How to Be a Millionaire: The Best Quotes from "Everyday Millionaires"

Everyday Millionaires is a book by Chris Hogan, who works with Dave Ramsey, and it’s based on interviews with over 10,000 millionaires.

There are two reasons I wanted to write an article that covers the best quotes from the book.

First off, there are so many myths, falsehoods, and just plain old wrong impressions about wealthy people that it’s worth taking the time to correct them.

Most of what people think about how to become a millionaire is just incorrect because the wealthy people most Americans are most familiar with, people like LeBron James, Elon Musk, and Kim Kardashian, are simply not representative of how most people acquired large amounts of money.

It’s good for people to understand that because if you believe your only shot at becoming “rich” is to be like them, it can make it seem out of reach from most people when it’s anything but.

Additionally, there is no shortage of good financial advice available for people in America, but unfortunately, it is something you really have to search for. They don’t teach it in school, you’re not going to see it on TikTok, and most people’s family and friends simply don’t know a lot about the subject.

So, there’s a lot to be said for putting sound financial advice in front of people – and this really is that. Personally, I would put more emphasis on running your own business than they did in this book (even though it’s anything but a picnic), but otherwise, everything you’re going to read here is simple, solid financial advice for you, for me, and for your kids that I would recommend to anyone.

Will it help you become a millionaire? There are no guarantees and the older you get without having gotten started, the harder it becomes, but almost everyone reading this would benefit from having a good understanding of smart, basic, financial principles.

* Over the past year, we have surveyed and/or interviewed over 10,000 American millionaires. We targeted people with a net worth of more than $1 million, meaning the total of all their assets, bank accounts, and investments (minus any debts) totals $1 million or more. Most of them (89%) have a net worth between $1 million and $5 million. The rest have a net worth well over the $5 million mark. We asked this group everything we could think of to help us get a crystal-clear picture of who they were, how they acted, where they lived, what they did for a living, where their money came from, how long it took them to hit millionaire status, and what their wealth meant to them.

* Of all the millionaires that participated in our research, we found that the most common occupations of their parents were sales, farming, engineering, small-business ownership, and accounting.

* TRUTH: 79% of millionaires received zero inheritance, meaning only 21% received any inheritance at all. 84% received $0 to $100,000, which means that 84% of millionaires did not receive enough inheritance to make them millionaires.

* Like I said, 79% of millionaires received no inheritance at all from their parents. That means only 21% of millionaires actually received an inheritance. You know what’s interesting about this? The Survey of Consumer Finances by the Federal Reserve reported on the percentage of American households who receive inheritances. You want to take a guess at what that percentage was? Twenty-one percent. That’s right. Millionaires and the general population receive inheritances at the exact same clip.

* Eight out of ten millionaires come from families at or below the middle-class income level. When we break that down, 48%—so almost half of all millionaires—described their parents’ household as middle class, 27% described it as lower-middle class, and 4.25% of them described it as lower class. It seems that real millionaires aren’t waiting around for someone else to hand them a fortune.

* While I’m talking about risks, I want to briefly touch on one that most people never consider. One of the riskiest financial behaviors I know of is engaging in partnerships with other people. I’ve seen friends or family members go in together on businesses and investment deals, and I’ve seen them go sideways more often than not. Even if you know and love the other person, a partnership can ruin your chances for wealth building.

* In fact, if someone earning the median US household income of $59,000 started investing the recommended 15% of their income at age thirty, they’d have over $1 million by age fifty-five. And that’s if they never got a single raise! Just doing the exact same thing for twenty-five years would make them a millionaire.

* 90% of millionaires have never taken out a business loan. ...And wealthy people avoid debt. We found that 63% of millionaires have never taken out a home equity loan or line of credit, and 90% do not currently have a home equity loan.

* TRUTH: 79% of millionaires did not attend prestigious private schools. 62% graduated from public state schools, 8% attended community college, and 9% never graduated college at all. ...The truth is, 88% of millionaires did graduate with a bachelor’s degree, compared to only 33% of the general population. Moreover, millionaires are more than twice as likely to pursue advanced degrees than the general population. We found that 52% of millionaires have a graduate or terminal degree, compared to only 12% of the general population. What’s really interesting, though, is that these men and women were often the first in their families to go to college. Only 25% of millionaires had both a mother and father who went to college or a trade school, and 46% said neither parent went at all.

* Speaking of student loans, I cannot stress this point loudly enough: stay away from them! Don’t be fooled by the marketing, either. Sallie Mae and Navient aren’t in the education business; they’re in the debt business. That tuition money isn’t free. It comes with a price tag that will wreck your life for decades. Getting out of college with $40,000, $60,000, or—heaven forbid—$200,000 in student loan debt will negatively impact your ability to build wealth throughout your life. Because of the power of compound interest, your first decade out of school will be critical to your long-term investing. Sending all your hard-earned money off to pay for student loans will rob you of your wealth-building potential for years. Millionaire-minded people know this. In fact, 68% of the millionaires with a college degree we studied never took out a penny in student loans, compared to 49% of the general population. They understand that wealth building is a long-term job, and they don’t want to waste any time with student loan payments. They’d rather do whatever it takes to get out of school debt-free. That way, they can actually keep the money they make early in their careers. ...Let’s do the math. The average monthly student loan payment for someone in their twenties is $351.15 If that student avoided student loans, started his or her career without that payment, and invested that $351 into a mutual fund every month instead, they’d have almost $3 million by age 65. Don’t miss that.

* TRUTH: One-third of millionaires never had a six-figure household income in a single working year. Only 31% of them averaged $100,000 household income a year, and only 7% averaged over $200,000 household income over the course of their career.

* A $35,000 income today doesn’t mean that’s all you’ll ever make. It also doesn’t mean you’re disqualified from building wealth. Don’t believe me? Fine, I’ll let the math do the talking. For simplicity’s sake, let’s say you get a $35,000 job out of college at age twenty-two, and you stay in that same job—never even getting a raise—until you’re sixty-five. If you stay out of debt and live within your means, you should be able to invest the recommended 15% of your income, which comes to $437 a month. Putting $437 into a retirement account every month from age twenty-two to sixty-five will leave you with nearly $3.5 million at retirement. And that’s if you never got a raise, never saved any extra, never became a two-income household, never paid off your house, and never invested more. With that size nest egg, your annual retirement income would be about five times greater than the $35,000 you made throughout your life! Are you starting to realize that anyone can do this? I hope so!

* An unbelievable 96% of net-worth millionaires enjoyed what they did for a career. Sixty-four percent took it a step further and said they loved their jobs. They must love them because 56% are still working in some capacity even though they’ve achieved financial independence. In fact, more than one-third (37%) are still working full-time. Why? Because they enjoy their work, and they find fulfillment in it. Of all the millionaires we talked to, only 38% were fully retired. Why do millionaires like to work so much? I think it’s because a strong work ethic has been grafted into their DNA. They work because they like to work; it’s who they are.

* We found that 80% of millionaires are married, compared to 49% of the general population. More significantly, 63% of millionaires are in a first marriage, compared to only 38% of the general population. Finally, only 5% of millionaires report being currently divorced, compared to 19% of the general population. So, the general population has four times the divorce rate than that of millionaires! ...These successful millionaires demonstrate consistency not just in their finances, but also in their marriages and relationships, as 75% of married millionaires have been married for thirty-two years on average. This means most of these couples built their wealth, year after year, together. The result of working side by side for so long toward a common goal is apparently important for marriage, too, as an overwhelming 91% of millionaires say their marriage is either good or great.

* Second, above the 401(k) match, you’ll move to a Roth IRA. A Roth IRA is an amazing retirement option that enables your money to grow tax-free. You’d set this up on your own, separately from the 401(k), so talk to an investment professional for help. This is also where you’d start investing if your company does not offer a 401(k) match. The Roth IRA works pretty much the same way as a Roth 401(k). The main difference is that an IRA gives you more fund options to choose from than what your company offers inside their 401(k) plan. There’s a maximum contribution limit for Roth IRAs ($5,500 per person under age fifty as of 2018). If you’re married filing jointly, though, both spouses can have a Roth IRA—even if one doesn’t work. So, each spouse could max out a Roth IRA in their name up to $5,500 each, or $11,000 total (as of 2018). After matching the 401(k) and putting up to $11,000 into a Roth IRA, most couples hit their 15% contribution goal right here. Third, if you max out the Roth IRA and still haven’t hit 15% of your income in contributions, then go back to the 401(k) and finish your 15% there. One quick note on income, though. You can’t open a Roth IRA if your income is too high ($135,000 individually or $199,000 for married couples filing jointly as of 2018). If that excludes you, then you’d just invest your full 15% into the 401(k) and be done with it. Third, if your company offers a 401(k) match, take it. I don’t want to hear any excuses about this one. Think about it: your employer is actually offering you free money.

* While 15% should be your starting point for your investing, it’s not all you should ever do. Remember, the reason we start with only 15% is because you still need some extra income to throw at your mortgage. Once you finally pay your house off, though, you can fire all your cannons at your 401(k).

* And, like I told you early in the book, most of these stories are a little boring. These men and women didn’t have crazy, bold, unusual, world-changing careers. They’re teachers and accountants. Military personnel and mid-level management. Engineers and farmers. Remember, only 15% of millionaires held senior leadership positions in their careers; the rest—a whopping 85%—were regular people working regular jobs. And now they’re millionaires.

* Vanguard reports that the average 401(k) balance in America is $103,866.36. That takes into account all age groups, from those under twenty-five to those over sixty-five. Obviously, younger folks are going to have less saved than their parents and grandparents, so let’s just look at the over-sixty-five group. The average 401(k) balance in that group is $209,984.37. If that represents all of an average person’s retirement savings, then they’re in trouble. Using the industry standard 4% annual withdrawal, this person is looking at an annual retirement income of—wait for it— $8,000. That’s less than $700 per month. Can you live on that now? I can’t. Will that fund your high-definition retirement dream? It won’t fund mine.

* Watch out for lifestyle creep. Sure, you need to give yourself permission to spend and to have a little fun with your hard-earned money but keep that spending in check. Remember, the wealth you build will be your sole source of income for the rest of your life. Don’t be scared to have some fun with it, but make sure that nice beach house won’t end up stealing years’ worth of your future income. Just because you can buy something doesn’t mean you should.

* Our research found that net-worth millionaires are much more generous than the general population, as 55% of millionaires give to others regularly, compared to 28% of the general population. Some give monthly and some give as needs arise, but most—70%—say they set some of their income aside every month to give to others. Only one in ten millionaires says giving is not part of their personal finances. The bottom line is that millionaires are givers.

* First, we found that 94% of millionaires say they live on less than they make—compared to 55% of the general population. Second, 95% of millionaires say they plan ahead and save in advance for big expenses—compared to 67% of the general population. Contrary to what you may see on TV, the average millionaire lives a modest life without many extravagances. For example, the typical millionaire spends $200 or less per month on restaurants.

* In fact, we found that 70% of millionaires saved more than 10% of their income throughout their working years. Thirty percent of them saved more than 20% of their income. When we asked what factors contributed to their net worth, 83% said saving money.

* It took the average millionaire 10.2 years to pay off their homes, and 67% of them live in homes with paid-off mortgages. ...Freddie Mac reports that 90% of all homebuyers choose a thirty-year mortgage when buying a house. Only 6% of buyers select a fifteen-year loan. This absolutely blows my mind. If you want to know why most people don’t become millionaires, look no further than the thirty-year mortgage. People throw away tens—even hundreds—of thousands of dollars on these loans without ever stopping to do the math.

* More than half (51%) of the millionaires in our study believe the top factor holding people back from becoming millionaires is a basic lack of financial discipline. These wealthy men and women demonstrate their discipline with habits you wouldn’t normally attribute to millionaires. We’ve already seen that 94% of millionaires live on less than they make, and 95% plan ahead and save up for big purchases. That planning takes different forms, but most of them (64%) still live on a budget, even though they are financially independent. And believe it or not, 93% of millionaires use coupons all or some of the time while shopping. ...We found that 96% of millionaires never carry a balance on a credit card. So, let’s break it down: millionaires live on less than they make, save for big purchases, and spend wisely. Or, to make it crystal clear, they live on a budget and stay out of debt. It’s not rocket science.

* If you have any type of debt except a mortgage, you need to squeeze every dollar you can out of your budget to pay that debt off as quickly as possible. Debt, as we’ll see below, will kill your millionaire aspirations.

* Rather than hitting the lot and buying a brand-new car, we found the average millionaire drives a four-year-old car with 41,000 miles on it. And eight out of ten millionaire car buyers drive it away debt-free without carrying a car payment behind them. These wealthy people know that car payments and loan interest won’t move them forward to financial independence. What it's really costing you, this will blow your mind. Cars.com reports that the average new-car payment is $509 a month. If you did what millionaires do and paid cash for slightly used cars instead, you’d have $509 a month to invest toward retirement and wealth building. In thirty years, that $509 per month investment would break the millionaire mark at $1.1 million. In thirty-five years, it would hit $1.82 million. And—this is crazy—that same $509 per month investment would be worth $2.97 million in forty years. So, if you’re in your thirties or forties right now, I just showed you how to become a multimillionaire with one simple trick. Like I’ve been saying, anyone can become a millionaire in America—even if you only invest the average car payment.

* Dave Ramsey’s book The Total Money Makeover outlines seven crystal-clear financial milestones that should be at the heart of any successful financial plan. If you aren’t familiar with Dave’s 7 Baby Steps, here’s a quick review: Baby Step 1: Save $1,000 for your starter emergency fund. Baby Step 2: Pay off all debt (except the house) using the debt snowball. Baby Step 3: Save 3–6 months of expenses in a fully funded emergency fund. Baby Step 4: Invest 15% of your household income in retirement. Baby Step 5: Save for your children’s college fund. Baby Step 6: Pay off your home early. Baby Step 7: Build wealth and give.

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