How The Marketing Industry Continues to Convince Average Americans They Know What a Millionaire Looks Like

The average American millionaire owns less than 6 bottles of wine in his or her home, and paid $13.09 to $14.54 or less for each bottle. They shop at stores like Costco, Target, and Wal-Mart.

A few days ago, I quoted something from one of Dr. Thomas J. Stanley’s books: “In the United States, there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more.” For the past few days, I’ve been studying more about average household income in the United States and, specifically, the purchasing habits of the wealthiest Americans.  It is exactly what I’ve experienced in my own life, and fits precisely with those I know.  Yet, so many of my friends and family continue, almost obstinately, to attempt to emulate a certain “lifestyle” by building a bigger house or buying a nicer car, without first getting their financial foundation set.

Most Millionaires Never Made More than $80,000 in Annual Income

A perfect example: I see friends in New York order Grey Goose vodka, which Stanley discusses in his book.  Chemically, it is virtually identical to every other vodka brand because almost all vodka companies use a “base” from one of three suppliers (with Archer-Daniels-Midland being the largest), with the base shipped in giant tanker trucks across the highways, or in railroad cars.  So, for all intents and purposes, “the Goose” is identical to Smirnoff.  Put plainly, that $60 bottle you  use to signal that you are wealthy when, in fact, you are broke and have credit card debt?  It wasn’t that long ago it was sitting in the back of a chain-smoking truck drivers’ cab at a dirty rest stop in the middle of Nebraska.

Buying the luxury items does not make you a success.  The success comes from having lots of cash coming in, little debt, and the ability to be financially free so you can take control of your own life and spend time how you want with your family and friends. You are not a success because you wear Chanel glasses.  They actually get you further away from your goal.  You are a success if you have the cash to pay for the Chanel glasses using dividends, interest income, and profits from your investment holdings.  The difference is like a war hero.  It’s against the law to wear medals you didn’t earn in combat (seriously).  In the economic world, however, you can fake it by purchasing the “badges” even if you do it on credit at 30% interest and haven’t earned them.  Prada, Gucci, Montblanc, Grey Goose, Burberry … it doesn’t matter.  If you are financially independent, these are legitimate, wonderful ways to award yourself.  I actually own $200 Burberry ties and $1,200 Montblanc pens.  The point is, those things came long after I had built my first business and was on to my second and third, my retirement accounts were funded, my taxes were paid, and I had money saved for an emergency.

Sometimes, I seriously ask myself why I’ve written more than 10,000 articles on investing, saving, and wealth management over the past 10 years.  Doing so has consumed a huge part of my life and, although I’ve made a nice chunk of change in royalties and advertising revenue sharing, there are better uses for my time.  And then, something like this keeps me up – it’s 5:02 a.m. now – because I can’t stop thinking about how I wish that I knew this stuff when I first started out on my own.  I’m putting this all out there so that someone, somewhere, will see that it is possible and that most of the stuff you see on the news or in magazines about the wealthy is a lie.  I do it for the same reason I plan on someday wrapping my holdings up in a single investment vehicle and letting friends and family buy shares – I know how good it is to wake up in the morning and decide how you’re going to spend your day.  I want you to have that same freedom because it is wonderful and we live in the greatest country in the world, judging by our opportunity to create our own destiny relative to the historical alternatives.

How to Know Someone Is an Idiot (It’s Not About the Money!)

The argument that infuriates me more than any other, and lets me know that I’m dealing with an idiot, is when someone says, “I don’t care about the money.”  You know what?  Neither do I! I care about having control over my life and not being subject to someone else’s arbitrary decisions.  I care about having money to give to charity.  I care about knowing if something happened to my family, I could support them.  I care about knowing that through the operating businesses, we create jobs so that people feed their family and save for retirement.  I love knowing these things.

Whether you are a composer, a computer programmer, a school teacher, or a social worker, if you don’t retire wealthy, it is your fault and your fault alone. Hell, an 18 year old saving $300 per month until he’s Warren Buffett’s age at 10% compounded would end up with more than $12 million. That’s why I started working on this when I was 10 years old!  It’s.  Just.  Not.  That.  Hard.  (Note: There is one notable exception: A health crisis.  More innocent people declare bankruptcy due to health problems than almost any other cause in this country and it’s a shame.  We’re better than that.  Someone who is in that position has done nothing wrong.)

I have a family member who came to me when he or she (I’m going to say “he” because I don’t want to keep repeating that) was 18 years old.  He wanted to do exactly what I had done and began putting aside $850 per month, split between a brokerage account and a Roth IRA account.  On top of this, he saved 10% of his pay through his employer’s 401(k).  He never earned more than $28,000 per year. A few years later, he had nearly $35,000 saved.  He could never save another penny, and at a 10% return, he’d have just over $6 million by the time he’s Buffett’s age. That is what I’m trying to get across to people.  If you get it done right, and early, and spend less than you make, compounding will do all of the heavy lifting.  In fact, educators (public school teachers in general) are disproportionately represented among the ranks of millionaires relative to their population due to the frugality common in the industry!  There’s no pressure to show up to work in a BMW 9 Series.

The next time you drop $50 or $100 for a bottle of wine, just remember that statistically, most American millionaires shop at Wal-Mart, Target, and Costco, paying less than $15 for their wine collection (which consists of roughly 12 bottles, on average). Millionaires are, by definition, millionaires because they spend their time focusing on prudently spending less than they earn, generating new sources of income, and earning a good return on their investments. As a group, they would rather own an extra 30 shares of Wal-Mart Stores, Inc. common stock, giving them a bigger share of the retailer's profits and cash dividends, than a case of Dom Perignon. That is why they continue to earn money as they sleep or spend time with friends and family, while most people have to wake up each morning and drag themselves to a job about which they have very little passion.

Related posts:

1. The 5 Levels of Building Wealth
2. How One of My Family Members Used Shares of U.S. Bancorp to Build Substantial Wealth
3. The Importance of Frugality in Building Wealth