Want to know what it takes to be a millionaire? Well, Ramsey Solutions went straight to the source and interviewed 10,000 of them. And some of the findings were surprising. Like: eight out of 10 have invested in their company’s 401(k) plan.
But wait. Aren’t millionaires supposed to live off Mumsy’s trust fund and pamper the family’s money in their seaside homes in Martha’s Vineyard? Not exactly – in fact, not even close. Dave Ramsey, personal finance expert and founder of Ramsey Solutions, says this myth of mostly inherited wealth is “flat-out wrong.”
When the Ramsey National Millionaires Study asked where the wealth came from, they found that a whopping 79% had received no inheritance from their parents or other family members. Not a penny. Unpaid bills maybe (although the study didn’t ask). But top-notch jewelry and stock chests? No.
So how did they achieve millionaire status and what can you do to replicate their success?
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Choose the right career
Ramsey’s study found that five careers produced the most millionaires: engineers, accountants, managers, lawyers and teachers.
Although these careers strongly associated millionaire status with a higher education, it did not require attending a fancy school. In fact, only 8% of respondents attended “prestigious private schools,” with 62% attending public schools.
And a crucial detail to note: the status of a millionaire is not synonymous with an exorbitant salary.
“Only 31% have earned an average of $100,000 a year over their career,” the study found, “and a third have never made six figures in a single working year of their career.” .
On top of that, the millionaires in the Ramsey survey weren’t necessarily in leadership positions: only 15% fell into that category. In contrast, more than nine in 10 (93%) said they got rich because they “worked hard.”
When hard work meets smart finance
Excellent job performance goes into financial hyperdrive when paired with savvy preparation for retirement. In fact, the study found that eight out of 10 invest in their company’s 401(k) plan. These plans not only offer tax breaks as you accumulate savings, but also, in many workplaces, an employer match of up to 6% of your salary.
Prudent spending is also crucial, as 94% of respondents said they “live on less than they earn”, while around three-quarters “never had a credit card balance from their life”.
Read more: The Great Escape: Wealthy young professionals earning over $100,000 flee California and New York. Here’s Why and Where They’re Heading
The key is to create a budget and stick to it. These millionaires spend less than $200 per month at restaurants and 93% use coupons when shopping.
(Consider, though, if there’s a more profitable way to spend your time. You might be much better off putting in an extra hour of work than spending that time cutting $10 into coupons.)
Waking up to the American Dream
If Ramsey’s survey highlights one salient fact, it’s this: a negative attitude, inaction, and bad spending habits can present the greatest obstacles to millionaire status.
In other words: you have to believe in it. You must act. You need to protect yourself against frivolous spending and adopt smart savings. This is what the American dream is made of and what makes it 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.
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