Written for a general audience eager for financial security and a comfortable retirement, Everyday Millionaires also should appeal to financial advisors curious about the findings of research done by a polished financial coach with the sensibility of your toughest but favorite teacher.
“Wake up people! Your income today is not a reflection of your personal value,’’ wrote Chris Hogan, author, public speaker and financial coach for Ramsey Solutions, Nashville, Tennessee.
Here’s what Hogan discovered in his research for the book: There are almost 11 million millionaires in the United States today, according to a study from Spectrem Group’s Market Insights Report (2017), but the number of people living paycheck to paycheck is on the rise, with one in three unable to cover a $2,000 emergency with cash.
Hogan and his team surveyed and/or interviewed more than 10,000 American millionaires, with 89 percent having a net worth of between $1 million and $5 million.
Hogan said that his work uncovered these traits among millionaires: they take personal responsibility for their life and money; they work hard to earn and keep their money; they have long-range goals and they are consistent. He defined a millionaire as a person who knows they can cover their bills and not have to work for the rest of their life.
The majority of respondents, 79 percent, “reached millionaire status through their employer-sponsored retirement plan,’’ such as a company 401(k). Hogan said these people believe that you don’t get rich, you build wealth, a mantra that advisors know well. And nearly 70 percent of the millionaires in his study have a financial advisor, often retaining the advisor after retirement to shepherd their investments.
Out of the 10,000 millionaires, Hogan profiled 26 men and women in his book.
Overwhelmingly, they are from lower-middle to middle class backgrounds, often raised on farms, educated at public schools, living unpretentiously, driving used cars and, about 33 percent live in homes located in zip codes where the home values are $205,000 or less.
“Of the millionaires we researched, we found that most common occupations of their parents were sales, farming, engineering, small business ownership and accounting.’’
The children who became millionaires most often were teachers, engineers and accountants, and rarely (7 percent) held C-suite jobs. Eighty-eight percent were graduated from college, and 68 percent of them did not take out student loans. But 69 percent of respondents did not average $100,000 or more in household income per annum.
Essential components of their financial lives were beginning savings when young; never spending more than they made, never borrowing from friends or taking out a business loan; most often paying in cash, rarely carrying debt on a credit card or home equity loan; and planning for their future. Among those researched, only 21 percent received an inheritance and only 3 percent received a $1 million or more inheritance.
“Most of them are smart, hard working, unassuming people (who) built their wealth low and slow. When it comes to building wealth, the microwave approach doesn’t cut it,’’ Hogan said.
Many respondents had two or three careers, such as Sandra, who began as a beat policeman in the 1960s, retired after 27 years to become a customer service rep for an airline and finished her work life as an office administrator. She bolstered her company 401(k) with real estate investments and retired with a net worth of $2.3 million.