Some Areas of the Country Produce More Millionaires

Here's a series of thoughts from Stop Acting Rich: ...And Start Living Like A Real Millionaire on what areas of the country produce more millionaires (care to guess before you read ahead?):

• As a proportion of their respective populations the Midwest had a higher concentration of these high-net-worth people.
• The concentration of millionaires next door in the Midwest is 1.65 times greater than what is expected given the size of its overall population. The South is also above the norm with a multiple of 1.2, while California and especially the Northeast areas of the United States have less than half the expected number given their overall household population.
• The traditional values of thrift and modesty in spending are still alive in many parts of the Midwest.

He goes on to share a few stories that illustrate this last point -- that people in the Midwest are more likely to control their spending and not worry about appearances/"keeping up with the Joneses." It's this ability that he says allows them to have much higher than expected net worths.

I'd add one thing to this: it's cheaper to live in the Midwest (and the South for that matter) in general (I say in general because it's probably more expensive to live in downtown Chicago -- in the Midwest -- than it is to live in a rural part of New York state.) There's no doubt that some areas of the country cost more to live in and some cost less. Guess which ones cost more: California and the Northeast areas of the United States. Guess which ones cost less: the Midwest and the South. Coincidence? I don't think so.

And the good news is that you don't have to sacrifice quality of life to live in a lower cost-of-living city. In fact, many of the most livable places in America also don't cost that much to live in.

Isn't that nice? ;-)

Comments

[Budgeting in the Fun Stuff]

I'm hoping to be a statistic soonish, lol. I want to help boost the South's ratio. :-)

[meb]

What factor does the family farm play in this? My parents probably paid a total of $100,000 for land that's worth maybe $1.2m today.

[Tyler]

Any idea where he got this data? Net worth data seems a little hard to come by.

Well I guess there is a reason to live in the Midwest.

[jeffinwesternwa]

Cost of living, especially TAXES, cost of education (lots of less expensive shools than the popular left leaning colleges of the NorthEast and Calif areas), a different "work ethic/me ethic/raising children ethic w/ MUCH more less material wants and desires". I've seen these differences living all over the US...

[mysticaltyger]

It's true. California and the Northeast are about being trendy and looking good. The people with the flash usually don't have the cash.

[Mark]

I would definitely agree with this. As a native Kansan, I moved to California eight years ago. It is appalling how cavalier people are in California towards debt--and, particularly, defaulting on debt and the victim mentality. Buy a house above your means? It's not your fault--you are a victim, stick it to the man and don't make your mortgage payments. Live rent free for two years...everyone else is doing it! Get fired? Not your fault...you're a victim. And the Administration will give you 99 weeks of unemployment. Tired of working? Take disability and get free payments for life while pursuing other interests. The amount of self-serving behavior was a big shock. And it is all about appearance in California--best car, best house, hottest wife, et al. And the funny thing is, even though on the superficial surface I may appear to have less, I very likely make more money per year and have far more in savings.

[myfinancialobjectives]

Wow that is really surprising. Someday soon I shall help to boost the north east out in this region:)

[Benjamin Bankruptcy]

In Australia, the cost of living is higher in capital cities but wages tend to be higher to offset for this. Is this not the case in America as well? Well in the private sector at least. If you work for the government wages are the same regardless of where you are

[Rob]

This makes perfect sense having grown up in the Northeast (just outside of NYC in Jersey). Now I live in southwest Ohio. When I go back to visit my parents it always amazes me at the contrast in cars.

In Ohio I see one BMW, Mercedes or Lexus for every 20 standard run of the mill car or truck. It might be even less than that. Back in Jersey just about every other car is a luxury vehicle. How so many people can afford those cars AND their homes (which are much more expensive) just blows my mind.

[My Personal Finance Journey]

I couldn't agree more. Since moving from the South to the Northeast 8 months ago, it is 1) about 40% more expensive to live and 2) the culture is set up in such a way that saving is not as encouraged.

[Tyler]

Because I found the stats a bit shocking I did a bit of research. This data is from the Census Bureau in 2004.

Number of people with a net worth over 1.5 mm divided by the states population...

The top ten...

Washington 0.81%
New York 0.87%
Maryland 0.90%
New Jersey 0.92%
Delaware 0.97%
Wyoming 0.99%
Florida 1.15%
California 1.20%
District of Columbia 1.21%
Massachusetts 1.29%
Connecticut 1.35%

I'd love to hear how he calculated his data.

The Census also breaks it down by real estate holdings, financial, and other.

Real estate is certainly a factor in the calculation, but its not enough to move WI in front of CA.

[Tyler]

I find it interesting that 30% of the top 10 (FL, WY, WA) Dont have state income tax.

[Tyler]

The worst 15 states (states with the least amount of people with over 1.5mm let worth per capita.)

Alaska 0.15%
North Dakota 0.16%
Mississippi 0.28%
Utah 0.33%
South Carolina 0.33%
Idaho 0.36%
Alabama 0.40%
Arkansas 0.40%
Oregon 0.42%
Tennessee 0.42%
Kentucky 0.44%
Michigan 0.47%
Wisconsin 0.47%
New Mexico 0.48%
Texas 0.48%
Oklahoma 0.48%

[Tyler]

I know its the wrong way to look at the data, but at this time I dont want to do the work...

taking the per capita average by region

Highest concentration to lowest
East Coast
West Coast
West
Mid West
South

[Cody]

I compeletey concur with Mark. I am 23 and I have lived in Southern California my whole life. Thankfully, I had my grandfather to look up to. He was a literal example of the millionaire next door; just a good ole' country boy. It amazes me how many friends I have and people I know that still live at home with their parents, but drive the newest, hottest car with a payment of $550 + per month. These same people wear all of the latest designer denim, etc. In California, Southern California anyway, it is all about looking rich, rather than actually having a commendable net worth, let alone money in the bank. Thanks for the great post, FMF. For all the readers who are into this kind of data and information, you should check out Dr. Stanley's blog @ http://www.thomasjstanley.com/blog.php

[FMF]

Tyler --

I don't have the book with me now, but I believe he did his own research study and the data is from it.

[Tyler]

What I find amazing, is how many people make over 5mm a year on the east coast and west coast.

[mysticaltyger]

@BenjaminBankruptcy: Yes, incomes in the high cost areas are higher than average, but they usually don't make up for the higher cost of living. Singles and couples with no kids can usually make up for this by living in smaller houses/apartments. But once kids enter the picture, it's a lot harder to come out ahead.

[jim]

Tyler is correct. The Census data has the # of people with high net worth and the % of millionaires is NOT higher in the midwest. Definitely not. The book is either flat out wrong or he's doing something else with the data like normalizing based on income levels or something.

"many of the most livable places in America also don't cost that much to live in"

That particular "most livable" list specifically uses cost of living, unemployment and income growth to figure their rankings.

"I find it interesting that 30% of the top 10 (FL, WY, WA) Dont have state income tax."

Top 3 tax states are also on that list : Connecticut, New Jersey and New York. Alaska has the lowest taxes but also the lowest ratio of millionaires. So there doesn't seem to be any consistent correlation between taxes levels and the % of millionaires

[Tyler]

Fair point Jim. I agree, no conclusion can be drawn. Although I think Alaska and Hawaii are too much of an outlier to be considered.

[Mike Hunt]

Tyler,

Interesting statistics. Given Alaska only has about 1 million people it means there are only 1500 people worth $1.5M in the state? That's a shockingly low number! You could find more people worth that at any given time at a high end mall in Singapore! Fascinating...

-Mike

[chynalemay]

uh, many of those "millionaires" aren't at the "high end mall", just the wannabees, copycats!

[Mike Hunt]

Given that 1 in 9 people in Singapore are a millionaire, you could swing a cat in any crowded area like a high end mall and hit a number of millionaires.

-Mike

[Eric]

I rather move to Singapore then :)