. “. . . but I didn’t get rich by skimping on lattes.” So how do you join the millionaires’ club? One way is to run your own business. That’s how more than a third of all millionaires made their money, according to the AmEx/Harrison survey. Over a third had a professional practice or worked in the corporate world; only 5% inherited their wealth.

4. “I have a concierge for everything.”

5. “You don’t get rich by being nice.”

6. “Taxes are for little people.” Most millionaires do pay taxes. In fact, the top 1% of earners paid about 40% of total federal income taxes collected in 2007, according to the Internal Revenue Service. That said, the wealthy tend to derive a higher portion of their income from dividends and capital gains, which are taxed at lower rates than wages (15% for long-term capital gains vs. 25% for middle-class wages). Also, high-income earners pay Social Security tax only on their first $106,800 of income.

7. “I was a B student.” According to the book "The Millionaire Mind," the median college grade point average for millionaires is 2.9, and the average SAT score is 1190 — hardly Harvard material. In fact, 59% of millionaires attended a state college or university, according to AmEx/Harrison.

8. “Like my Ferrari? It’s a rental.” Why spend $3,000 on a Versace bag that’ll be out of style as soon as next season when you can rent it for $175 a month?

9. “Turns out money can buy happiness.” “There’s no group in America that’s happier than the wealthy,” says Taylor, of the Harrison Group. Roughly 65% of millionaires say that money “created” more happiness for them, he notes.

10. “You worry about the Joneses — I worry about keeping up with the Trumps.” Wealth may go a long way toward creating happiness, but the middle-class rich still can’t afford the life of the billionaire next door — the guy who writes charity checks for $100,000 and retreats to his own private island. “What makes people happy isn’t how much they’re making,” says Glenn Firebaugh, a sociologist at Pennsylvania State University. “It’s how much they’re making relative to their peers.”

I understand that Smart Money wants these pieces to have "shock value" and hence they push the limits a bit. But I believe they still want to be truthful. As such, I think they get some of these right and some wrong. Here's my take on the ten:

1. I think most of the millionaires don't believe they are "rich," at least not in the I-can-do-whatever-I-want-whenever-I-want sense of the word. I think they realize that they are certainly doing well -- and much better than most -- but they also realize that a million dollars isn't going to last 30 years into retirement.

2. Yep, millionaires shop at Walmart -- as well as other places that provide good prices. They didn't get wealthy by spending all their money needlessly (when they could get better prices elsewhere) after all.

3. Now they're bordering on the truth IMO. I don't think millionaires are looking at every single penny and avoiding spending at all costs. But I do think they look for value and are not spending willy nilly all over the place.

4. I think this is untrue. Mega-rich people may have concierges for everything, but the average wealthy person certainly does not.

5. This one is bordering on the truth. I think many wealthy people have gotten where they are by being ruthless, but I also think that just as many have become wealthy while being kind and fair.

6. Yes, wealthy people look for all the legal ways possible to avoid paying taxes. What's wrong with this?

7. As we've discussed, success in life is more about the person and his/her qualities, not what school they went to and what their grades were.

8. I think this is stretching the truth. Most wealthy people do not rent (or own) very many luxury items.

9. We've talked about money and happiness several times before, and my take is that money can make you happier to a point, but after that, more money doesn't increase happiness. That's the research I've seen at least.

10. I think most millionaires don't really "worry" much and certainly aren't concerned with trying to be The Donald. That said, they do have concerns about the economy, future financial issues (like healthcare), and the like.

Ok, so you may be asking, "What makes this guy think he knows more about millionaires than Smart Money?" A few things:

• Personal experience -- with myself, friends, and family that fall into this group.
• Reading about Millionaires -- books, web articles, etc.
• Writing about millionaires -- if you recall, I did several pieces on millionaires not too long ago.

In fact, here are some posts you may want to check out of you want more insight into what the average millionaire is dealing with, what he thinks, what he does, etc.:

• What Real Millionaires Do
• How to Become Wealthy
• Playing Good Defense is the Key to Getting Rich
• One Thing that Sets Wealthy People Apart 
• The Greatest Detriment to Building Wealth 
• How to Be Financially Comfortable 
• What Makes Wealthy People Wealthy 
• The Difference Between the Wealthy and Everyone Else 
• The Most Important Factors Making People Wealthy 
• Rich People Know that Things Don't Satisfy

Comments

[Tyler]

1and 10. are major drivers. Enough is a foreign concept. Worry is the wrong word here, but the desire to win is a major driving factor.

5. Not being nice, and being ruthless are a little different. Rarely does being ruthless pay off in the long run, and being what many call ‘nice’ has equally bad returns.

7. B students and below have less options. Many of them are ‘forced’ to run their own company which leads to number 3. Owning your own firm. People rarely get rich working for someone else. (My definition of rich is higher than $1mm net worth.)

6. taxes- I’m not sure on this. Yes they have accountants that help them minimize the tax bills and make intelligent tax decisions, but their not spending a ton of time on taxes. Time is better spent trying to make more money than saving a few grand on taxes.

[kenyantykoon]

i want to be a multimillionaire and i feel that i am playing the part ie not wasting cash or resources and being entrepreneurial. how knows maybe i will be the billionaire next door :)

[SED]

I think some of these are things that are little known about millionaires and others are things that are untrue about millionaires which makes it a bit confusing.

[BibleDebt]

I think there is a lot of truth to the fact that it doesn't take an A student to become a millionaire. There are a lot more factors to becoming a millionaire including drive, perseverance, persistence, etc. Just cause you know, doesn't mean you will follow-up and do! It also doesn't mean to will see the long term goal.

[Investor Junkie]

I take #5 as not being a pushover or being stepped on. If you let people walk over you than you probably are not wealthy.

[KittyBoarder]

Rich folks value time more than anything else.. So I can see that they use conciege as much as they can to focus on the things they want to do or value to them, and outsource everything else to someone else..
BTW, conciege services are not that expensive.. My company offers it as a benefit to all employees.. $5, I had conciege to get my car registred, cleaned and gas filled....

[LiveCheap]

I read this article over the weekend and had similar thoughts as you outlined.

The concierge thing is way off. I only know two guys that are millionaires and use a concierge. They make high 7 figures or low 8's a year. That is way beyond being a millionaire.

The rental thing about Ferraris and Gucci seemed way off. The people that use these services are pretending to be rich. The guy that makes $150K wants to get a thrill ride for a weekend and why not. But the average millionaire has no want of renting a Ferarri and in most places couldn't even get one.

On Rich and Being Nice. You can get rich by being nice but you better have an amazing talent. This happens all the time in the tech arena. But those are the small minority. Most old line businesses are full of people that are very good at squeezing profit out at others expense. For many, business is like war and the same people will be the nicest people in the world when they aren't working. I'd agree that being ruthless usually catches up with you, but I know a few that made their money that way. I think the bigger differentiatior is that those that rich pay attention to the little things and make sure they favor them in every deal.

[Eugene Krabs]

What? I have a higher SAT score than the typical millionaire? Not that it matters when it comes to net worth, apparently.

I too disagree with #4, but I would like to offer an alternate wording: "It's not what you know, but who you know." Although it typically implies knowledgeable individuals, I believe it can also refer to resources and knowledge bases. For example, I don't REALLY have to know everything there is to know about charities and career building strategies. Rather, I can turn to FMF for more advice to certain things.

If SAT scores really do say anything, it means you don't have to know "everything". You just need to know how to find the answer when you don't know something.

[Old Limey]

Being a millionaire is no big deal any more in parts of the USA that have undergone an explosion in real estate values over the last 30 - 50 years.
You could be just another very ordinary retiree that bought a nice home in a nice neighborhood, had a good job throughout his career, and with the home now paid off and worth well over $1M in many parts of California. If you then add in the value of a highly appreciated IRA or 401K as well as non-IRA savings and you have a net worth well over $1M. You need to have a lot more than that if you want others to judge you as wealthy, rather than just the neighbor next door.

[MasterPo]

Read "The Millionare Next Door".

That says it all.

[Art]

These are the ten things which I believe that millionaire won't tell you:

1. They have failed for the nth times before making their financial flights take-off but they have one habit that made them a millionaire but won't tell you - persistency;
2. They have multiple streams of income;
3. They diversfy their investments;
4. They are risk takers;
5. They purchase their needs but never entertain on their wants;
6. They earn more but spend less;
7. They pay heir own selves first;
8. They are savekaholic;
9. Their exact pleasures in earning more money instead of spending i and;
10.They support worthy causes that will address and alleviate th flights of the poor.

[Art]

These are the ten things which I believe that millionaire won't tell you:

1. They have failed for the nth times before making their financial flights take-off but they have one habit that made them a millionaire but won't tell you - they are persistent;
2. They have multiple streams of income;
3. They diversify their investments;
4. They are risk takers;
5. They purchase their needs but never entertain on their wants;
6. They earn more but spend less;
7. They pay their own selves first;
8. They are savekaholic;
9. They exact pleasures in earning more money instead of spending it and;
10.They support worthy causes that will address and alleviate the flights of the poor.

Posted by: Art | Mar 9, 2010 11:43:11 PM

[basicmoneytips.com]

Certainly an interesting article. The one I think that is most accurate is that they care about how much they are making in relation to their peers. It is obvious that our society is more concerned about the people next door or in our office than about our own status. If there was no one around would it matter how much money you had? Probably not.

[mike m]

may be late to add to this but i have convinced myself that i am rich. the way i prove it to myself is to go to walmart and look at all the stuff i could buy but don't. i know i am rich, there is nothing in walmart that i can't afford :-)