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!
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