Afford Anything - The biggest study of everyday millionaires in 25 years - with Chris Hogan

Episode Date: January 7, 2019

#171: Chris Hogan surveyed 10,000 millionaires in the United States. Here's what he discovered: - 89 percent of millionaires have a net worth between $1 million to $5 million dollars - 62 percent graduated from public state schools - 9 percent didn't graduate from college - Close to 50 percent had a B average or less in school - 55 percent give to charities and churches on a regular, monthly basis - 73 percent never had a penny of credit card debt - 18 percent are self-employed - 62 percent earned a household income of less than $100,000 annually - 80 percent exercise at least three times a week. On average, their homes are 2,600 square feet, and they've lived there for an average of 17 years. Two-thirds have a paid-off mortgage. They paid off their home on average in 11 years. Their net worth breaks down as one-third their home, and two-thirds their investments. They became millionaires at the average age of 49. They spend, on average, $35 on a pair of jeans.   What can we learn from these everyday millionaires? Find out in today's episode! For more, visit https://affordanything.com/episode171  Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every decision that you make is a trade-off against something else. Saying yes to something implicitly means that you are saying no to an alternative. And that applies to your money. And it also applies to your time, your focus, your energy, your attention. It applies to anything in your life that's a scarce or limited resource. And so the questions become twofold. Number one, what's most important to you?

And number two, how do you align your deal? decisions accordingly. In other words, how to your actions reflect your priorities? Answering these two questions is a lifetime practice, and that is what this podcast is here to explore. My name is Paula Pan. I am the host of the Afford Anything podcast, and today, Chris Hogan joins us on the show, and this is a particularly special episode because I interviewed Chris Hogan twice, and you're going to hear both of those interviews on today's show. Now, who is Chris Hogan? He was an all-American football player. He attended Georgetown University, then went on to become the vice president of a big, well-respected company. But while he was there, he realized that money was a source of

struggle for a lot of families. And he wanted to get more involved in that. He wanted to do something about that. And then at that point, he met Dave Ramsey. A lot of you have heard of Dave Ramsey. He is one of the most popular voices out there in the world of teaching people about how to handle their money, particularly how to pay off debt. And Dave hand-selected Chris as one of his speakers within the Dave Ramsey family. And so Chris is now a public speaker. He's an author who covers the topic of personal finance, money management, getting out of debt, investing. And he just wrote a book called Everyday Millionaires.

This book was a massive undertaking. He surveyed 10,000 millionaire households across America to find out, who they are. Where do they live? What are their occupations? How many of them are employed versus self-employed? What's their average household income? How much money do they have? What's their net worth? Where did they go to school? What are their habits? How much debt do they carry? How big of a home do they live in? How much do they normally spend on a pair of jeans? He surveyed 10,000 households, gathered this data, and published it in this book. And so I interviewed him twice. both of which you're about to hear in today's episode. Now, in our first interview, we recorded the very first one on stage in front of a live crowd at a conference that's called FinCon.

It's a conference for financial bloggers and podcasters. So when you listen to it and you hear the sound of a crowd in the background and you hear the sound of people milling around, that's what's happening. We've recorded this live on a small stage together. But at the time that we did that recording, Chris was unable to disclose the actual numbers from the study that he did. And so after our interview, I went back to him and I said, hey, you know what? I am going to hold off on publishing this until you're ready to talk. You're ready to give me some statistics, some real numbers, some data. And he agreed.

And so then we got on Skype together and we recorded a second. interview and in this second interview, he spills the numbers. The percentages, how much of their net worth is held in their home versus in stocks. What percentage of millionaires exercise and how often? What percentage of them have ever had credit card debt? What percentage of them give to church or charities? We talk about all of those statistics in that second interview. So you're about to hear both of these right now. Here is Chris Hogan, discussing everyday millionaires. Hi, Chris.

Hello there. How are you doing? I'm great, excited to be here with you. Great. Let's talk about everyday millionaires. Now, you surveyed 10,000 millionaire households and looked for common threads in terms of how they became millionaires and what they're doing now that they are millionaires.

What did you find? We found out a lot of amazing things. We are debunking some myths, some of the things that we tell ourselves about millionaires that just aren't true. But we found out their stories. That's the thing that gets me excited. I'm talking about we talked to some people that came from less than nothing. I mean, homeless and on welfare.

But people that started to make some decisions for themselves, started to grow in their information and their knowledge, and started to make a change for themselves and their family. And so we learned incredible stories. We found out some amazing statistics on how they invest, what they do, their income level, how they spend money, it's really been eye-opening. So let's talk some of those numbers.

Share some of those statistics with me. Yes. Well, I mean, some of it, I got to hold on to. Oh, confidential. It is. But my publicist would tase me if I let it out too soon, but I'll tell you it's eye-opening. For example, a lot of people think that you have to make a high six-figure income to become a millionaire. And that's not true.

We talked to people that were making $40,000, $50,000 a year, but they invested consistently over time, right? using a 401k is how they got to millionaire status. So this mindset, I think, it's important for us to debunk these myths, because if we think I have to make a high six-figure salary before I can get there, then we automatically give ourselves an excuse, well, I just can't, or I'm not going to be able to do it, and that's just not true. Now, did you see any common threads in terms of the part of the country that people lived in? Because right now in my head, I am imagining the tweets that I'm going to get,

and I'm imagining some people saying, you know what, 40 or 50K in New York City is not the same as 40 or 50K in Kansas City. Right. I completely agree. And that's a matter. We all know that already. That has nothing to do with anything, right? 50,000 in L.A. and 50,000 in New York City is totally different than in Missouri or even in Tennessee. It's not a matter of the income. It was the debt load and the intentionality with money. So, for example, someone making $50,000 a year, if they've got $20,000 in credit, credit card debt, well, they're not able to build wealth because they're making the credit car company rich. So it did bowl down to not just what they were making, but how they utilize their money and how they invest. And tell me more about, I mean, what numbers can

you share? I can tell you this, with millionaires, they did not make a high six-figure income. Was there an average or a median? It was, yes, and I can't give that yet. They also, most people believe that they inherited the money. Like a lot of people, they They say, well, they just inherited money. A very small percentage of these millionaires inherited anything at all. An even smaller percentage inherited enough money that would cause them to be a millionaire. So the point is, is they inherited some money, but that didn't cause them to become a millionaire. They did that based on their intentionality and how they invest in.

So all this to say, a lot of the excuses we throw out there about why we can't do it or why we haven't done it, it's just that. It's an excuse. We've got to acknowledge, you can do this. It just takes focus, it takes intentionality, and it takes a plan that actually will work. All right. I want to ask you about what that plan is in just a second. But first, my burning question that I wanted to ask before we met was how does this study differ from what we've learned through The Millionaire Next Door, that classic book.

Absolutely. That is a great book, and that book's about 25 years old now, right? And we know how much the world has changed. From 25 years ago, I mean, you look at it. Technology change. There's lifestyle changes, there's all these things. We learned a whole lot more. We went a lot deeper in this.

Such as not only just their investing habits, but we were talking about their own stories. What kind of giving are they doing? What are they focused on? What was their why? Why did they start chasing it? How did they work together with their spouse, or some of them that were single or newly single?

And so we went a whole lot deeper than just the run-of-the-mill 20 or 30 questions and really wanted to get into the psyche but also the lifestyle. All right. did you find out in terms of psyche and lifestyle? The psyche was amazing. The level of intentionality was shocking, meaning that they didn't get there on accident. These are people that are goal-oriented, and they understand the value of sacrifice, right?

Like most of the time, we in this society these days, we are an and mentality, meaning we want this and we want that. We rarely come up with sacrifices or we're rarely willing. These people were very clear. They were okay not knowing who got voted off the island on TV. They were okay not knowing the latest, greatest show or whatever was out there. Very small percentage of them watched TV regularly. They were focused.

They were readers. They were people that were giving and connected in their community. That sounds very similar to the millionaire next door. The same common threads. People in those surveys also rarely watch TV. Yeah, but you're talking about a difference between what? 200 people versus 10,000. So you're looking at it in the cross section of where we went.

So it's from all across the United States. Most people thought, well, you're going to have a heavy, concentration in L.A. or heavy in New York. No, we've found millionaires in Kansas City, in Minnesota, in North Dakota. I mean, they're all over the place. And these were people that chose to live a very defined, disciplined life, much like in Millionaire Next Door, but in the giving component. This is the thing I'm excited for people to read. The way they gave back, and a lot of them are doing it anonymously, making the impact. One guy went in and paid off the railway, an entire railway for Walmart, the entire store lailway for people. I mean, he paid $30,000 to pay off

railway. So you can imagine around Christmas time people coming in and to coming in to make a payment on their railway and to find out it's been paid off. So those kinds of stories, and, you know, they told us this anonymously so we're not putting their name out there. But to hear people having that mindset of they're not just doing it for themselves, they're doing it to be able to get back. You mentioned earlier that these millionaires had a plan for how to, you manage their money. What was that plan? What are some of the components of that plan? Yeah, some of the components obviously are, no surprise, debt. Looking at debt and seeing it as a threat, not as a tool. They taught me in grad school, right? OPM, leverage, all these fancy words,

but the reality is that debt brings risk. Because if I use someone else's money, I have to pay a penalty called interest. And so millionaires look at that, and they don't see that as an option. They see that as something that brings risk into their lives. So debt-averse, very clear. but they were paying off their homes on average and under 11 years. Paying off a house. Now imagine that, because the American dream is to own a home. A lot of us mistake owning for buying, right? No, no, I'm talking about paying it off.

Because imagine how much investing and how much more wealth building you can do if you don't have a mortgage payment and you're able to invest that. Statistically, what was a percentage of millionaires who were completely debt-free as part of their journey versus had some debt but then paid it off? I mean, how did that break down if I were to see that on a graph or see that on a chart? Yeah, it was 80% of them had gotten themselves debt free in under 15 years. Some had some debt. Some still had owed some on the home.

But we're talking about it on a large average. Some had some credit cards that they paid them off each and every month. Some were very averse, and we break that down in the book. But the mindset of it is they're not getting confused. Like they teach us now that debt's a tool, right? That's what the banking industry wants us to see and all this. And these are people that just didn't fall for that. Like they're going to cash flow something.

If they were wanting to start a business, they're going to slow, slowly save up and cash flow it and become their own credit line, not the bank. You mentioned that there are millionaires, some who are couples, some who are single, some who are newly single, perhaps because of a divorce or a death. What were some of the demographic breakdowns in terms of family size and structure? Yeah. I mean, they came from all angles of single, newly single, even married. A high majority were married. the high percentage of them, I think 75% of them were in their first marriage and had stayed married for 15 years or more. And so they had kids, you know, on average the 3.2 kids. But it was less about

their structure. It was more about how they lived their lives. Like what they were doing, they were very, very intentional. They didn't rationalize a want. You know, I think a lot of us nowadays, we get confused. We confuse a want with a need because we want something really bad to the point we feel like we needed. But these were people that were very defined. They were like, we're going to save up and pay cash. They were okay not having the next latest, greatest thing because they didn't want to go backwards. And that was that intentionality factor of staying, going focus, and going. And some of them had gone backwards. Some of them had fallen off the wagon and gone back into debt. But once they got out of it, again, they almost had this awakening, as they described it, that they go, I don't want to

complete that cycle. I don't want to do that anymore. I want to grow forward. Were they majority two income households? I can't remember the exact percentage of there were, yes, high majority of them were dual income, but there were single income. I'm talking, we had some single moms, parents of two to three kids that had done this. One of the other shocking surprises were the occupations. Teachers were in the top five occupation for millionaires. Teachers. And most often times we hear teachers, they're not paid enough, which I agree they're not for what they have to do and the job they're asked to do. But to think about a teacher. being able to reach millionaire status, it's talking about someone that understands it,

knows the goal and knows the process and time, utilizing their 403B. You know, it's amazing. And so, again, it debunks the myth that you have to have a high income or you have to inherit it or that you have to be lucky to get there. None of those are true. What you need is to be focused, be intentional, and have knowledge. We did a, on our show, we did a two-part series in which we interviewed a school teacher who became a millionaire by the age of 40.

See, I love that. Andrew Hallam. Yes. You know, and so it's one of those it lets people know that it's possible, right? And I think that's what we have to be careful of is what we tell ourselves. I think oftentimes we can place limitations on ourselves before we even ever get started, and we can be defeated at the starting line. And so be careful what you tell yourself, be careful of the message you heard from your family growing up.

I think a lot of times our families can impact how we view money or what we think is possible for ourselves and our future. What did you notice in terms of, other than attitudes towards debt, what did you notice in terms of other similarities, such as what was perhaps attitudes towards investing or towards giving? Yeah, the investing very, very intentional. Their goal was to obviously, they understood they needed to outpace inflation, right? That's the cost of living going up, but very intentional. And they also, high percentage of them, got with an investment professional. They were working with someone to guide them. And a lot of people out there, they're hesitant to

go meet with an investment professional because they're either embarrassed about the lack of progress that they've made or they think they're going to be judged by. someone. But in millionaires, we're looking at this going, no, I need to get with someone to help me, someone that has knowledge that I don't have. And so a high percentage of them were sitting down with an investment professional regularly. And did they primarily invest in equities? Were they in an equity bond mix? Were they in rental properties? What were their asset classes? Their favorite asset classes? They were all around in all the asset classes. Real estate was very, very popular. And this was real estate that was debt-free. So they,

slowed down in their approach about how they buy, how they go about it. But real estate was big, equities were big, and also growth stock mutual funds. Growth stock, mutual funds, as opposed to value mutual funds? And so that's, I mean, just from the mix of where they were, some of them had some single stock, but very few were into cryptocurrencies or any of the latest crazes. Interesting. Why do you think it was, they biased towards growth funds as opposed to value funds? Do you have any hypotheses? No, no, I think personal preference. I think it really boils down to their volatility. You know, their risk tolerance, you know, and that's one of the things as people invest. I don't think people understand that you can

invest based on how you are, your mindset. And if you're married, most oftentimes, we're married to someone wired a little bit different than ourselves. And so how do you balance that, right? Even in your portfolio, just like you would in real life. What about tax management? Were there any strategies that millionaires shared that the average everyday person does not in terms of tax planning and strategizing? Well, from a tax strategy standpoint, they were very, just like they would go see an investment professional, they were also plugged in with a tax professional, meaning that they were working with a group as a team, meaning their investment professional, their tax professional

as well as there's trust, estate planning and trust. These were people that were connected. They essentially built a team around their family. And so these were all individuals that knew of each other. And I was amazed to see how well they were connected, meaning that the investment professional, with the tax professional, everybody was kind of coordinating to make sure, are we doing what's necessary for this family? So what I'm hearing is that the common thread was that they hired outside experts, but you did not find a common thread with regard to the actual strategies that they employed? The actual strategies they employed for investing? For investing, for tax strategizing, for any of those. Yeah, no, they definitely used, I can't remember how we went

through in the correlation. But the big takeaway is that they were definitely using those professionals and how they're walking through, and obviously we want to be risk averse as well as tax averse. And so they're not leveraging, okay? They're not going that route to take on and hold on to a mortgage for the tax deduction. They're not following for any of those myths. They know having it paid for allows them to have cash to be able to do other options. What was the average number of years of education that the millionaires had across the 10,000 that you served? The average was at least a high school education.

Percentage for college bumped up a little bit, but we had some people that didn't even complete high school. And so looking at this, it wasn't about a high level. And that was another myth that we busted, that you had to have an Ivy League education in order to become a millionaire. Just not true. What it is, is it's a matter of people that started, often finished, so they were completing college, which connected very well with people being goal-oriented and being very intentional with how they live. How did you define millionaire? Is it based on net worth including personal residence or is personal residence factored out? Great question. Yes, it is net worth. So again, taking in the residence. So as I tell people, I'm helping people define this, right? Because you want to

look at what you own, own minus what you owe. So it is looking at definitely personal residence. Okay. And a lot of people, they bicker with me on that. They go, Chris, what do you mean? The house doesn't really count. I go, of course it does. Because if you sell it and you have equity, you make money on it. Right. Right. Right. Absolutely. Tell me about some of the money mistakes that they've made. When they reflected back on their life, what were some of the biggest mistakes that they regretted. Yeah, I think it's the typical things that us regular people feel. Not budgeting. You know, when you have money coming in and you're just spending out of habit and not intentionality, we can end up having a lot of money passed through our hands. That was the second biggest regret,

whether it was a car payment or a credit card, even student loans, you know, looking back on it. And so the third biggest thing that I heard was people wish they would have invested sooner. You know, I was very fortunate at age 21 when I started grad school. My employer said, hey, you need to sign up for this 403B. I was coaching football at the time. And he goes, trust me, I said, well, I can't really afford it. I was making $15,000 a year at that time. He goes, you can't afford not to.

And so I signed up at age 21. And it was one of those things where I'm so grateful for that, right? Getting started early because money's two best friends are time and compound interest. And so you get started out there and you let that money sit and grow. don't pull it out for a wedding. Don't pull it out for a home down payment. You know, leave that money there. Because I tell people, you pull money out, you almost surrender up to 50% in taxes and fees.

And so people that pull out 50,000, you may see 25,000. But you've also tapped Uncle Sam on the shoulder. And you can have a tax situation that next year in filing. So some of the biggest regrets are not budgeting, getting into debt, and not starting to invest. Not investing sooner. Yes. Sooner. Yes.

How do they talk to their kids about money? They're very intentional in communicating about money to their kids, meaning at a young age, on average five to six years old, talking to them, helping them to understand the value of commission, which is what I do with my boys. I've got three. They're 11, 13, and 14. And so we don't do allowance in the Hogan House, right?

Allowance just sounds like it just comes from fairyland. We do commission, which means you've got jobs to do, you do your jobs, you get paid. You don't do your job. Well, you're going to do the job, right? That's not optional. But it's a matter of teaching them the three categories we talk about a lot, which is spend, save, give. And so talking to young kids about that earlier, what you're doing is helping them start to understand how money works.

And most young people on college campuses don't know that. They don't know how it works, so they fall prey to the credit cards. They fall prey to the student loans and car loans. And they end up putting themselves in a hole that takes many years to try to climb out of so they can start to try to build well. Now, across these 10,000 households that you surveyed, did they have any particular favorite tools that they used? You mentioned budgeting, so it seems as though the majority of them actively budgeted their money. How did they do that? Was it with a spreadsheet? Was it with any particular tools? And to what degree did they do that? Did they really have a granular breakdown of different line items,

or did they just have more of a big-picture idea of save-spend give? Right. No, they definitely, I mean, they were utilizing budgeting every month. You have a good mix of some. A lot of people were doing it digitally nowadays. There's so many tools that are available out there. But again, very clear categorically on what they're spending and just being intentional. And it's okay. What I loved is that not only were they intentional about being intentional about being intentional about being intentional about being intentional about being a budget even as they travel. And it's not one of those things. See, budgeting is not a skill that you stop. You know, they were clearly planning some travel and being intentional about having a budget even as they travel, right? And it's not one of those things. See, see, budgeting is not a skill that you stop. doing. Budgeting is one of those things that it allows you just stay in control of money. And so it makes you very aware. So in terms of the way in which they budgeted, to what degree of detail would they go into? We didn't ask about degree of detail. It was more about if they were budgeting and how they were doing it. So a majority of them, they were definitely budgeting and they were using online tools. Got it. Yeah. Tell me about the neighborhoods that they lived in. Do the majority of them live amongst peers who had a significantly lower net worth? Because that was

one of the major takeaways from the millionaire next door as, as reflected in the title. You mean as they live now or from growing up? Oh, no, as they currently live. So are they, the millionaire next door living in a non-millionaire neighborhood? Absolutely, they are. So that part is still true from 25 years ago. Because they're people that are still digging, they're staying clear on what they're doing. They're not trying to go out and build the next latest, greatest thing. They're not chasing those things. What they're doing is being very intentional with how they live. And so they're not trying to go move. They're there. And, What I love about it is that the people, they don't know, like, their neighbors have no idea because they're not flashy.

They're not, you know, they're not out trying to have the latest, greatest thing. They have nice things, but they're not trying to prove their net worth and how they live. Yeah, so that was still consistent. So then based on the neighborhoods they lived in, were they sending their kids to public schools or were they paying for private school tuition? They were both, doing both. And the majority of them on the public side, some were doing some private, but a majority was doing public. You know, and that's what I grew up. up in. I did not come from money. I came from a very blue-collar family in rural Kentucky.

And so that went to school, work hard, right? Pull up your bootstraps and go big, right? Working hard. But again, I think it boils down to that whole thing about not having to make a high income. You don't have to go to an Ivy League school. What you need to do is understand how money works. I think it's the knowledge that's crucial. And so somebody, a single mom that's making $40,000 a year, has the same opportunity with the right knowledge, getting themselves out of debt, beginning to budget, having an emergency fund is another thing. You need a cushion between you and life happening because we're all a car repair away from having to go in and sit down with the bank, but also investing. And so understanding those tools that are available,

they're not just out there for certain people. They're out there for everybody. We just have to know how to use the tools. What was the average length of emergency fund that you saw within these millionaire households? It was on average between six to eight months. Between six to eight. Yeah. And again, it's a cushion, right? You want to have something if there's an illness, a job loss. And we tell people three to six months. If you're married, you and your spouse need to be in agreement. But the goal behind that is if you have a stable income, if both of you are working outside of the home and you've got a stable income, you could lean more toward three months.

But if you're self-employed or you're someone that is working a job that's straight commission, I definitely would encourage you to lean more toward a six-month emergency fund to allow you to have a little bit more cushion. Did you notice any similarities in terms of average family size, like number of children that these households had? Yeah, I think I'd mentioned it was like 3.2. 3.2. I was wondering, actually, when you said that, if you meant that literally. No idea, really. It's on average. Just ran three kids.

Wow, 3.2. Among these households, did you have any challenge in getting them to talk to you? I mean, how much encouragement did you have to give them to respond, to take the time out of their day in their busy schedules? Well, because we wanted such a big cross-section. all the way around. We didn't just want people from my tribe or Dave's tribe. We wanted white space. So we utilized an outside firm that helped us to find these millionaires, these

10,000 all across the country. Because I wanted to know northeast, southwest, all the way around, a great cross-section. And so it wasn't difficult. You know, I think people, obviously were protecting their identity, so we all agree on that on the confidentiality side. But I think people were excited to talk about what they'd done. Because

I wanted to know their story. I didn't want to know just that they'd hit millionaire status. I wanted to know, what did you overcome? You know, and so I highlight certain stories throughout the book, talking about the things they had to overcome, the challenges, because I wanted people as they read the book to really start to understand and know that, my gosh, if they can do this, then I can. You know, I still, it's available to me. My big statement in the book is a lot of people feel like the American dream is no longer available. Like, a lot of people feel like the American dream is dead. And I want people to know that's a lie. The American Dream is not only alive, it's well, and it's available for people

that are willing to choose it. And so what would you say to, because again, I'm thinking about the tweets I'm going to get, there are people who will say, yep, average cost of higher education is very high, health care spending is very high, all of these, you know, the cost of living generally is a lot higher, and wages have stagnated. What would you say to a person who says that to you? I would say you could look at those things and you could answer yes to a lot of those things. Higher education is expensive. You know, you're looking at some of the wages are stagnant. But the people that I'm talking about that are intentional are looking for ways to be able to increase their income, whether that is from their current career or career shift or side hustle

or they're looking for opportunities to grow forward. And I think that's the mindset that I want people to have that they're looking at it and going, hey, okay, what can I do? I think too often times we look at what we can't do or look at what's a challenge or an obstacle and we stop there. I think taking that next step and starting to think, what am I going to do to help myself? What am I going to try to do to get out of this rut or whatever it is? And I think that step is where we have an opportunity for our own growth. And so I don't, for me, I don't want to be a victim. I don't. I want to be a Victor, which means I'm trying to do some things differently and I'm willing to sacrifice. And so for me, having teachers, I'm talking about from first, second, third grade, fourth

grade on pouring into me, I feel like I always had people that were believing in me, maybe even at a time that I didn't believe in myself. So coaches, family members, right? And so I think people need to hear the message of you can and it's available, but you have to do something. You have to take a crucial step and that's the side. And so you talked about increasing your income, but earlier you had said you don't need a high income. You said wages are stagnant. Right. You said that people are going to say wages

are stagnant. If your wage is stagnant, look for ways to increase your income. Okay, that makes sense. Absolutely. If I need to make more to attack debt, if I've got 15,000 in student loan debt or 20,000 in credit card debt and I want to attack debt, what am I going to do? I'm going to sacrifice. I'm going to look for ways things to sell in my home because we all got stuff or take on a second job to accelerate and get myself out of debt so I can invest faster. Studies have shown people are spending 24% of their income on consumer debt, 24%. And so the best way to give yourself a raise is to get out of debt. And that's by selling something or taking on an extra job or doing something to increase your income

so you can attack the debt and keep more of your money with you. What were some of the stories that stood out to you in terms of things that people did in order to either get out of debt or have more money to invest? Well, I mean, it's amazing. One of the powerful stories was the individual that downsized home. They had a 3,500 square foot house, I believe. They downsized to a 2,000 square foot home to really be able to cut costs and be intentional, to be able to allow them to save up more for college for their kids.

We had people that got rid of vehicles and went down to one car, which most people would look at you like you have a third eye nowadays, right, if you've got a family of five and you use in one vehicle. But, I mean, these are the kinds of sacrifices people make when they start to really think. Is it uncomfortable to go to one car? Yes, but is it possible? Well, of course it is. And so what we have to do is start to think a little bit different and say, hey, what are we willing to do as a household?

What are we willing to do to get to this thing? I think people setting goals and having that mindset, it's amazing what people find out about themselves when they start to fight through struggle. You know, struggle doesn't know any race, ethnicity or religion. You know, struggle is out there for all of us. But victory is available too for people that change. their mindset and start to think a little bit different and they're not willing to, they're not scared to try, right? They're not scared to give that extra effort and to sacrifice for the future. How do you think, given that everybody struggles, what was it that set these

millionaires apart such that they were able to develop the mindset required? It was internal drive, is what I'd say. They were very clear on, hey, they knew how investing works. They know time and compound interests are your, money's two best friends. And so if I'm putting that money in, I'm not touching it. I'm going to keep my lifestyle in check, therefore living on less than I make, and I'm going to stay allergic to debt. And I think you have that kind of mindset. And if that's your philosophy, as you make decisions, no matter what kind of model car comes out, right? They come out with a new model of car every year to make you feel bad about your car, right? Like they have the car now that'll park itself.

You know, it's like, really? I'm going to drive eight hours on vacation in the last two minutes. I'm going to get tired, right? I can't park the car. No. So I'm okay with those commercials playing. I just know I don't have to buy into that, right? And so it's almost like blinders. They're so focused on the goal and what they're trying to achieve. They see something bigger than themselves. And like I said, it wasn't necessarily about what they obtained. It was a matter of the status they got to to be able to do more for others. The giving. You know, that was the thing, the hearts of these individuals, especially the people that came from less than nothing, you know, where they had that spirit of gratitude. And I tell people, gratitude. can change your life when you step back and you look at the people that have done things for you that they didn't have to or gone above and beyond for you. And so it gives you this different spirit about yourself and you do want to be able to reach back and help other people. So let's talk more about giving. There must have been, I imagine, some strategy around how they made giving related decisions. How would they do that? How did they choose a charity and evaluate whether or not

their last year's gift was a effective one. Yeah. Very good. Well, obviously, if they were affiliated or connected to a church, they were doing giving there. But a lot of them were very intentional about the charities. The ones that they support had a personal thing for them. One lady, she talked about supporting Ronald McDonald House because a friend of hers had to stay there when her child was sick, right? And so they fed them and took care of them. And so for her, Ronald McDonald House was a big deal. for others, you know, different things out there, the different charities. So people were connected to it through some kind of experience or relationship with a friend or family member. And so they sat down at the beginning of the year and would identify the charities they were going to support and how they were going to go about it.

But here's what I also love. Not only were they supporting charities and doing structured giving, they were also doing some grace giving. And grace giving is this is where you keep that cushion in your own budget to be able to understand that, hey, I've got this, you've heard about a need in your church or in your community, and you're able just to write a check, right, just to do that. And so people that don't have debt strapped to them like an anchor, they have the ability to do that. Wow. Was there a particular percentage of their income or percentage of their net worth that these millionaires would typically give? On average, they were doing 12 to 15% of their income. 12 to 15% of pre-tax or after-tax?

After-tax. Wow. That is a significant percentage. But it's the mindset, right? It's that mindset of looking at it going A, number one, They had awareness. They knew their job was stewardship, but they have those hearts. I tell people it's hard to be hateful when you're grateful, right? And so when you have that spirit of gratitude, you are looking for opportunities to impact other people's lives. Wow. Did they often start out with such a high percentage, or did they work their way up to it over time?

You know, and that's, you know, a lot of people, they've got debt right up to their eyeballs or they're not able to. But I think as time goes on, as people start to see the benefit of that and the hard work, that it grows. And I think that's another thing I'm looking forward to studying later on is how does that percentage grow as people are going? Because I think you start to count the grace giving. That's hearing about someone in your church or in your community that has a need and you're able to take buy money or to write a check. And it's not something you have to second think about, right? Because you've built that margin into your budget. Impulse giving.

It is. It's a good thing. Yeah. You know, and you've seen it. You've seen it. You've seen when someone's in need what a great tip will do. I love to do that at restaurants, especially. you know, all year-round, but especially around the holidays, where you see a waitress in there that's

working on Thanksgiving Day or the day before Thanksgiving. This is somebody that has to work, right? Right. And so just to leave a hundred or $200 tip and then just leave real quick, go out to the car and sit and watch. Watch when she or he sees that tip. That expression, that genuine gratitude you can't fake. You know that's going to make a difference in their life. And you don't do it to get a bunch of accolades. That's why I do it and get out of there real quick. I don't want them to feel weird and it's not anything I want from them. It was something I'm doing. And so I tell people out there, let your kids see you do that kind of stuff too. Let your kids be a part of your giving and the things that you're doing because now what you're doing is you're letting them start to see the impact of this.

And my boys have been with me as we do some of these things and they talk about it. And see, I think that's planting a seed in their mind that giving's a good thing, right? And you start them on that path. But we have to guide our kids. people that are building wealth and they're having money, you're going to obviously leave an inheritance to your kids. Let's make sure your kids have an awareness of this. So they don't fritter it away or waste it, right?

And so you've got to start to help them have those muscles, the same muscles we had to develop to be able to control our wants versus our needs. Well, thank you so much, Chris. Is there any final takeaway that you want to leave the audience with? I just want to encourage people to keep growing in your knowledge, be very aware of the people that you hang out with, And if you have questions, go see a professional.

It's okay to get a review or an assessment. You may be on track and doing a great job. But I've seen small tweaks in 401Ks make big gains. So don't go it alone. Always get some guidance. Thank you so much. Yes, ma'am. Good to meet you.

I'm looking forward to reading your book. Thank you very much. Thank you, Chris. That was an amazing interview. But I still have a question. What are the numbers? Tell me more what percentage of millionaires give to charities? What percentage of them have or have ever had credit card debt?

How much money do they make? Where do they live? How old are they? Well, in our second interview, Chris answers those questions, and you're about to hear that interview right now. But first, we're going to take a quick break to hear a word from our sponsors, and then we're going to hear the numbers straight from Chris Hogan. Coming up. If you get a side hustle, you don't want something that's boring or teasing. You want something fun, like pet sitting, like walking dogs, like boarding dogs in your home when the owners are out of town.

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Just go to freshbooks.com slash Paula to get started. And when they ask, how did you hear about us? Say, afford anything. Again, that's freshbooks.com slash Paula, P-A-U-L-A, to get 30 days free. FreshBooks.com slash Paula. Hi, Chris. Hello there. Great to talk to you again.

Well, it's good to be back with you. And this time, we get to talk about numbers. Yes, we're going to dig into the stats about this book. Oh, excellent. So let's begin. You surveyed 10,000, was it 10,000 people or 10,000 households? It was 10,000 millionaires. So it was the households. And it was actually over 10,000. It was like 10,150, I want to say. Wow. Okay. You hired an outside firm. You'd mentioned that you hired an outside firm in order to find these households. Yeah, you really did because I wanted to know the true picture of what it looked like out there, not just people that knew of Dave or me, but people that had never heard of us and really wanted to.

to get a full overview of what does the average millionaire look like in the United States today? And what does the average millionaire look like? What were some of the statistics that you found around those households? Yes. Well, I can tell you, they are surprising. Looking back and walking through, for the purpose of this, we were targeting people that had a million dollars or more in net worth. So, 89% of the millionaires that we talked to had a net worth between one and five million dollars. on average in looking at it, they definitely had tendencies on how they invested. For example, we had 79% of the millionaires got to millionaire status through their employer-sponsored retirement plans. So we're talking about 401Ks, 403Bs.

So the number one contributing factor for millionaires' high net worth was using their retirement plans, which was definitely eye-opening. Digging into staying in the financial realm, we also found 68% of, of the millionaires used an investment professional or financial advisor to help guide them in their journey. So they weren't going at it alone. Some were doing self-directed plans, but they were still connecting with an investment professional to really dig in and talk. Diving in on the education side of things, they didn't always, these millionaires did not attend prestigious private schools. 79% of the millionaires did not attend a private school. 62% of them graduated from public state schools. Now, you had some that went on to grad school and private schools, but the 62% went to a

public state school. But get this, 9% of the millionaires didn't graduate college at all. The education wasn't a prerequisite to get to millionaire status. Staying in that vein of education, almost half of the millionaires that we studied had a B-average or less in school. Oh, wow. I mean, so that was eye-opening. That means grades only tell part of the story. It's also about their character traits, which we'll dive into here in a moment. But get this, this, this blew me away. 40% of the millionaires that we studied were involved in sports or cheerleading. That was the most common extracurricular type of activity, which was shocking. And then one more, then I'll take a breath here, because I got so many stats. 15%, only 15% of millionaires are in senior

leadership at their company, meaning vice president or senior vice president. And only 7% are C-suite executives, CEOs, chief marketing officer, things of that nature. So it was really eye-opening to see what they used and how they got there using their investment plans, the 401K and using an investment professional. But the education piece was key because that was one of the things in the myths that I chopped down, Paula, in this book, a lot of people assumed that you had to go to a private school in order to put yourself on the path to be successful. When you say private school, are you referring to a private college or private K through? Yes.

When I say private school, I'm referring yes, to a private university. Do you know, you mentioned that the majority of them did not have senior leadership positions at their companies. Do you know what percentage were self-employed? 18% of them were self-employed. Nice. Right. So you had some people that owned their own business, but even though they did that, they were still focused on putting money aside and running the business, but also growing their own personal wealth. Of those that were self-employed, did they reach millionaire status through the income and the valuation of their companies?

Or did they also reach millionaire status by taking the proceeds of what they'd earned and investing it in retirement accounts and other forms of personal investments? Yes, that was on the personal side of their wealth. So not looking at the valuation of the business, but this is personal wealth that they themselves built. That's a very good distinction. Oh, it is. I mean, but it just goes to show because most of the time for people, that are self-employed, every dime or every dollar they have, they put it back into the business. Right.

But it just goes to show that, you know, if you're self-employed, you need to have that dual lens, that yes, you are all in and running your business, but you definitely need to pay yourself an income. And as you pay yourself, I tell people, it's like two buckets. You've got your business bucket and your personal bucket. You need to have an income coming from that job. And from that income, you're able to build wealth on your own. that gives you the opportunity with your business to be able to pass it on to someone,

your kids or grandkids or pass it on to employees without having to hand them paperwork and debt for you to now cash out and be able to go live your dreams. So it's really about the mindset you have for the business and the legacy you're wanting to have down the road. Oh, Paula, get this, also on the income side. Uh-huh. Most people think, you know, that's one of the myths I chop down. People think that wealthy people have high-paying jobs.

But get this, only 31% of millionaires made 100,000 or more in a working year. Okay? That is 7% averaged over 200,000. Okay, so 31% 100,000. 7% averaged over 200,000. So get this. 62% of millionaires made under $100,000 a year. Wow.

Was that individual income or a combined household income? household income. Wow. Right. So what that's showing is is that it's not about the high paying job. It's about being intentional. And that word is crucial in talking about the character traits that I found, but it's about being intentional with your money. So it doesn't mean that you need to make a lot, because if you have bad habits and you make a big income, it just means now you're doing bad habits on a bigger scale. You know, and we've all seen that. I was one of those people early on in my career that I thought, you know, if I made more money, that would fix things. And the problem was, is no, not necessarily.

Because all you do is you do more of life or you do it more often. So it's really about controlling the income that you have now and really having a long-range plan. Do you know how their spending broke down in terms of what percentage of their income did they spend on housing, transportation, food? As far as on the transportation side, here's what I do know. I do know on the housing, the average millionaire, lives in a 2,600 square foot house that they've been in for 17 years. Two-thirds have a paid-off mortgage. And so the average millionaire from this group that we talked to over 10,000,

they paid off their home in 11 years. So that was their focus. 93% of them use coupons when they shop. 85% of them carry a grocery list to the grocery store. I asked them about some spending habits as far as a pair of jeans. The typical millionaire spends on average about, $35 for a pair of jeans, which cracked me up because I work with some entertainers and musicians who will spend $600 on a pair of jeans, and I'm asking them, you know, what do these genes do?

That's special, right? I mean, that's a whole lot of money. They also, they're very intentional with their budgeting and also their exercise. Most of them hit millionaire status by age 49. So they started investing early and stayed consistent. And then eight out of 10 of the millionaires are exercising at least three times a week. So they're very focused. And in the way they invested also, they were focused on, on average, in good growth stock mutual funds inside of their 401Ks

with some index funds. But we didn't hear about a lot of stories of people that dove all in on single stocks to get rich quick. There was very little mention of any kind of cryptocurrency or any kind of latest fad. But these were people that were focused. And again, that's why I titled the book, Everyday Millionaires, because these are regular people that are working regular jobs.

Now, I have to tell you this, because a lot of people, you know, were curious also, I know I was about what kind of jobs were these people working? What did they do for a living? Now, keep in mind the income thing that I told you about. The top five jobs were this. Engineer, accountant, number three was teacher. Okay, so school teacher or a professor. Number four was management, and then number five was attorney.

Now, the thing that I loved and was blown away by was the teacher staff. The teacher would land at number three. But if you think about it, being consistent and focused over time, putting money consistently into your 403B, being focused and attacking and paying off your house, and again, the average millionaire paid off their home in 11 years. So for us, looking at their net worth, we look at what you own. minus what you owe. So for school teachers being consistent in putting money into the 403B, but also then paying off their home, well, if they've got a four or $500,000 house and they've got

five or $600,000 in their 403B, you put those together, they're a millionaire. So it just shows people that it's possible. We just have to have the mindset and be intentional. No, one thing that strikes me when I hear those list of occupations is that with the exception of some teachers, although not with the exception of professors, but with the exception of possibly teachers, the rest of them are all occupations that I would expect would make $100,000 or more. Yeah, except for the management, management and accounting, having worked with several of those as a financial coach, I too thought they would have earned more, but there are all types of accounting positions out there where somebody's making, you know, 50, 60 or $75,000 a year. And the

management side. This is someone that is, they could be in management in a factory. They could be management in retail. So it's a broader category. Yeah, the income portion of it definitely surprises me, the less than $100,000. Me too. But if you think about it, the average income right now, I think, is around $54,000 in the U.S. today. And so, you know, it really goes back to the lifestyle and habits, because if you're not intentional and you're not budgeting, then it doesn't matter how much you make. always going to be living paycheck to paycheck. And our studies have shown and looking at this that we have close to around 80% of people are living paycheck to paycheck on average around the country. So that means they're running out of money before the end of the month, which goes back

to that whole habit of being intentional and making sure that you're budgeting. Were there any particular parts of the country where the millionaires tended to concentrate? When we last spoke, I remember you mentioned that it wasn't in the big cities, that you found people in the heartland or in the middle of the nation. Did you find any specific states or regions? Yeah. And looking at it, the top five cities that we found that millionaires were living were in New York, San Francisco, Phoenix, Chicago, and St. Louis. Those were the biggest, you know, which I anticipated, you know, New York being on there and San Fran as well. But Phoenix and Chicago and St. Louis, those three kind of surprised me. I would have thought,

we would have had more concentration maybe in California. Why do you think those three cities had such a high concentration? And as far as Phoenix, Chicago, and St. Louis? Yes. I think Phoenix is a little bit easier to be able to grasp, having traveled to Phoenix in January and it's 58 degrees, that's a beautiful thing. So I could understand, you know, the snowbirds relocating and going there.

Chicago, you know, it's a hub. It's a massive city. a lot of industry, a lot of growing businesses there in that market. And then the same thing can be said for St. Louis, where you have people that are focused. You know, one of the other things that surprised me was the sheer kind of numbers of people that had some kind of connection to farming, meaning whether they either grew up on a farm, worked on a farm at some point in their lives. And, you know, me being a Kentucky boy, having grown up working on some farms, I get it now. because in diving into the characteristics that we found, because I wanted to know, what are these people made up of?

You know, what is their mindset? But one of the first things they talked about is, you know, really believing that you can build wealth, you know, that the American dream is alive and available. That was their mindset. But the average millionaire has five characteristics that make them successful. And I'll list them for you. Then we can dive in. But number one is they take personal responsibility. Number two, they practice intentionality with their finances.

Number three, they're goal-oriented. Number four, they are hard workers. And number five, they know that wealth building takes consistency. And the thing that I love about this list is any person out there that's listening to your show or that reads my book, you can do these five things. These are choices that you can make. regardless of what you've done financially in the past or even your family. You know, I've talked to a lot of people that didn't come from families that did a great job with money. And so they don't believe that they can.

But money is one of those things that you can learn about. You can improve. You can put some things in place to help you to start to develop all five of these. From personal responsibility, being intentional with your finances. That's talking about budgeting and really telling your money where to go. being goal-oriented, knowing that you're chasing down something, right? You're working towards something. Being hard workers, meaning that you're given the effort day in and day out and you're

doing your job. And then number five, knowing that wealth building takes consistency. It's not about the flash and the pan things to do. But it is, as we advise people, to put 15% of your income into a tax-favored retirement plan, 401K, 403B, and doing that consistently over time will help. you to build wealth. We'll come back to the show in just a second, but first, Afford Anything is brought to you by Skillshare.

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How did you come up with that list of five attributes? In terms of methodology, in what way were you able to? derive that information from the respondents. What we had was we gave them some multiple choice options and how they would describe themselves and how they approached money. And so that was the top five kind of responses, which doesn't surprise me. You know, anybody that is successful as you look at those five characteristics, you know, personal responsibility means that it's not about a victim mindset. It means that regardless of what I've done, good or bad, it's on me, right? I'm not.

looking to blame anybody. I'm not looking to look for anybody to try to help me fix anything, but I'm accepting that. And again, being personally responsible means that you're staying in control of the things that you can control. It doesn't surprise me that successful people are doing that. The intentionality with their finances, you and I know, when you're successful with money, that's not an accident. That is a decision that you made because we're the most marketed to country on the planet. There's always a commercial trying to make. make you feel bad about the car you're driving or trying to get you to go to a restaurant. And so that kind of mindset and being intentional means they're not spending money because

someone else wants them to. They're doing it because they want to do it. They're making that kind of decision. And so, you know, looking at this and acknowledging it, it just shows that people can do it. Regular, everyday people have an opportunity. And so they want to be able to do that. And with that, of the personal responsibility piece, let me back up real quick, 96% of the millionaires when we asked them believe that they're in control of their own destinies.

That goes totally against the victim mentality or any other kind of thinking where you go, no, I'm responsible. I know I'm in charge. I'm going to make decisions that move me forward. You mentioned that the average age of millionaires whom you surveyed was 49. In our previous interview, you also mentioned that they, on average, tended to, have 3.2 children. Yes, yes. What other attributes comprise this, this model of the average millionaire? Well, again, you know, it goes back. We talked about the housing. So they're, on average, they're living in a 2,600 square foot house. Two-thirds of them have the mortgage paid off, typically paying it off in around 11 years. They're working average jobs, except for the 15%

that are in senior leadership. But they also get this. And as far as the debt, The millionaires steer clear of debt. 73% of them never held a penny of credit card debt. Seven out of 10 never had any student loans. And that's compared to the general population where we have almost 51% have had a student loan or have one. But this I loved. None of the millionaires that we talked to ever claimed to have reached millionaire status from their credit card rewards or points. And again, this is going back to being.

aware, being focused, and understanding, hey, how am I using my money? You know, how are we approaching this and what am I going to do? The other character qualities you asked about, their net worth breakdown. A third their net worth was their home. Two-thirds of their net worth were their retirement accounts and their investments. And so really, the net worth factors were the paid off home as well as their retirement accounts and investments. So they were very very, very much. They were very proactive in investing not only in the 401k but also into Roth IRAs and IRAs. Did many of them have other real estate investments besides their personal residents? It was below 20 percent. Primarily from a real estate standpoint, their focus was their primary

residence, but some did have it and it was also paid for. And there's nothing wrong, you know, with investing in real estate as I tell people. The big thing is, is that you want to be where and you need to be careful, right? That intentionality with finances means that something can be a good idea and can look good. But if it's got debt attached to it, any option that has debt as part of it, we have to look at it and see it for what it is and understand that debt is a threat. We don't want to use it. And I can remember being in grad school where, you know, my professors would talk about OPM, right, other people's money or leveraging. The reality is that if I'm using someone, else's money. I'm paying a penalty in the form of interest for using their money. And so it becomes

real simple for me. Interest that I pay is a penalty, but interest that I earn as a reward. So I don't want to pay interest. I want to earn it. So that means even in my investments or looking at something that is a potential investment, I want to steer clear of debt and make sure that I'm not factoring that into the equation. One of the other things, Paul, I talk about in my book is that the intentional thing really, really jumped out at me. Nobody accidentally ends up, you know, retiring with millions of dollars in the bank. That comes from hard work and thousands of daily decisions. So you've got to be intentional with your money as well as your choices. It's more about deciding versus sliding into life. When you decide something, it keeps you in control.

But when you slide into a decision, what really happens is now you become like this passive passenger in life. You're starting to just kind of go with the flow or going with the next trend or whatever's happening. So I just want people to begin today, regardless of where they are, and really understand that you've got to decide your way into wealth. And that means you've got to plan for your life, which obviously starts with budgeting. I talked about the investing in the real estate, but also I did not talk about the generosity. The millionaires, on average, are very, very generous. Fifty-five percent of them. are giving monthly to some type of charitable cause or organization as compared to 29% of the general

population. So not only are they mindful and intentional with their money, but they also have this spirit of generosity where they are trying to help others, trying to empower them and guide them. And I think that says a lot, too, about kind of the hearts of individuals where oftentimes, you know, society would think that people that have wealth are mean or they're not kind to others. And that's just not the case. A lot of them were doing giving anonymously for a lot of charities and organizations that they believed in. That's right. I think in our previous interview you had mentioned that they were donating on average somewhere between 12 to 15 percent of their after-tax income.

Yes. Yes. And so, again, that's either through their church, but also other giving for charities that they believe in. whether that was ongoing or one-time giving. And so it just, you know, to me, it's eye-opening. I want people to begin to look at wealth and understand a few things. Number one, I don't want them to believe the myths and the lies, you know, that you have to have this high education or that you have to make this super high income.

It's about being in control of your money and where you are and having a plan. Utilizing the 401K is absolutely imperative. to put money aside consistently and let it grow. So that means not pulling it out for a wedding, not pulling it out for a down payment on a home, but let that money sit there and grow. I tell people all the time, money has two best friends, time and compound interest. And if we allow money to sit there, it will grow and the interest will grow interest, and it will continue and help us move toward building wealth. Did you gather any statistics about how much on average they paid for things like a wedding

or what percentage they put as a down payment on their first home, those kind of major milestones? No, ma'am, no. But the cars, the big thing was that they paid cash. Now, initially, their first car, some alluded to, yes, they did have some car debt in the past. But as they were moving forward in the process, in those years it took them to get to millionaire status. they were very intentional on paying on cars. But information about wedding, spending, or things of that nature, no, that wasn't something I asked. Prior to your book, the previous major study of millionaires happened 25 years ago with the book, The Millionaire Next Door. In what ways do your findings differ from the findings within the millionaire next door? Obviously, their 25 years have passed. So what differences do we see between then and now? Oh, gosh, I think there are quite a few, but as much as the differences, you also have the similarities. The intentionality part of it, I think, was reflected just as much in the millionaire next door,

where they weren't looking to buy to impress people. They were being very conscientious. I do think that as far as the length of time and people are paying off the house for millionaires now, it's being done a little bit faster. The net worth is a little bit higher with, you know, 89% of them having a net worth between a million and five million. But again, that's attributed to the length of time between the two books, where you've had 25 years, and obviously we've had some record situations in the market and with interest rates as well. But a lot of similarities, meaning that the intentionality part, the consistency part, they're really being smart in how they shop and what they shop for. I think the giving is higher now. And as far as,

the percent and the dollar amount that people are giving. And so it's interesting. I think in any time you look at something, you've had 25 years, right, a quarter century pass, you're going to have some consistencies in as far as the type of people that you're talking about, the hardworking, the goal-oriented, as well as people that invest consistently over time. That's big. But I think the educational piece now has shifted a little bit where you do have people that are more self-employed. It's easier now to start a business than it was 25 years ago where you have opportunities through the internet or ways to market and really promote your business. And so I think both books are eye-opening.

I think it gives you an opportunity to really look and start to get more information about a group of people that typically are looked at as a, like a unicorn, more mythical. And it's not. These are regular everyday people that are working regular everyday times. types of jobs. Did the millionaires whom you surveyed have aspirations to retire early, or did they plan on staying in the workforce until their mid to late 60s? Yeah. Many of them, now again, this was excluding the people that were self-employed because they absolutely loved what they were doing. We had a high percentage of them that loved what they were doing. But most of them said they wanted the options. They wanted the freedom, right, to be able to make decisions. It was eye-opening because I can relate with that. I love what I do. I don't ever look at me stopping what I'm doing. I may want more options to take a longer vacation or, you know, to do more things that I want to do.

But in the survey, 96% of the millionaires enjoyed what they did for a career, which I think is absolutely astounding, that people are working in a line of work that they enjoy. 64% of them said that they loved their jobs. To say that you love something, that means you're absolutely. enjoin it to its fullest. But get this, too, you know, we hear a lot now about the whole boomerang generation, you know, the sandwich generation where you're trying to launch millennials, but then you also have parents that are aging. Get this, only 6% of the millionaires give monthly support to their children

that are over the age of 25, okay? Only 6% of the millionaires. And 71% of the millionaires never do. So that means if they have adult children, they've helped those young people to become adults. Next, I'm going to ask you to speculate a little bit, 25 years from now, when someone in the future runs another study of 10,000 millionaires in the year, what would that be, the year 2040, the year 2045? Where do you see that going? In what ways do you, what similarities and differences do you expect we'll see at that point? Oh, wow, that's a great question. So 25 years from now,

Someone does another book. What are some things that I think that we'll see that are the same? I think in looking at the characteristics of the personal responsibility, the intentionality with finances, being goal-oriented, hardworking, and understanding that wealth building takes consistency, I think we will see that as the same. I think those are internal things that drive people. I would love to see that the income obviously has grown, that people are inventing. investing even more. I would love to see that net worths are between five and 10 million from people

that are staying focused in being allergic to debt. I would hope to see, you know, that people are paying off their home not in 11 years, but maybe they're doing it in seven to eight years, 25 years from now. I would hope to see that the jobs, you know, I talked about the top five jobs, engineer, accountant, teacher, management, and attorney, I would love. to see even more different types of jobs listed and represented there. So, yeah, my hope is that we not only have many, many more millionaires than we do now, but people coming from various backgrounds understand that, hey, I can make a decision and use these character traits, these attributes,

in the way that I live and would love to see that happen. I'd love to see more millennials, people in 22, and 23 years old when they graduate and they get that first full-time job that they immediately start investing in a 401k or use an IRAs earlier because to me that is the secret to building wealth. For a millennial or for somebody right now who's listening to this who recently graduated from college, should they focus on paying off their student loans, if applicable, or should they focus on investing for retirement and what decision-making framework should they use? when they're thinking about how much to put in column A versus column B.

Yeah, that's a great question. And I get that from millennials right now. I'm going to tell them if they're weighing back and forth between paying off student loans or investing, I'm going to tell them to be 100% focused because when you try to do multiple things, that's where we end up ineffective and a lot of things. And so I would tell them to focus 100% on attacking debt. You're young. You have time.

and you're going to avoid the interest as a penalty by attacking student loan debt. So that would mean I would control lifestyle. I would take on extra jobs if I had to. And again, really get focused. And, you know, I'm seeing people pay off 80, 90, or even six figures in student loan debt in three to four years. And now that that's gone, now they've got income to really be able to focus on as they invest.

So, yes, I would tell them attack debt first. get yourself out of debt, then build up an emergency fund of three to six months of expenses, then start to invest 15% of your income. What did you find with regard to the way that millionaires talk to their kids or taught their kids about money? You mentioned that they don't support adult children financially, but what other things did you find in terms of the way that these money lessons are passed on to the next generation? Well, and that was the thing that was amazing is a lot of these millionaires, they were very intentional on how they talked to their kids about money, helping their kids at an early age begin to understand that you've got to save, you know, you've got to spend and you've got to give, being able to put those things aside and knowing how money works. And so they're very intentional, these millionaires about teaching their children. They want to help them. They want them to understand. how money works. For example, 86% of the net worth millionaires learned the importance of saving and taking control from their own parents. So it was something that was passed on to them. 85% of them described their parents as savers and 13% of the millionaires said that their parents

were extreme savers. So for them being in the living example to the next generation is a big deal. They want their kids to understand how money works and they want it again passed on to generation to generation. You know, that's the thing when you start to talk about legacy and understand the importance of the opportunity that's in front of you, that we do have to educate young people to help them understand how does this money stuff work? What are some of the pitfalls to avoid? And, you know, I know, as I've talked to my own boys, I've told them about some of the money mistakes that I've made, some things to watch out for. And I'm teaching them about money now. not making, I'm not having like a mutual fun party or anything or making them do spreadsheets,

but I am helping them understand patience, right? How do you save up? It's okay to have nice stuff. We just don't want nice stuff to have you. And so it's being very focused. Again, these millionaires is not an accident. But I think this too, Paula, you asked me about 25 years from now. What do I want to see?

You know what? I would love to see fourth and fifth generation millionaires. I would love to see first generation millionaires increase by 40 or 50 percent. And I would love to see that lineage, that legacy being passed on for generations to come. And what do you think it's going to take to get there? I think the biggest way to really help people to think about that and be able to get to those ideas I have for 25 years from now is people hearing stories. I think the stories of how other people did it, of how other people. people decided, but also people getting information. It's great to hear about how someone else did it,

but knowing the steps that people have to take it inside their own lives, the process, the changes that they have to put in place, and some of the safeguards, too, Paula. You know, being aware that 20 or 30 minutes browsing on a car lot, if you don't have money, is dangerous. That's the best way to bring home a payment, right? And something that's going to haunt you for five to six years. And so we have to be careful. We've got to proactively plan our future, but we also have to proactively safeguard it and protect it. Nice. Well, thank you so much.

Paula, thank you for having me. It was a pleasure to talk with you. Thank you so much, Chris, for spending this time with us. Let's do a quick recap. Now, these millionaires that he interviewed, remember he interviewed 10,000 millionaire households, the majority of which, 89% of which, have a net worth of between $1 million to $5 million. $9% of them never graduated from college, and 62% of them went to public state schools. About 50% had a B average or less, which makes me feel like kind of a chump for being an honor student.

That probably wasn't the takeaway I was supposed to get. Okay, moving on, 62% of these households had a household income of less than $100,000 annually, which is impressive. The majority of these millionaire households do not make six-figure incomes. 73% have never had a penny of credit card debt. 55% give to charities and churches on a monthly basis. On average, they became millionaires at the age of 49, and they spend $35 on a pair of jeans.

I also thought this was interesting that their net worth breaks down as one-third a paid-off home and two-thirds their investments. And if you think about it, with a million-dollar net worth, that's having a home that's valued at about $333,000, that's totally paid off,

and then that's having another $667,000 in retirement accounts. I mean, if you think about it that way, that feels very doable. We're talking about, on average, they get there around the age of 50. So if you think about it, if you buy a home at the age of 30 or 35

on a 15-year mortgage, you'll have that thing paid off by the time you're 45 or 50. And if you buy that home for, say, 280,000, and over the course of 15 years, it gains value up to 330,000, all right, well, there you go. That's one-third of that million-dollar net worth right there. And I'm certainly not saying that to diminish the accomplishment. Rather, I'm saying it to show how attainable and how approachable it can be. even for, as Chris said, households that don't make six figures. So what are some of the other key takeaways that we got from this interview?

Beyond the numbers, beyond the data, beyond the fact that most households are five-figure income earners, what else have we learned? Well, we learned something about the way that the average millionaire invests. They were all around in all the asset classes. Real estate was very, very popular. And this was real estate that was debt for real estate. so they had slowed down in their approach about how they buy, how they go about it. But real estate was big.

Equities were big and also growth stock mutual funds. So I do love that he gave a shout out to real estate investing, but that's not the point of this takeaway. The point of this takeaway is the majority of millionaires stick with classic tried and true staples of investing. Chris mentioned mutual funds. Of course, index funds have a lower expense ratio. but a broad basket of funds rather than individual stock picking for the majority of a portfolio that's invested in the market that's invested in equities. Bonds and bond funds, real estate. I mean, these are classic hallmarks of a diversified portfolio.

And as he said, as much as some media headlines love to dominate with these big headlines about Bitcoin millionaires or marijuana industry, millionaires, or the next iteration of it is going to be ARVR millionaires, those are headline-grabbing industries. That's where the excitement is, but that's not where the average millionaire invests. And I'm not saying that to disparage those industries. I'm simply making the point that the level of attention that the mainstream media gives to it is not a reflection of how America's average millionaires reached their seven-figure net worth. So that's one key takeaway. Key takeaway number two is the importance of building a team.

They were working with a group as a team, meaning their investment professional, their tax professional as well as there's trust, estate planning and trust. These were people that were connected. They essentially built a team around their family. And so these were all individuals that knew of each other. And I was amazed to see how well they were connected, meaning that the investment professional with the tax professional, everybody was kind of coordinating to make sure, are we doing what's necessary for this family? The lesson here is that the moment that your budget allows you to do so, start surrounding yourself with professionals.

Now, if you're just out of college or if you're making $50,000 a year and you are buying your very first home or your very first rental problem, property. You're just at the beginning. Every hundred counts. If you're at that stage, don't stress out about the idea that you need to have this big team of extremely expensive professionals around you. Like, don't worry, one step at a time. One, Dave Ramsey is famous for baby steps, right? Just one step at a time. But once you are able to start hiring professionals, I would strongly encourage you to do so. I mean, myself, for afford anything. I've worked with two attorneys. I have a general business attorney, and I have a attorney who is a specialist in trademarks and intellectual property. I've worked with both of them behind the scenes here to afford anything. I have a CPA named Trevor, and as of a couple of days ago, I now have a bookkeeper named Julia. I finally decided to stop doing that myself. And so I agree with, if you heard a previous episode with Joe Saul Seahy, who's a former financial advisor, he made the comment, and I agree with this. that I am still the quarterback.

They are the conditioning coaches, but I'm still the quarterback. I'm the orchestra conductor. I cannot delegate oversight or responsibility. I cannot delegate thinking or judgment or decision making. The buck stops with me. That is what Chris Hogan was talking about, personal responsibility.

I can't just hand my files over to somebody and say, here, you do everything. It doesn't work that way. But what I can do is surround myself with the best coaches and the best teachers and people who are trained to see my blind spots and to clue me in about the unknown unknowns. That is the benefit that you get from surrounding yourself by a team of professionals when you have the money to do so. And remember if you're young or you're just starting out in your career or you're in a lower paying field, don't worry about the fact that that cost of admission to some of these professionals is too high. Just focus on what you can do. Because the more that you focus on what you can do, the more that that circle of can starts to expand. So, key takeaway

number two, build a team. Key takeaway number three, look for what you can do. Look for opportunities to grow forward. Higher education is expensive. You know, you're looking at some of the wages are stagnant. But the people that I'm talking about that are intentional are looking for ways to be able to increase their income, whether that is from their current career or career shift or side hustle, or they're looking for opportunities to grow forward. Look for opportunities and grow the gap. It all comes down to the gap between what you make and what you spend. And there are two ways to grow that gap. You can make more, you can spend less, or you can do a combination of the two.

It's all about that gap. So that's key takeaway number three, grow forward. Key takeaway number four, and this is something that I wanted to touch upon, let's look at what Chris said about people who are self-employed. 18% of them were self-employed. So you had some people that owned their own business, but even though they did that, they were still focused on putting money aside and running the business, but also growing their own personal wealth.

Now, there are actually two takeaways within this. First of all, according to the Pew Research Center, as of 2014, which I know is kind of old data, 10% of the workforce in the United States is self-employed. There is some controversy over that statistic. According to the Treasury Department's Office of Tax Analysis, in a report that they issued in 2007, 17, they found that among taxpayers with non-zero earnings, meaning taxpayers that earned greater than zero, 7.2% received income solely from self-employment. And another 6.1% depended on a mix of self-employment and also working for a company. So they found that 7% of taxpayers are full-time self-employed,

13% in total and 7% full-time. According to the Bureau of Labor Statistics, they agreed with what the Pew Research Center put out. They said that about 10.1% of U.S. workers are self-employed. So the point of all of that is that the reports range anywhere between 7 to 10% of the workforce is full-time self-employed. And if we take the high end of that estimate and we assume that 10% of the workforce is self-employed full-time, what does that mean? That means that self-employed people consist of one-tenth of the workforce. population, but one-fifth of the millionaires. Remember, as Chris pointed out,

18%, which is approximately one-fifth, of the 10,000 households that he surveyed were self-employed people. So the self-employed consists of one-tenth of the workforce, and yet one-fifth of the millionaires. And the reason that I point this out is because 25 years ago, the book The Millionaire Next Door, made a similar observation. They all

also observed that self-employed people and people who owned businesses were disproportionately represented among the millionaires that they surveyed. And so from both of those books, from the millionaire next door, which was published 25 years ago and from everyday millionaires published now, we see that self-employment and entrepreneurship can be a great pathway to a seven-figure net worth. There's a second takeaway within that as well, and that comes at the end of the quote that you just heard. As Chris said, when you're self-employed, you have to grow wealth for two entities, for your company and for yourself. And so you cannot conflate how well your company is doing with how well you yourself are doing.

Certainly, reinvest back into your company as much as you can. Of course, but don't do that at the expense of making sure that you are personal. set up well, that you have retirement savings, that you have investments, that you avoid credit card debt and car loans, take care of yourself while you're taking care of your business. That leads nicely to the fifth key takeaway, and this one, key takeaway number five, speaks for itself. If you have bad habits and you make a big income, it just means now you're doing bad habits on a bigger scale. And we've all seen that. I was one of those people early on in my career. that I thought, you know, if I made more money, that would fix things.

And the problem was, is no, not necessarily. Because all you do is you do more of life or you do it more often. It's about growing the gap between your income and your spending. And why do we want to do that? Why is that so important? Well, it's because of key takeaway number six. You and I know when you're successful with money, that's not an accident. That is a decision that you made because we're the most marketed to country on the planet.

There's always a commercial trying to make you feel bad about the car you're driving or trying to get you to go to a restaurant. And so that kind of mindset and being intentional means they're not spending money because someone else wants them to. They're doing it because they want to do it. I love that line. When you're successful with money, that's not an accident. That's a decision. So what are you going to decide?

That's what I'll leave you with today. My name is Paula Pant. This is the Afford Anything podcast. If you enjoy what you've just heard, please do three things. Number one, open the app that you're using to listen to this episode and hit the subscribe button. That way you won't miss any of our future episodes. Number two, share this episode with a family member or a friend. And number three, leave us a review in whatever app you're using.

using to listen to podcasts. Thank you so much for tuning in. My name is Paula Pant and this is the Afford Anything podcast. I'll catch you next week. Don't forget, we have a free book that can help you start the new year right. This book is called One Tweak a Week. It's totally free and it's 26 easy, quick, actionable steps that you can take to improve your finances in the new year.

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