Those of us who are personal finance bloggers or blog readers know that it doesn’t necessarily take remarkable luck and good fortune for someone to eventually become a millionaire. Sure, those things are a tremendous help, there is no question about that. However, an individual or family with a more modest level of income and not coming from wealth still has a chance to get there, provided they start saving early enough.
Yahoo! Finance had an article on 7 common millionaire myths that are commonly held. Below are those myths, with my comments:
1) Millionaires Don’t Pay Their Taxes.
As the article states, they already do, and this is not likely to change in the near term. While we all want to be millionaires, there’s no need to hate on those who are, just because they’re millionaires!
2) Millionaires Just Inherited Their Money
Some sure have, but the viewpoint that all have inherited big money is simply not true. Many of them have worked hard for their money. I think that this myth is one that’s perpetuated in order to make people feel better about their own situations. Believe me, I’m no millionaire but I’m not going to stick my head in the sand and think that all millionaires just had the money handed to them. Some did, but not all. Sometimes that’s evident.
3) Millionaires Feel Rich
I’m not a millionaire, so I can’t tell you exactly how they feel. It would be nice to find out from personal experience someday! That said, from what I have seen, I suspect it’s the drive to cover life’s necessary expenses, and a bit of “paranoia” about being broke, that has driven people to get to the point of being wealthy.
4) Millionaires All Have High-Paying Jobs
No, they don’t. Some people are able to live within their means, maximize the savings minus expense gap,invest properly, and avoid big financial and life mistakes. With a mixture of discipline (and in some cases a little luck), there have been innumerable middle-class people who have accumulated wealth.
5) Millionaires All Drive Fancy Cars
Many people became millionaires by living within their means, and being able to discern wants and needs. If I had a million dollars handed to me today, I still wouldn’t buy a new, upscale branded car. Rather, I would buy a reliable used car.
6) Millionaires Hang Around the Golf Course All Day
If they did this, they had better be worth well more than a million dollars! Otherwise, their millionaire status would be gone in a hurry. This myth is a bit strange.
7) Millionaires are Elitists
Some may be, and I’m sure many are out there. I have also seen a few that are outwardly just like the average person, but behind the scenes when you get to know them their hidden snobbery comes out. Also, I have seen a few that are not elitists and frankly, don’t want to spend any money at all if they could help it. I think it’s tough to generalize about the attitudes of millionaires.
What do you think of this list?
I think there is much wisdom to be gained from those that are. Having a mentor, role model, or millionaire teacher are ways to get help and wisdom. In order to absorb that wisdom, I believe one must cut out biases, perceptions, and jealousies, and focus instead on embracing reality.
I also think that some people who want to be wealthy try to act like they’re already there. You know, driving a car that’s really a step or two above what they should be driving, buying a home that’ s not a good fit based on their income and savings, or purchasing designer clothes despite not saving much money.
A buddy of mine who is in his mid-30’s and dating shared with me a story about a woman he went out with who told him about her vacation preferences. She said that when traveling, she preferred to stay in 5-star resorts and get pampered as that was her standard. She just wouldn’t stay in someplace lesser. His take was that this was a huge red flag, and the relationship never got started. Clearly, to him, she was someone with very high tastes that was living well beyond her means. He’s not stingy at all, by the way. He’s a good guy that would be generous to anyone he is with (in case you’re reading, my friend!).
Anyway, I think that outside of those who inherited or got extremely lucky in some way, many people who are millionaires got there because of hard work. In addition, they got there by living within their means, saving a significant percentage of their income, making smart health choices (such as deciding to stop smoking), and being responsible overall in their lives. For example, making smart decisions such as saving enough money in tax-deferred accounts, and only making an IRA withdrawal when the rules are clear. Furthermore, these aren’t necessarily extraordinary income earners, either.
What do you think? Do you agree that these are generally myths? Do you have any examples from your own life to prove or disprove these assertions?
This article was included in the Carnival of Personal Finance at Budgeting in the Fun Stuff