Outside studies and my own personal experiences with High and Ultra-high-net-worth Individuals show that real millionaires have very different spending and saving habits than you may have been led to believe.

https://www.youtube.com/watch?v=dioeYHQl8wM

Do High-net-worth Individuals Really Act like the Ballers That We See on Television?

The image that we’ve been taught to believe about High-net-worth Individuals is that they drive fancy cars, only eat at the finest restaurants, and jet set around the world on lavish vacations – but is that reality? Several of my mentors, friends, and former bosses are High or Ultra-High-net-worth Individuals. In my experience, the way they actually think and behave is quite different than the lifestyle that people have been led to believe.

If you’ve ever seen the documentary Becoming Warren Buffett, you likely remember that he eats McDonald’s for breakfast every morning on his way to work. Even more astounding than that terrible health decision is that one of the world’s richest men chooses what he eats depending on how the stock market is doing that morning. If one of the greatest investors of all time pinches pennies when the market is down despite having over $300 billion worth of investments (valued at the end of 2022), what does that say about the people who have overextended their credit lines to buy flashy cars, designer wardrobes, and things they can’t afford?

I may burst a few bubbles dispelling the popular myth of how most High-net-worth Individuals live their lives. Between the study of actual High-net-worth Individuals that led to the book The Millionaire Next Door and my own personal experience dealing with people in the highest income tax brackets, the cold hard truth is that rich people just don’t act as you think in many cases.

It is with the utmost regards that I hope you come to an important understanding that the “keeping up with the Jones’” habits that lead people into debt spirals are not only bad for your credit, but are living life in a way that even truly rich people don’t do. Let’s see if we can dispel a few myths and help those trying to become rich actually learn how to accomplish that goal – rather than just looking rich while going into debt.

“Keeping up with the Jones’ may seem fun, maybe even necessary at times, but it really isn’t,” says Leonard Kim of AdvisorCheck. In doing so, you may be utilizing too much of your earnings into things that do not pay off in the long run. For example, when we ran a poll to see how much people were spending on food for themselves, 8.5 percent of respondents said that they were spending over $1,000 a month on food alone, while 64.1 percent of respondents said they were only spending between $250-$500 a month on food. Taking just that $500-$750 a month in savings from food and investing it could help propel one to become a millionaire in their lifetime,” Leonard continued. 

The Stark Contrast Between Celebrities Versus Self-made Millionaires

Our days are often inundated with celebrities. People see images of celebrities being given the red carpet treatment (quite literally if you’re a fan of awards shows), wearing the latest fashions, or playing with the newest gadgets and believe that those things are the trappings of success. Many believe this is what they should strive for – even if it takes maxing out their credit cards to do so.

I have a secret that the makers of those clothes, gadgets, jewelry and other status-symbol objects don’t want you to know. Most of that is marketing, and more often than not, the celebrities don’t pay for any of it – at least not the A-listers.

I’ve appeared on the Adam Corolla Show a few times, and am fortunate enough to call some of his crew and staff friends of mine. Adam is a well-known car-a-holic who has a car-focused show, which means that he has a large audience of people who look to him for advice on fast, cool, or luxury vehicles. Knowing this, there are several auto dealers and manufacturers who routinely send Adam free high-end cars to drive around town for a month or two.

If he likes the car and mentions it on his show, or people see him driving one around town, the dealers and manufacturers consider it likely that it will help increase their sales. Adam loves fast cars and gets to drive new ones around for free, so both parties see it as a win.

The same goes for A-list movie stars walking the red carpet bejeweled with massive necklaces and bracelets for the Oscars every year. They don’t actually own any of that – the designer dresses and jewelry are loaned to them for the night in the same type of marketing scheme.

Professional athletes, movie stars, and now even YouTube and TikTok celebrities are often given these types of marketing deals when their audience or fan base grows to a certain level. Long before the term “influencer” became so popular that it was a job aspiration for teens, high-end clothing and accessory brands were choosing celebrities to give free stuff so that mainstream America would think their brand was what they needed to have. The ones that end up purchasing these things on their own sometimes do end up facing bankruptcy as well. 

What the Detailed and In-Depth Studies of Actual American Millionaires Revealed

There’s a great meme going around social media (if you’re into the life and success hacking types of accounts) that outlines how Lamborghini doesn't create television ads because their customers aren’t sitting around watching television. While those who complain about successful people rather than trying to build their own success would have you believe that all wealthy people are trust fund babies whose birth lucked them into riches, the opposite is true.

Published in 1996, The Millionaire Next Door was the product of several decades’ worth of study and over 500 in-person interviews with actual American millionaires by authors Thomas Stanley and William Danko. They found that over 80 percent of America’s millionaires were self-made and that the majority of them lived a middle-class life of frugality. A large portion of them was self-employed and owned some type of blue-collar business, and their paths to wealth were not paved by exorbitantly high paychecks. Rather, the majority of them were simply good savers and investors who knew how to live within their means.

Most of them preferred used domestic cars that had been well-maintained and that they could buy with cash rather than a brand-new flashy car that would require leasing or a car loan. If it doesn’t make sense to you that a High-net-worth Individual would worry about a car loan, then you truly don’t understand how rich people think about money.

The authors separated the millionaires that they encountered into two groups: Prodigious Accumulators of Wealth and Under Accumulators of Wealth. The Prodigious Accumulators of Wealth were dedicated to creating and sticking to their budgets, spending eight hours per week doing their financial planning on average.

This group also saved and invested approximately 15 percent of their monthly income, lived in homes that cost less than $300,000, and only had about 30 percent of their wealth invested in the stock market. These were people who earned their money through work, perseverance, and dedication to making their money work for them rather than throwing it away on the trappings of success.

The Under Accumulators of Wealth encountered by the authors were often doctors or professional-class workers who had high incomes but far more exorbitant spending. Many in this group felt that they had to spend more on luxury items to maintain their professional image, which put them far behind their Prodigious Accumulators of Wealth counterparts.

Their studies led the authors to come up with a simple formula to determine if someone was meeting their full financial potential regarding saving and investing: multiply your pre-tax income by your age and then divide the result by 10. If this number is above your current net worth, you are an Under Accumulator of Wealth. If your net worth is above that, however, you are in the Prodigious Accumulator of Wealth category.

The authors found that 55% of actual millionaires didn’t attribute their wealth to “striking it rich,” hitting the lottery, or high incomes. Rather, their wealth had been accumulated by simply living a frugal lifestyle, setting budgets and sticking within them, and investing their money wisely. Many would practice what they called “paying themselves first” by taking a certain percentage of their monthly income and investing it before anything could be spent. By implementing this false scarcity, they created a process in which their money was invested and “out of mind” before it could be wasted.

You may be thinking that a book that was written 20 years ago based on studies that were conducted over three decades doesn’t have much bearing on how high and Ultra High net-worth Individuals think and act today. As I mentioned at the outset of this article, however, my personal experience with people in these wealth brackets aligns perfectly with their findings.

To help you understand how self-made millionaires who aren’t celebrities actually see work, money, and status symbols, I’m going to outline how a few of my personal acquaintances live their lives despite being wealthy.

What the Lives of a Few High-Net-worth and Ultra-High-Net Worth Individuals Looks Like to Others (And What it Looks Like Behind the Scenes)

The Owner of an Infamous Nightclub in Austin, Texas

My first job in college was as a bouncer at a nightclub on the infamous Sixth Street in Austin. The owner that I worked for owned several of the most popular bars and nightclubs on the street that is famous for partying college kids. Every once in a while I would have to escort him to pick up or drop off cash between them. He was not a big man, and since he often had large amounts of cash on him, he had developed the strategy and lifestyle to never give the appearance that he did.

The first night that I had to accompany him, I was asked to go out front and wait for him to arrive. As a newbie who still had the mental image that someone so rich would arrive in a Bentley sporting a $3,000 suit, I didn’t even know that it was him when he pulled up in a 10-year-old quarter-ton pickup truck that had seen far better days. He stepped out wearing shorts, a t-shirt, and beaten-up tennis shoes, pointed at me, and asked if I was his escort. I responded yes, and he started walking at a brisk pace while waving me on to follow him.

On the walk to the first stop, I made a comment that I now realize was boneheaded about his truck – something along the lines of asking about a bumper sticker that says, “my other car is a Ferrari.” He stopped and gave me a look that let me know how stupid of a question it was immediately. His only verbal response was, “that’s only for people who have to show off. I don’t.”

A Marketing CEO Who Sold His Company to One of the Largest Companies in the World

Fast forward a decade and a half and I found myself working in an executive position at the largest marketing firm in the world. My first boss at my first agency and I hit it off immediately, and he brought me into his world, frequently eating lunch and going on outings together. This man and his buddies had started his marketing agency, sold it to a conglomerate for a very large amount of money, and the conglomerate left them onboard to run the place for hefty salaries.

A math wizard and not content with sitting still, this marketing CEO taught himself everything there was to know about the stock market and made more money investing than he did from selling his agency or his CEO's salary. When I finally asked him about how much money he had, his joking answer was, “I’m first-class rich, not private jet rich.”

Something that I’ve learned through my time with self-made millionaires is that many of them never think of themselves as “private jet” rich. That is, of course, unless they get to a point where commercial air travel costs them more than it’s worth due to the hassle of the TSA and being on someone else’s schedule.

This mentor and boss lives in a neighborhood that is certainly nice but is not one that you’d ascribe to someone with that many zeroes and assets to his name. He’s typically found in jeans and a t-shirt that promotes a non-profit to which he’s dedicating his time, but nothing too fancy. He prefers used SUVs to new sports cars, and while we do meet for lunch every few weeks, it’s often burgers rather than caviar and foie gras (although he does insist on paying most times).

The Inconspicuous Blue Collar Bookkeeper Who Saved Every Penny

The most stereotypical “millionaire next door” that I’ve ever met was actually my roommate. There came a time when the marketing company moved me to work in Dallas, but my family had to stay in California. To make it feasible to be able to have a place in both states and buy a plane ticket every week, I subletted a room from an entrepreneur in Dallas who didn’t want to continue paying his full mortgage.

For the first few months that we lived together, I simply thought he was the cheapest man that I’d ever met. He was the type that would drive 30 minutes out of the way to get gas that was $0.10/gallon cheaper (this was in Texas, mind you, where it’s always pretty cheap), shopped at discount grocery stores or Walmart for all of his groceries, drove an older used car, and always complained about the prices of things.

At first, I knew that he was an entrepreneur who had started a type of construction business that offered a new unique service that provided extremely efficient insulation to both new and existing homes. When tax time came around, however, I discovered that he was also the bookkeeper for dozens of successful small businesses and that he even owned a handful of his own.

I thought that I was a hotshot marketing executive making far more than he ever would. After all, he was such a cheapskate; why else would he be so worried about the cost of things all the time?

When we finally had “the talk” about money I discovered that he had spent decades not only prodigiously saving, but also building dozens of different revenue streams through businesses that he started but had other people do the work. He is the epitome of the “millionaire next door,” and the last time I talked to him, he had finally retired and begun traveling South America to enjoy his money (where it goes a lot further).

The Sports Marketing Entrepreneur That You Couldn’t Distinguish in a Crowded Room

Another one of my mentors from my marketing days is a unique combination of my “millionaire next door” roommate and the hotshot executive that I’d thought I was. He was one of my bosses in Dallas and being the son of an Army Non-Commissioned Officer (NCO), we hit it off like old friends immediately (I am a post-9/11 Army vet myself). Growing up in a large family with an Army NCO for a dad and mom that didn’t work, he never had much as a child and resigned himself to learning how to make a lot of money when he grew up. Thankfully, he also taught me quite a bit about what he learned.

Despite being the executive in charge of the marketing campaigns for a handful of Fortune 500 companies, he was most often found wearing jeans and a t-shirt. He has a very gregarious personality, and a level of confidence that isn’t found often. Much like my mentor from the first agency that I worked at, marketing was a minor income stream for this man who had his money-making fingers in dozens of very lucrative pies.

He opened my eyes to the secrets of his success over drinks to celebrate a successful campaign, telling me how he had built his own mini-empire. Much like the secrets divulged in Millionaire Next Door, he had been a prodigious saver who had chosen to start investing as soon as his income allowed him to. Small at first, the amount that he could invest compounded over time as he developed more revenue streams.

Much like my Dallas roommate, he pinched pennies when he was young, and found blue-collar industries in which he could start a profitable enterprise without having to put a lot of money down. In his words, his secret was that the most profitable industries were usually the least sexy, which meant that there wasn’t a lot of competition from the cash-heavy family offices, oil investors, and Finance Bros that Dallas is lousy with.

Since he also had his 9-to-5 marketing job to maintain, the moment he could hand off the daily business needs of the company to someone else to manage, he would. He essentially found a blue-collar industry that he could tap into, started up a new company and brought in the needed staff, won a few contracts, and then hired someone else to manage it. Rinse, wash, and repeat.

By the time I met him, he owned dozens of rental properties, a port-a-potty company, a fencing company, a technology company that made money off the arbitrage between winning contracts in the US and outsourcing them overseas, and a handful of others. Each had someone else running the day-to-day, and each paid him an income every single month.

 If you met him on the street, however, you’d think he was just your average Joe.

How Can You Become a Millionaire Next Door?

There are a few common themes that run between the secrets disclosed in the book, The Millionaire Next Door, and the friends I mentioned above. Firstly, they are people who have an inner drive to always accomplish more. Many of them see money as a sort of game, with dollars accumulated as points on the board. They are constant competitors, but they don’t compete with others – they only compete with themselves.

Secondly, none of them waste money. Ever. Each that I’ve been fortunate to be friends with has one thing that they are willing to splurge on, but only after they’ve reached the threshold at which they feel that they can afford it without jeopardizing their other investments. When they do spend a lot of money, it is only on items that are high quality and they expect will last them at least a decade.

They don’t buy things to look cool, because they know that they don’t have to care what other people think about them. Rather, they buy them as their own sort of congratulation when they feel that they’ve earned it – and they never put it on a credit card unless they are planning on paying it off immediately and accruing the points or miles.

They each also follow the lessons outlined in, Rich Dad, Poor Dad by Robert Kiyosaki, to have their money work for them rather than spending all of their time working for their money. If you spend money on new clothes or a flashy brand-new car, that is a depreciating asset that loses value immediately.

Some people believe that the home that they live in is their best investment, but if you live in it that’s actually a liability for you – and an asset for the bank that owns the mortgage. It’s only truly an investment for you if it’s bringing in income (like a rental property).

Each is also on a constant search for another income stream that they understand and that won’t require much of their time. Nothing overcomplicated that they can’t learn or teach someone else, and nothing that will take up too much of their time.

There are a handful of A-list actors who can make tens of millions of dollars from a single movie, or Silicon Valley billionaires who can dedicate all of their time to one company to strike it rich. But by following my mentors’ example of saving every penny that you can and investing it wisely rather than splurging before you’ve earned it, pretty much anyone has the ability to do exactly what they’ve done – it just takes time and dedication.

Invest Wisely with a Financial Professional on Your Side

Prodigious saving is one element of the secret to becoming a “millionaire next door,” but it’s not the only one. Pinching pennies and saving them under your mattress will only get you so far, especially with inflation and the rising cost of living currently eating away at the value of every dollar that you save. The other side of that secret to success is investing your hard-earned (and saved) money wisely. Thankfully there are plenty of financial professionals who can help you in that department.

Many people worry that a financial advisor may be too expensive for their income level, but they would be surprised to learn how affordable they can be. Some may charge as low as a flat fee of $10 to open up a retirement account. 

Given the outsized returns they can often provide based on how much they can help you learn to grow (and save) your money, they should be considered a very wise investment in and of themselves. A Certified Financial Planner can not only help you determine the best places to invest your money but can also help you determine a budget and needed monthly savings to help you reach your goals.

If you feel like you have the budgeting part covered, there are fee or commission-based financial advisors who can help you find the best places to invest your money to let it work for you. Affordable financial advisors of all types can be found easily through AdvisorCheck.com, where you can look up their background, specialties, contact information, location, history, and even the average account size of their clients.

If your entire life plan is to strike it rich as a celebrity, professional athlete, or Silicon Valley entrepreneur, good luck. For the realistic among us, the path to financial independence and becoming a self-made millionaire is far simpler than you may have been led to believe.

Stop spending money on things that you don’t need, pay off and rip up your credit cards, get a free AdvisorCheck membership and use it to find a good financial advisor who can help you create a budget and/or put you on the path to investing for your future. Just as with everything in life, the goal is attainable if you’re willing to put in the work.

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Written by Robert Patrick Lewis

Fact checked by Billy Quirk

Reviewed by KJ Kim

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