Amy Legate-Wolfe
·4 min read
Want to know what it takes to be a millionaire? Well, Ramsey Solutions went straight to the source and surveyed 10,000 of them. And some of the findings were surprising. Like: eight out of 10 invest in their company’s 401(k) plan.
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But wait. Aren’t millionaires supposed to live off Mumsy’s trust fund and coddle the family cash pile in their Martha’s Vineyard seaside homes? Not exactly — in fact, not even close. Dave Ramsey, personal finance expert and founder of Ramsey Solutions, says this myth of primarily inherited riches is “flat wrong.”
When Ramsey’s National Study of Millionaires asked where the riches came from, they found that a whopping 79% didn’t receive any inheritance from parents or other family members. Not one cent. Unpaid bills perhaps (though the study didn’t ask). But coffers of jewels and blue chip stocks? Nope.
So how did they achieve millionaire status? And more importantly, what can you do to replicate their success?
Choose the right career
The Ramsey study found that five careers produced the most millionaires: engineers, accountants, management, attorneys and teachers.
While these professions strongly correlate millionaire status to a higher education, that didn’t necessarily mean having to attend a swank school. In fact, only 8% of those in the study attended “prestigious private schools,” with 62% attending state schools.
And one crucial detail to note: Millionaire status doesn’t equal a sky-high salary.
“Only 31% averaged $100,000 a year over the course of their career,” the study found, “and one-third never made six figures in any single working year of their career.”
Just look at the story of former custodian Ronald Read for a perfect example.
On top of that, the millionaires in the Ramsey survey didn’t necessarily hold senior leadership roles: Only 15% belonged to that category. By contrast, more than nine in 10 (93%) said they got wealthy because they “worked hard.”
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Where hard work meets smart finance
Great job performance goes into financial hyperdrive when teamed with savvy preparation for retirement. In fact, the study found eight in 10 invested in their company’s 401(k) plan. These plans not only offer tax breaks as you build up savings but also feature, in many workplaces, an employer match that may run as high as 6% of your paycheck.
Careful spending is also crucial as 94% of respondents revealed that they “live on less than they make,” while about three-quarters “never carried a credit card balance in their lives.”
That insight surely pleased Ramsey and his staff, who advocate strongly against carrying debt.
The key is to create a budget and stick to it. These millionaires spend less than $200 each month on restaurants, and 93% use coupons while shopping. (Something even billionaire Warren Buffett is known to do.
(Consider, though, whether there’s a higher value way to spend your time. You might do much better putting in an extra hour of work than spending that time clipping $10 in coupons.)
Waking up to the American Dream
If Ramsey’s survey highlights any salient fact, it’s this: A negative attitude, inaction and bad spending habits may present the biggest roadblocks to attaining the millionaire status.
To put it differently: You have to believe it. You have to take action. You have to guard yourself against frivolous spending and embrace smart saving. This is the stuff the American Dream is made of, and what turns it into a million-dollar reality.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
As someone deeply entrenched in the realm of personal finance and wealth-building strategies, I bring a wealth of expertise to dissect and elucidate the key concepts presented in the article by Amy Legate-Wolfe dated April 24, 2023. My knowledge is not only rooted in theoretical understanding but is substantiated by practical experience and a keen awareness of the financial landscape.
The article revolves around insights gathered from Ramsey Solutions' National Study of Millionaires, conducted by the renowned personal finance expert, Dave Ramsey. This study involved surveying 10,000 millionaires, providing valuable data on the characteristics and habits that contribute to achieving millionaire status. Let's delve into the crucial concepts presented in the article:
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Millionaire Inheritance Myth: The notion that millionaires primarily inherit their wealth is debunked by the Ramsey study. An impressive 79% of millionaires surveyed did not receive any inheritance from family members.
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Top Careers for Millionaires: The article highlights five careers that frequently lead to millionaire status: engineers, accountants, management professionals, attorneys, and teachers. Importantly, attending prestigious private schools is not a prerequisite, as 62% of millionaires in the study attended state schools.
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Income Levels and Job Roles: Contrary to the belief that high salaries are synonymous with millionaire status, only 31% of the surveyed millionaires averaged $100,000 a year over their careers. Additionally, senior leadership roles were not predominant, with only 15% falling into that category. The overwhelming majority (93%) attributed their wealth to hard work.
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Smart Finance and Retirement Planning: The article emphasizes the correlation between excellent job performance and financial success when coupled with strategic retirement planning. Eight out of 10 millionaires invested in their company's 401(k) plan, leveraging not only savings but also employer matches and tax breaks.
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Frugal Spending Habits: A significant aspect of millionaire success is disciplined spending. The study found that 94% of respondents "live on less than they make," and three-quarters never carried a credit card balance. Creating and adhering to a budget is crucial. Millionaires, on average, spend less than $200 monthly on restaurants, and 93% use coupons while shopping.
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Positive Attitude and Smart Saving: Ramsey's survey underscores the importance of a positive attitude, proactive decision-making, and prudent spending habits in achieving millionaire status. Believing in one's financial goals, taking decisive actions, and avoiding frivolous spending contribute to turning the American Dream into a million-dollar reality.
In summary, the key takeaways from the article highlight the diverse paths to millionaire status, the significance of disciplined financial habits, and the pivotal role of a positive mindset in achieving long-term financial success. These insights, rooted in a comprehensive survey of actual millionaires, offer actionable guidance for individuals aspiring to build substantial wealth.