There is no shortage of lies, myths and misconceptions about millionaires. And trust me – after becoming a millionaire at 35, I’ve heard them all.
Many believe the only way to become a millionaire is to be evil or cutthroat. Others believe millionaires simply inherited their wealth. I’m here to tell you neither of those are true. I got rich the old-fashioned way. No inheritance. No businesses. I was never cutthroat.
These 13 myths about millionaires need to stop.
Myth #1: Most Millionaires Just Inherit
One of the most pervasive myths about becoming a millionaire is that you must inherit substantial money or win the lottery to achieve this status. Fake news.
While windfalls like inheritances or lottery winnings can undoubtedly boost your wealth, the truth is that the majority of millionaires are self-made.
They built fortunes through hard work, discipline, and intelligent financial decisions.
In reality, relying on luck or inheritance is not a sustainable path to wealth. Instead, focus on building your financial literacy, investing wisely, and gradually developing a long-term plan to accumulate wealth.
Myth 2: You Need a High-Paying Job
While a high income can definitely accelerate your journey to wealth, it is not the only path. Many millionaires started with modest incomes and gradually built their wealth through careful saving and investing. Dave Ramsey found that nearly 1/3rd of all millionaires never earned a six figure salary in any year of their career!
The key is to live within your means, save a portion of your income consistently, and invest wisely to grow your wealth over time.
It’s not about how much you earn but how you manage and grow what you have.
Myth 3: You Have to Take Big Risks
Some believe that becoming a millionaire requires significant risks, such as investing all their savings in cryptocurrencies or stock market speculation. While taking calculated risks can be a part of wealth-building, it’s essential to understand that reckless gambling with your money is more likely to lead to financial ruin than success.
Successful millionaires are often risk-averse when it comes to preserving their wealth (especially as they get older). They prioritize diversification, have a solid financial plan, and avoid putting all their eggs in one basket. Intelligent, informed decisions are critical to financial success, not reckless gambles.
Myth 4: Millionaires Only Invest in Stocks
Investing in the stock market is a great way to build wealth, but it’s not the only way. Many millionaires have diversified their portfolios by investing in real estate, starting their businesses, or engaging in other income-generating activities.
Diversification is a fundamental principle of sound financial planning. By spreading your investments across different asset classes, you can reduce risk and increase your chances of long-term financial success. Don’t limit yourself to stocks; explore various investment opportunities to build wealth effectively.
Myth 5: Millionaires Never Face Financial Challenges
Just like the assumption that millionaires inherit their wealth, the image of millionaires living a life of perpetual ease and luxury is a myth perpetuated by popular culture. In reality, millionaires, like everyone else, can face financial challenges, setbacks, and unexpected expenses.
What sets them apart is their ability to manage these challenges effectively due to their financial discipline and planning.
It’s essential to have a financial safety net, such as an emergency fund, insurance, and a solid financial plan, to weather unexpected financial storms. No one is immune to life’s uncertainties, regardless of their wealth.
Myth 6: The Myth of Endless Leisure
Contrary to popular belief, not all millionaires spend their days lounging on yachts or sipping champagne by the pool. They may do that after they retire, but they don’t spend the most productive years of their lives doing nothing. That’s why they are millionaires.
Many successful individuals work tirelessly to maintain and expand their fortunes. A regular 40-hour work week isn’t typical among most millionaires.
Wealth often comes from hard work, strategic planning, and relentless dedication to their goals.
Myth 7: Millionaires Are Always Flashy Spenders
Another common misconception is that millionaires are extravagant spenders who flaunt their wealth through luxury cars, mansions, and designer clothes. While some millionaires enjoy the finer things in life, most are frugal and mindful of their spending.
As we learned in Dr. Thomas Stanley’s influential book, “The Millionaire Next Door,” most millionaires don’t spend like drunken sailors. Most live in modest homes and shop in the same stores as the rest of us.
“Keeping up with the Joneses” can lead to financial ruin rather than prosperity. Millionaires often prioritize saving and investing over conspicuous consumption, a key reason they can maintain their wealth over time.
Myth 8: You Have To Sacrifice Your Lifestyle
Nobody wants to live a life that feels like a sacrifice. Contrary to popular belief, becoming a millionaire doesn’t require sacrificing your current lifestyle entirely. It’s not about living a spartan existence but making thoughtful choices about allocating your resources.
Creating a budget that aligns with your financial goals and values is crucial. You can gradually increase your wealth without feeling deprived by identifying areas where you can cut unnecessary expenses and redirect those funds toward savings and investments.
Myth 9: It’s Too Late to Become a Millionaire
A common myth, particularly among older individuals, is that it’s too late to become a millionaire. They believe it’s unattainable if they haven’t achieved this milestone by a certain age. However, this myth couldn’t be further from the truth.
It’s never too late to start building wealth. Regardless of your age or current financial situation, taking the first steps toward financial literacy, setting clear goals, and consistently saving and investing can help you make significant progress toward becoming a millionaire.
Myth #10: Millionaires Are Work-A-Holics
Just like most millionaires don’t spend their lives on private boats and jet setting around the world on constant vacations, they also don’t work themselves to death, either.
Smart millionaires maintain a proper work/life balance to ensure they put in enough effort to build wealth, but they also don’t sacrifice their health and time with their families. They work hard but they also play hard.
Myth #11: Millionaires Are Easy To Spot
Untrue. The image that you have in your mind about what millionaires do and look like doesn’t necessarily represent the reality. While high income people drive around in expensive exotic cars, wear $6,000 suits and wear pricey jewelry, real millionaires avoid public displays of wealth.
Most millionaires don’t look wealthy, me included. You would never guess I’m a millionaire if you passed me on the street.
Myth #12: Millionaires Have Ivy-League Degrees
While most millionaires do have college degrees, they don’t necessarily have degrees from high-ranked, prestigious universities. In fact, more than six in 10 millionaires got their degree from a regular, in-state public university.
Just having a degree is much more important than where the degree comes from.
Myth #13: Most Millionaires Are Expert Investors
It’s true that most millionaires invest their money. But, that doesn’t mean they are all experts at picking and choosing what companies to pour their money into. In fact, regular index funds and ETFs are two great hands-off ways to invest your money in the market without knowing a lot about the market. And they have produced a lot of millionaires – including me.
You don’t need to be an expert at the stock market to earn considerable wealth investing.
How Millionaires Get Rich
In conclusion, the path to becoming a millionaire is not paved with luck, inheritance, or extravagant spending.
It requires discipline, financial literacy, and the ability to make informed decisions about saving and investing. By dispelling these eight common myths, you can focus on the true principles of wealth accumulation and set yourself on a path toward financial success.
Remember that becoming a millionaire is a journey, not a destination, and anyone can embark on this journey with the right mindset and commitment to their financial goals.
