5 Millionaire Myths Broken
If you’ve ever had aspirations to become a millionaire—and let’s face it, who hasn’t? —then you probably have some preconceived notions about how millionaires made their fortunes. You might also believe some of the stereotypes created by Hollywood and the media about how millionaires spend their time and their money. And like most stereotypes, they are mostly untrue. In fact, most of what you probably believe about millionaires is myth-based. If you feel like you could never reach millionaire status, it might be because you believe some of the most popular untruths about the wealthy. Read on to learn some of the most popular millionaire myths and how they’re just that – myths.
Myth #1—They Inherited the Money
Probably the most well-circulated millionaire myth is that they inherited their money. In fact, if you had to guess the percentage of millionaires in the that inherited their money, what would you guess? 50%, 75%? The truth is, only a small percent of millionaires amassed their wealth as family money, an inheritance or bequest. That means most millionaires amassed their fortune through hard work and smart business dealings. This myth is especially discouraging for those who believe it because if you have the belief that the only people who have millions are the ones who come from millions, what’s the use in even trying to become a self-made millionaire? By learning the truth about this myth, there is even more reason to go out there and make your own millions, being encouraged by the fact that so many before you have worked their way to millions, and it wasn’t handed to them on a silver platter like it’s so easy to assume.
Myth #2—They Earn High Salaries in Their Day Jobs
Sure, plenty of people on the millionaire lists are Fortune 500 CEOs and executives, oil tycoons and celebrities. However, a large part of that list is people with everyday jobs who have worked hard and have spent conservatively over the years. They may not have impressive titles or corner offices—in fact they could have served your coffee this morning or could be teaching your children. The point is, this is another false assumption that you can’t be a millionaire if you’re not making six or seven figures in your day job. Depending on their career choice, they may have put in 40-50 years at a company and utilized their retirement benefits to the max, thus retiring a millionaire. Or perhaps they lived frugally for many years and invested their money wisely. There’s no one specific way to become a millionaire, so thinking that your day job doesn’t pay enough isn’t a good enough reason to give up on your aspirations of making it to millionaire status.
Myth #3—They Don’t Pay Taxes
This is another myth that gets a lot of attention from non-millionaires. The myth assumes that because they have access to the best lawyers and accountants, that they can use offshore accounts and other resources to avoid paying taxes altogether. While the wealthy (and anyone who is smart with their money) will of course take the most advantage of the tax structure to make it work to their own advantage, that doesn’t mean they’re doing anything illegal or unethical. In fact, the ultra-wealthy in the United States (known as the “1%”) pay an estimated 40% of the taxes. And depending on any future tax law changes, the number can climb higher than that. Ultimately, no one is above the IRS and arguably the wealthy are scrutinized more heavily than other income brackets. So in short – yes, they absolutely pay taxes!
Myth #4—They Live the High Life Every Day
This myth is most widely perpetuated by Hollywood and the media (specifically social media). There is this idea that for millionaires, every day is spent around the pool sipping expensive champagne, at the golf course, out shopping at designer stores or jet-setting to exotic locations on their private jet. And while that may be the life for some of the most elite celebrity billionaires, the average millionaire is much smarter and more conservative with their money. They get up and go to work like everyone else, because they understand the value of their money since they have worked for every penny—remember that self-made millionaire statistic from above? Sure, they probably take vacations and enjoy nice dinners just like the average person, but it’s not at the scale that the myth leads us to believe. In truth, living frivolously is the opposite of what helps someone become a millionaire so it would make more sense that you won’t see millionaires living the high life, driving luxury cars and living in massive mansions. This separates those who want to remain millionaires from those who could easily squander away a fortune very quickly.
Myth #5—Millionaires Only Associate with Other Millionaires
This myth assumes that millionaires all belong to some secret club, with a handshake and underground meetings. And while for some people who have inherited money, sometimes known as “old money” because it has been handed down through the generations, there may be some truth to this. But the real truth is, you may already associate with millionaires and not even know it. You might be next to them on the train, stuck in the same traffic jam, or even close friends. These millionaires aren’t flashy, don’t flaunt their money, and choose to live a normal life outside of the excesses of some members of the wealthy population. The bottom line is you can’t judge a book by its cover, and millionaires come in all shapes and sizes, from all walks of life, and might be right next door in a typical suburban home with a domestic, reliable vehicle in the driveway.
Now that these popular millionaire myths have been broken, what does that mean for you? That you too could become a millionaire! Looking for a place to start? Read our article on how to become a millionaire The team at ARQ Wealth Advisors are here to help you design your financial plan, contact us here.