The Millionaire Next Door
A few weeks ago, I shared some ideas for how all of us can increase our income in small but immediate ways, and this week I’d like to talk about wealth.
You see, one of the main misconceptions about wealth is that you can tell who is wealthy: the rich look rich and act rich and live where you think they would live (Kensington, Bel Air, Central Park West). But the reality couldn’t be further from that perception. The vast majority of America’s millionaires (people with NET wealth of $1 million+) live, well, next door, in middle-class or sometimes working-class neighborhoods.
They drive Fords, wear Timex or Seiko watches (I love Seikos!), and have a net wealth that they could live off of for more than 10 years without doing anything. They prioritize financial freedom over conspicuous consumption and live well below their means.
And you know what else? The people we think are wealthy because of what they wear or drive or earn are often as likely to be living paycheck to paycheck as their lower-earning counterparts. A big income means nothing for wealth if you spend what you earn, as so many people do.
So why am I sharing this?
Well, one of the reasons is that wealth is something that so many of us strive for. Some of us may have started our businesses or chosen our career paths to become wealthy and financially independent (PSA: and that’s ok! Money isn’t evil… what people do for it and with it can be, but money is just an object).
But sometimes it’s easy to forget that we can build wealth now, from where we already are, if we are willing to do what the unseen majority of millionaires do: spend less than we earn, not increase our liabilities even when our assets increase, and have a wealth building plan that isn’t over-reliant on any one asset class. We can do all of this whether we are in the early stages of our careers or are already 9-figure unicorns and CEOs.
And the other reason I think it’s important to know about the millionaires next door is so we can burst any bubbles about who we need to become to “look the part” of being rich. Because the thing is, we don’t have to change anything. We can all become millionaires from where we are, living in the same house, wearing the same mix of fast fashion and high fashion (or no fashion!), and cruising in our 2002 Honda Accord if we want to be.
We don’t have to eat at Michelin-starred restaurants, know a lot about wine, summer in the Hamptons, wear designers clothes, or “act rich” in any of the ways Hollywood and society tells us rich people act. In order to be wealthy, to become millionaires — or multi-millionaires — we don’t have to change, but our habits do.