Undercover Millionaire

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Feeling Like a Million Bucks?

According to a study of 10,000 millionaires in the US, 79% did not receive any inheritance. Only 3% of the people interviewed received an inheritance of $1 million or more.

You might think that “millionaire” is a status only held by Richie Rich or the Monopoly Man, but it is more common than you think. Interestingly, 18% of US households had a net worth of at least $1 million, translating to 23.7 million households with millionaires.

Being a millionaire used to be an established measure of success (ask Regis Philbin), and it still is, but it is more achievable than you think.

Who Wants To Be A Millionaire?

TLDR: Spoiler alert, millionaires are not mythical creatures; they walk among us. Roughly 1 in 5 households in the US are worth at least $1 million. Like you, they are painfully normal and with a few small changes in your spending and investing habit, you can join their elite cabal (again, also more boring than you’d expect).

Dollars and Cents

• Millionaires generally aren't business founders. They're engineers, accountants, even teachers. Less than a third (31%) even managed to average a $100,000 income throughout their careers, and a third never made six figures in any year they worked.

• 88% of millionaires hold college degrees, compared to 33% of the general U.S. adult population. Additionally, 52% have earned a master’s degree or higher.

• Nearly 70% of millionaires do not perceive themselves as wealthy, often due to lifestyle expectations and the high cost of living in certain areas.

• Millionaires save an average of 23% of their income, demonstrating a strong commitment to building wealth through disciplined saving habits.

You look like a million bucks. If you’re reading this, you’re either already a millionaire or well on your way. And the crazy thing is that your salary is almost irrelevant to whether you’ll become one or not. It’s just simple habits with a long-term outlook. So put down the scratch-offs and cancel that 12-leg parlay on DraftKings because that isn’t going to make you a millionaire.

Show me your Assets

Looking at how a millionaire’s assets change over time, we can deduce a lot about how most people become millionaires in the first place. These are the top 3 takeaways from the above graph.

1. Your car is not an asset. (Yes, even your CyberTruck)

The second you drive that car off the lot, it drops in value. Every year you keep it, a new model comes out, it drops in value. It requires maintenance, and if it’s a gas-powered car, it needs to be consistently driven, or it will not work as well. Given Uber and self-driving cars, the utility value of owning a car is decreasing over time. To top it all off, even if you drive for a living, the majority of the week, the car is sitting parked, doing nothing.

Wealthy people do not view cars as assets, and those who do typically drive Subarus and drink Monster Energy drinks.

2. Avoid being home poor.

After years of talking to experts on the podcast and fans who wrote in, the biggest problem preventing long-term wealth was paying too high a percentage of income on a mortgage or rent. The reason is because it’s a very high fixed cost that’s difficult to shake. Most other decisions are typically easy to reverse.

Simply put, you should not spend more than 30% of your after-tax take-home income on your home. Ideally, that number should be 25%. Eating ramen in a mansion sounds like something an influencer would brag about, but is the exact type of situation you are trying to avoid when buying a house.

That’s not to say a home won’t grow your wealth; it can, but it really depends. It’s a very nuanced calculation, and more often than not, it makes more sense to rent. Especially when mortgage rates are high like they are now.

Unsure about your situation? The NYTimes has an incredible calculator to help you answer the age-old question of whether to buy or rent.

3. Employer matching is the best wealth hack out there.

If “millionaires save an average of 23% of their income” feels high, it’s because it is. The truth is that most millionaires are not doing that out of their base; they have help.

A lot of 401ks include employer matching (or 403b, 457b, etc…). That means your employer will match every dollar you contribute to your retirement plan. The average matching is ~5%. What’s better than free money, amiright?

So, if you max your matching at 5%, you’re actually saving 10% of your salary. If your employer matches 10%, and you contribute 10%, you’re already at a future millionaire-saving status. Pair that with some good spending habits up-front, and you can be a millionaire now before you become one later.

 PSA - January is HERE, you need a budget

We plan to do a full budgeting post in a few weeks. Probably a few because it’s important, and you need to get on board.

That said, my favorite budgeting app by a long shot is Monarch.

They are running a deal through January 12th that will give you 50% off. Use the code NEWYEAR2025 to nab it. It’s only $4.17/month.

There is no reason why you should not do this. It’s cheap; your future is worth a lot more than that.

After years of talking about money, I still struggle to spend less than I make. I couldn’t do it without Monarch — easily best-in-class.

Get 50% off Monarch, budget like a badass, and support the Newsletter.

The path to your first million

 “Success is nothing more than a few simple disciplines, practiced every day.”

-Jim Rohn

Our Favorite Money Tools

🥧 M1 Finance - Don’t pay crazy fees to have someone invest your money; replicate their approach for free with M1 Pies.

🦋 Monarch - Automatically track your spending, create a budget, and track your net worth.

🏠 Fundrise - Invest in Rust Belt and Mid-Western real estate.

💸 Swagbucks - Get cash back from over 1,500 retailers, including Amazon, Target, and Starbucks.

🏦 Mercury - The best small business checking account, full stop. We use it for all of our businesses, including my personal checking. Create and manage virtual credit cards for every expense and never get overcharged again.

May the cash flow always be in your favor,

Andrew and Lou - the Funny Money team