Being An Average 1 Percenter

Being An Average 1 Percenter

My wife and I are average people. Sure, we have been blessed with a decent income, but you couldn’t tell that based upon our lives, positions in the community, our college grades, and where we are in our careers.

Personally speaking, I have always been a B-student (with occasional C’s and yes..D’s). I never excelled in any one particular subject. I’ve always had an interest in math and science, but I never excelled in the subjects. I never won any competitions or scored in the top of my class. I’m an introvert by nature and have cruised under the radar for most of my life.

Professionally, I am not looking to climb the corporate ladder. I have had significant pay increases but received them because I asked for them. I’ve received pay increases based on my performance, but I was never the best of what I did.

My wife is a physician, but works part-time. She hasn’t written any scholarly articles nor did she graduate from an Ivy league medical school. She did a residency program at an average institution (not at Harvard or Yale). She does not work in an academic hospital and holds no teaching responsibility at a university. She works her 20 hours a week and comes home. I put in my 8 hours a day and come home. We are average people who worked hard early in our careers. We asked for things (i.e. pay raises) because we met expectations and occasionally exceeded them.

Often times we think of the 1 percent as the best in their fields. We think of actors, musicians, politicians, athletes, wall street executives, and CEOs. We think of people who worked hard, became one of the best at what they do, and with a little bit of luck, they struck it big. But for most 1 percenters, this is not the case.

Fifteen years ago Thomas Stanley and William Danko published The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. One of the key takeaways from the book include that the 1 percenters in your neighborhood could come as a surprise.

The consistent finding in the book is that for the last 30 years, most who are wealthy are business owners, often of blue-collar businesses, that most others have ignored. Think janitorial, scrap metal, and dry cleaning, especially the industrial variety. It’s the successful owners and operators of such unglamorous businesses who have often been able to make money in one generation.

Most 1 percenters tend to be more frugal than others of the same age and income. For example, the research in the book shows that they typically live in areas where they have 5, 10, or 25 times more wealth than their neighbors.  The median value of their homes is in the low to mid-$400,000 range. Their homes are highly concentrated in the Midwest and the South, not in California or the Northeast, where, according to the book, you actually have the lowest probability of becoming a millionaire.

What you are likely to find parked in the driveway of the millionaire next door is a Ford or Toyota. According to Stanley, the median price for a millionaire to spend on a car is $31,000, and most of them buy (not lease).

What I have noticed in the book and from my own life is that it comes down to the effort you want to put in early in life and/or the amount of risk you’re willing to take.  So if you’re young, the decisions you make now can set you on a path to great financial success.  If you’re older, the amount of risk you’re willing to take will dictate your financial success.  The bottom line is that any average person can be a 1 percenter!

About The Author

Edwin is a marketer, social media influencer and head writer here at I Am 1 Percent. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.


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34 Comments

  1. Noah

    I recently read The Millionaire Next Door and thoroughly enjoyed it.

    However, I think the point of the book was to demonstrate that it is possible to eventually accumulate wealth through careful planning and by consuming less. Almost anyone can become wealthy if they try hard enough and have a job that is near the average. Being a 1 percenter is about income (> $250k/yearly if I recall correctly). While I think that most 1 percenters are (or at least should be) millionaires, it is by no means a guarantee. There are plenty of 1 percenters who have less than I do. The interesting thing is that a large portion of 1 percenters will be screwed when they retire because the $5 million they have saved for retirement is not nearly enough to maintain their $500K-1mi/year lifestyle.

    Reply
    1. Shape

      So being an English teacher is a “wrong” decision because they will never be 1%?

      Reply
      1. Noah

        Lance never implied that. His point is that English teachers will most likely never be a 1% earner. Now, that’s not to say they can’t accumulate wealth. I’ve known teachers who have accumulated well over $1million in wealth.

        If your calling in life and passion is teaching English, of course you should pursue it.

        Reply
        1. Shape

          I know lance didn’t intentionally mean it, but it was implied with the word “ones” in the sentence “Make the right ones”, as ones equals “decisions”, which is a call back to the previous sentence discussing how “you will likely never be a 1 percenter as a high school English teacher but that was a decision you made.” It is almost like sentences work together or something.

          Or, maybe Lance did mean it and hates teachers? We will never know…

          until Lance comes back and posts.

          Reply
          1. Noah

            The decision to become a teacher can be neither right nor wrong. If we change his wording from “right” to “expedient to building wealth”, it makes sense. Obtaining $1 million is much more difficult as an English teacher than a doctor or lawyer.

            That was my interpretation, but I could be wrong. Lance can give his interpretation when he returns. I will have less respect for Lance if he does in fact hate teachers 🙂

          2. iam1percent

            We all know what he meant. There are right decisions and wrong decisions to get to the 1 percent. More likely not, being a teacher is a wrong decision if you want to be in the 1 percent, but it is never a wrong decision if that is your passion and you love teaching.

  2. Noah

    In case someone doesn’t have time to read the book, at GetRichSlowly they have the 9 lessons of the book outlined: http://www.getrichslowly.org/blog/2011/02/09/nine-lessons-in-wealth-building-from-the-millionaire-next-door/

    Interestingly enough, the first principle is that income does not equal wealth. Based on that alone, I’m not sure how being a 1 percenter is even relevant.

    Reply
    1. iam1percent

      Income helps if you live an average life (i.e. spend much less than you earn). Earning a 1 percent income doesn’t always guarantee being in the 1 percent of networth.

      Reply
      1. Noah

        I would agree with that.

        The statement from the post that confused me was the following:

        “One of the key takeaways from the book include that the 1 percenters in your neighborhood could come as a surprise.”

        Shouldn’t it read instead:

        “One of the key takeaways from the book include that the wealthy in your neighborhood could come as a surprise.”

        I know I’m being picky, but I think it’s an important distinction.

        Reply
        1. iam1percent

          Although I typically talk about 1 percent being in the measure of income, 1 percent can also be measured by wealth.

          http://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/

          Reply
  3. Sam

    I also believe many more people can be in the top 1%.

    Unfortunately, only 1% can be in the 1%.

    Top 1% is $380,000+ in annual income per tax filing btw to the commenter above.

    Reply
    1. Shape

      The real trick is not getting more to the 1%, but getting in so everyone that wants it has a living wage and their basic needs met. We are in a modern society in the United States. Public school cafeteria should not have to be open in the summer and the school bus system run just to make sure the poor kids get something to eat when school is out.

      Reply
      1. Noah

        A large portion of the poor children come from families who have made life mistakes, whether it be having children out of wedlock or abusing drugs. Unfortunately you can’t prevent people from screwing up their lives. Their children usually suffer the most. I believe most people who are honest and hard-working are able to find work and provide. Yes, there are those who can’t and we as a society provide assistance. I don’t think that programs like school lunches should be cut.

        The other problem is that those in poverty don’t know how to manage money. I’ve known people on welfare who buy the most expensive food at the beginning of the month and then live hungry for the last week because the food stamps ran out. They also have more TVs than I do and expensive shoes. I wish we could force those on public assistance to attend mandatory money management classes, but of course that will never happen.

        Reply
        1. Shape

          You are stereotyping here. Even if you worked with people on welfare or food stamps (say you were a government counselor) you are still dealing with a limited sample mean that is also just a limited example of the region your office covered. An urban worker will encounter very different people than someone working in a rural, farm area.

          The people in poverty with drug problems, multiple TV’s, etc. are the ones that attract media attention. What gets people fired up more? The ones yelling with TV’s and expensive shoes; or the drafter who cannot find a job because people are using computers now and he must live with his wife and two kids in a tiny apartment in a bad neighborhood during a recession?

          I also think the recent drug testing for welfare checks has shown a small percentage is actually using drugs, even if you consider some of them cleaned up before going for their test.

          There is also a gap between the poverty line and the living wage line where people do not qualify for various assistance programs, but still struggle. They need help too.

          There are many causes for poverty or living below the living wage. Drugs and children are a small percentage of the problem and are hardly the main cause.

          Reply
          1. Noah

            I know the solution of a “living wage” sounds like a good solution but how do you realistically implement it? If you force employers to pay more (ie: raise the minimum wage), what is to stop employers from hiring less workers or laying off workers? I agree it is hard to live on minimum wage, but short of the govt giving away money (which they already do in the form of tax refunds to those who pay almost no taxes), what is the solution?

          2. Shape

            And there is the question! I do not know, which is why I am saying it is a problem.

            It would probably be much easier to take the current top 10% and lift them up to have the same buying power and lifestyle as the 1%, then to lift the bottom 10% up to a living wage.

  4. Shape

    How could you possibly take that message out of that book? How can you consider the book’s definition of wealth, top 1% earner, and top 1% net worth to be equivalent? They are all magnitudes different.

    The book even says there are over 3 million households with a net worth over $1 million. That is not 1% by the math.

    Besides, it is very legit to say being wealthy is not about what you own, but the money you earn every year and are able to spend. There is a dramatic difference between the 1% earners and those that saved a lot of money. A 1% earner could live a very comfortable lifestyle and still put enough money away to retire with a very high net worth able to sustain their lifestyle through retirement (isn’t that just a kind way of saying ‘until you die’?). But then what about the person making $50,000 / year? They would have to live at or below a living wage depending on the family size in hopes to put enough money away.

    Besides, I find it entertaining for a 1% earner to be telling the non-1% earners that they can be wealthy if they live very frugally for their entire life.

    “You can be wealthy too! You take home $50,000 a year? OK, live on $30,000 a year and save $20,000. That is $600,000 you can save over 30 years, then consider the compound interest!”

    “But I have 2 kids and a wife, how do I live on $30,000 a year?”

    “You just have to sacrifice, drive an old car, use the bus, no private school, and don’t take vacations. It’s a long hard road, but you can do it!”

    “Do you do that?”

    “Me, no! I don’t even think about the grocery or utility bill.”

    And BTW, “Often times we think of the 1 percent as the best in their fields.”

    No, we don’t. Stop just saying things to fill up an article like the following crap “My wife is a physician, but works part-time. She hasn’t written any scholarly articles nor did she graduate from an Ivy league medical school. She did a residency program at an average institution (not at Harvard or Yale). She does not work in an academic hospital and holds no teaching responsibility at a university. She works her 20 hours a week and comes home. ”

    Ohh, really? A 20-hour a week, non-ivy league, MD physician does not write scholarly articles like a research PhD’s would? Do tell me more! And those scholarly articles, boy, do those rake in the cash… what?

    “Most 1 percenters tend to be more frugal than others of the same age and income.”

    So, if I compared myself to others my exact age and income, but I have more wealth, then I probably lived more frugally? Come up with that one all on your own?

    Reply
    1. Noah

      NOTE: I accidentally forgot to hit the correct Reply button so this same response is below. Admin, please delete the duplicate if possible.

      I agree with your statements about the 1% being irrelevant to the book. I also agree that the 1% probably take for granted that they are able save more accumulate wealth. It sounds easy when someone is dropping $50K on a new car, but can also afford to save $100K/year.

      However, I don’t agree with the statement that someone who makes $65-70K/yearly ($50K take home) can’t become wealthy, even a millionaire. In most states (not CA for sure), that is good money and if you have a mortgage between $500-1000, you probably have another $3000 left. How you spend it is up to you, but saving $1500/month is not unfathomable, even with 2 children.

      Reply
      1. Shape

        The $50,000 is really just an example I was throwing out to contrast the high income of the 1%. I should have probably looked up the median income in the US.

        My main point was that someone giving that advice making $300,000 + / year can live a very comfortable life and still put away a large percentage of their money vs someone making $50,000. It is mainly that there is a significant difference between earning a lot and saving a lot of wealth.

        Reply
        1. Noah

          I agree 100%. Wealth and income are 2 very different things. I also noticed that when I read the post.

          Reply
          1. Shape

            I guess we just need to wait for the blog of a 1%’er that lives on $50,000 / year and puts the rest of it away.

          2. Noah

            Now that is an interesting idea, but I can guarantee it is very rare.

        2. iam1percent

          You obviously have not read this blog, but most who do know that I don’t live a lavish lifestyle. We have beer taste with a champagne income…and we’d do the same if we were making $50k.

          Reply
    2. iam1percent

      “So, if I compared myself to others my exact age and income, but I have more wealth, then I probably lived more frugally? Come up with that one all on your own?”

      That was the point of the book…and its easier said than done. Most people live beyond their means.

      “And those scholarly articles, boy, do those rake in the cash… what?” If you know how to leverage it, yes you can rake in cash. Consulting, speaking, etc. But you need to be well published first….

      ““You just have to sacrifice, drive an old car, use the bus, no private school, and don’t take vacations. It’s a long hard road, but you can do it!”

      That’s what I do. I drive an old car with 113,000 miles, my children are going to public school, and we haven’t gone on vacation (other than trips to the jersey shore) in years.

      This is probably why you will never be in the 1 percent (income or wealth). You have a no-can-do attitude.

      Reply
      1. Shape

        – – – – – “Most 1 percenters tend to be more frugal than others of the same age and income.”

        – – – – – “That was the point of the book…and its easier said than done. Most people live beyond their means.”

        There is just too much to say about this one, but you will not get it so I will (try to) keep it simple. No, the book is not dealing with the 1 percent exclusively. Initially the book speaks about the average millionaire, but more than 1% of households have a net worth of $1 million as defined by that book, so not the 1% here.

        Second, the main point of the book is to build wealth relative to your income, which is also relative to the lifestyle you built. While the concepts could be used to get to the 1% net worth, actually getting to 1% is not the point of the book. You are almost committing this sort of guilt by association error.

        And stop using cliches.

        – – – – – “If you know how to leverage it, yes you can rake in cash. Consulting, speaking, etc. But you need to be well published first….”

        You missed the point, as usual. Never the less, you do not have to have scholarly articles to make money doing consulting or speaking.

        – – – – – “That’s what I do. I drive an old car with 113,000 miles, my children are going to public school, and we haven’t gone on vacation (other than trips to the jersey shore) in years.”

        I am sure you live frugally compared to your income, but again, not the point.

        – – – – – “This is probably why you will never be in the 1 percent (income or wealth). You have a no-can-do attitude.”

        Arguing against your total obliviousness and ignorance does not mean I have a no-can-do attitude.

        I am going to guess reading comprehension was never your forte.

        Reply
  5. Noah

    I agree with your statements about the 1% being irrelevant to the book. I also agree that the 1% probably take for granted that they are able save more accumulate wealth. It sounds easy when someone is dropping $50K on a new car, but can also afford to save $100K/year.

    However, I don’t agree with the statement that someone who makes $65-70K/yearly ($50K take home) can’t become wealthy, even a millionaire. In most states (not CA for sure), that is good money and if you have a mortgage between $500-1000, you probably have another $3000 left. How you spend it is up to you, but saving $1500/month is not unfathomable, even with 2 children.

    Reply
  6. Noah

    By the way, iam1percent, that is a picture of you at the top of the post right? 🙂

    Reply
  7. Wayne @ Young Family Finance

    Income is only a piece of the wealth picture. Much of what this author found makes a lot of sense. There are plenty of superstars who have filled for bankruptcy. That’s because it doesn’t matter how much you make, if your expenses exceed your income.

    Reply
    1. iam1percent

      Wayne, you got it. That was the point of the article AND the book. I know it sound simple, but dear God…easier said than done for most people.

      Reply
  8. My Money Design

    There certainly are a lot of 1%’ers mixed in the masses these days, and they’ve all got there because they were more ambitious or creative than the people next to them. I have read one of Thomas Stanley’s other books similar to The Millionaire Next Door and was surprised to learn who the really rich people are – and they’re not who we think of. There were plenty of examples of different paths people had taken to become rich – yet they remain just as average as ever.

    Reply
    1. Shape

      My Money Design,

      So, I have to post this link here because you apparently are censoring correct information on your website. I have to give iam1percent mad credit for allowing the likes of me to post on his site. He can take it and dishes it back out.

      But, that book you are recommending, Rich Dad Poor Dad by Robert Kiyosaki, gives horrible, and sometime illegal, advice. Everyone should read the analysis of that book by John T Reed: http://www.johntreed.com/Kiyosaki.html

      Maybe you should have read it before recommending that book.

      Reply
  9. Josiah Bounderby
  10. Offshore Company

    Write more, thats all I have to say. It appears that

    you relied on some reputable sources to make your point. You clearly know what

    you’re talking about.

    Reply

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