Hosted By: Wyatt Yates
Money Myth: Millionaires Inherit Their Money
In this episode, I discuss what it means to be a millionaire. How many millionaires are there in the US? How do you determine who is a millionaire? What does the typical millionaire look like? What is their occupation? Where did they go to school? How long did it take them? Can you become a millionaire? Listen to find out.
Calculate your Net Worth. Total up all your assets, everything you own, and then subtract all your liabilities, everything you owe. The number you get is your Net Worth. Then make it a habit of calculating your Net Worth every year to see how you are progressing.
Wyatt Yates Host 00:00 Money doesn't have to be complicated. You can achieve financial independence. This podcast gets to the truth behind the money mess you hear from your grandma, your broke uncle, the latest social media influencers and the so-called money experts. Welcome to Money Myths with your host, wyatt Yates. 00:24 This week's myth is millionaires inherit their money. Now, this is a very common thought process amongst a lot of people, right. In order to be a millionaire, you need to come from a wealthy family. You need to inherit the money, because it's impossible to get ahead. Millionaires are the celebrities you see in the news or on TV. They're the professional athletes. They're the people that go to the prestigious schools like Harvard and Yale and all the private universities. They're people that only work on Wall Street. These are what millionaires are, and you can't achieve it unless something was given to you. So that's the myth, and you've probably heard somebody in your family say it before. 01:17 So first, when we look at this, we got to be on the same page of what a millionaire is, because there's a lot of misconceptions on what a millionaire is. A millionaire isn't somebody that makes a million dollars in a year. When we're talking about a millionaire, we're talking about net worth, and that person's net worth is one million dollars or more. So how do you calculate net worth? Your net worth is all your assets less all your liabilities, equals your net worth. So your assets being everything you own. So that's your house, your investment accounts, the money you have in the bank, your personal assets, your vehicles these are all assets you own. So you're going to take all of that, all of your assets, or everything you own, and then you're going to subtract your liabilities. So your liabilities are your debts, your mortgage on your home, if you have student loan debt or credit card debt any of your debts are going to be liabilities that get subtracted from your total assets. So it's everything you own minus everything you owe equals your net worth, and if that's over a million dollars, you're a millionaire. So that's what we're looking at and what we're talking about when we're talking about millionaires. So, now that we're on the same page and we understand what a millionaire is, how many people are actually millionaires in the United States? So, looking at the global wealth report that's put out every year, there are, as of 2020, 22 million millionaires in the US according to the global wealth report. Yes, you heard that right 22 million millionaires according to the most recent global wealth report, in the United States. So it's not as uncommon as it may seem in your head. There's 22 million people in the US walking around that are millionaires. That's roughly six and a half percent of the total population, or almost 9% of the adult population, are millionaires in the United States. So it's not this unicorn make-belief thing that seems impossible and only the few achieve it. There are 22 million people that are millionaires in the United States. So we understand what a millionaire is. We now know that it's really not that uncommon of a thing. Thank you for watching. Who are these people? Who are these 22 million people? What do they look like? 04:05 So in the last couple years, the largest study of millionaires and survey of millionaires was done by Ramsey Solutions. That surveyed over 10,000 millionaires. So if you know anything of statistics, this is a very large sample size, so the error variance is very minimal in this study. So what did this study find in terms of what the normal millionaire looks like in the United States? Well, first of all, eight out of ten millionaires invest in their company-sponsored retirement plans. When you compare that to participation rates that employers see in their retirement plans, it's significantly higher. So they understand the value of matching contributions on these retirement plans and investing consistently over long periods of time. So that's your average millionaire. Eight out of ten are investing in company-sponsored retirement plans and on average it took them 28 years of saving and investing to reach millionaire status. They're not getting there overnight. They're not inheriting it. They're consistently saving and investing to reach that millionaire status. 05:26 Another big misconception is thinking that it's the celebrities right, or the sports figures that have a high incomes. That are the millionaires, and the survey looked at what is the career for millionaires, what are they doing? You know who are these people and the top five careers four millionaires were in this order with first was engineers, second were accountants or CPAs, third were teachers, fourth were people in management and fifth were attorneys. So these fields are not your celebrities, your actors, your sports figures. These are everyday fields that anybody can get into and if you told your buddy that teachers were the top three in terms of fields, that of people that are millionaires, they would probably laugh at you and they're like no way. But you know all these people in these fields that go into these fields. They have one thing in common you know they're, they understand being disciplined and being able to follow a plan. You know, to be an engineer, to be an accountant or a teacher, somebody in management or to be an attorney, you have to be very disciplined to get your degree to do those fields. So these people all have that discipline in common in the ability to follow a plan. So when you think of it like that, it doesn't seem so unrealistic that these are the top five professions for millionaires. 07:15 Now what did their income look like over their life as they reached millionaire status? Well, one third of all millionaires never even had a six figure income in any single working year that they worked. One third of people that are millionaires never made six figures in a given year. So it's not an income problem. When you think that you got to have a high income to be a millionaire. That just proves it right there. A third of the millionaires so you have over seven million people never made over a hundred thousand dollars in a given year are millionaires, and only 31% of millionaires averaged over a hundred thousand in income per year and with only seven percent averaging over 200,000 per year in income. So it's not necessarily an income thing. It's following a plan, being disciplined, saving and investing over the long term. Now, obviously, you can reach millionaire status faster the more you make, and that's one of the big things I work with my clients on is how do we increase your income in your earnings and really focus on that? But you can do it on the income you're making today. 08:34 Now what about where these people went to school? Because people think you have to go to a very prestigious school if you want to earn a lot of money. So in order to be a millionaire, you need to go to these prestigious schools, whether it be an Ivy League school or a really good private education. So let's look at that. In the study that showed, 79% of millionaires didn't attend a prestigious private school. 62% of them graduated from a public state school and 8% graduated from a community college, and 9% never even graduated college. So it's not your school that affects whether you can be a millionaire or not. 09:18 Now, what about the myth of you have to inherit money? So, obviously a lot of those maybe those are people that inherited money, right? Maybe the people that are investing in their company retirement plans inherited money as well. So let's look at that, because in this study, they specifically asked on what you had inherited in terms of money over your lifetime. 79% of millionaires did not receive an inheritance at all. 79% did not receive an inheritance at all. In fact, only 16% of millionaires have ever received an inheritance of more than $100,000. And only 2% of millionaires say they came from an upper income family, so only 2% identify as coming from a wealthy family. That's what the typical millionaire in the US looks like. This myth couldn't be further from the truth of what a millionaire actually looks like. 10:32 You don't have to inherit money to be a millionaire, and you have to eliminate this negative thinking excuse making this mindset from your thoughts. You have to change how you think and view millionaires, and it is something you can achieve. It is something anybody in the United States can achieve. So you gotta get your financial house in order and you will be able to reach millionaire status. It's just a matter of being disciplined and putting in the work and enough time, and you can achieve it. 11:15 So what's the action step for this week? Well, first, you can never reach a goal or an objective of being a millionaire if you don't know where you currently stand. So you gotta know where you currently stand and you gotta be able to track it. And how you do that is you gotta calculate your net worth. So the action step this week is for you to calculate your net worth. Where are you today? 11:40 So to calculate your net worth, you can probably find a template online. If you're a client of mine, I have in our client dashboard. We have a template that you can use. If you'd like to use my template, send me an email. Go to our website at regatfinancialcom. I'll send you the template. But you can do this just on a sheet of paper too. So how it works is you're just gonna write down all of your assets at the top of a sheet of paper and you're gonna put in a value what's the value of all your assets today? And then, below that, you're gonna put in all your liabilities and how much do you owe today? And then you're gonna take your assets less the liabilities, and that's your net worth. So calculate your net worth so you know where you're starting and start tracking it. I recommend every year you should update that and see how you're progressing and how your net worth is progressing. So if it's negative now, your first goal is to get it to positive and then you just start working, but track your net worth and calculate it every year. So that's your action step for today Figure out where you're at and how far you have to go to reach that millionaire status. 13:00 Thanks for listening. Want to achieve financial independence? Go to regatfinancialcom where you can download my free PDF of the 12 Things to Do to Win With Money, and you can also sign up for my weekly money tips emails where I cover the same tips and tricks and advice I walk all my clients through so you can begin your journey to financial independence. Thank you for watching and listening to this episode of the Money Myths Podcast. Please do me a favor and, if you found this episode interesting, subscribe to the podcast so you can make sure you get all the future episodes. Also, leave a rating and review so you can help us grow this podcast so we can lead more people to financial independence. And, lastly, please take a screenshot of the episode, share it on your social media channels and tag us using at Rugged Financial. We will see you later.