What comes to mind when you think of a millionaire?
If you’re like most people, you probably think fancy cars, an elaborate mansion, and a frivolous, over-the-top lifestyle.
In reality, the real lives of most millionaires are much different than our stereotypes would suggest.
Let’s clear up some of these misconceptions and a look at some of the most common millionaire lifestyle myths to uncover what the life of the typical millionaire is really like.
Myth #1: Millionaires are Frivolous With Their Money
One of the most commonly accepted myths about millionaires is that they all live some crazy extravagant lifestyle.
Think about this…
Warren Buffett is one of the richest men in the world – and he still lives in the same house that he bought for $31,500 in 1958. It’s a 5 bedroom, 2.5 bath in Nebraska and he’s never “upgraded”.
Bill Gates drives to and from the Microsoft offices in a Ford Focus. Sure, he’s treated himself to a fun Porsche with his billions, but it has never been his ‘everyday’ ride.
I’ll even use myself as an example because a lot of people think having money means treating yourself constantly.
My favorite car is a RAM truck. And guess what my favorite place to get a bite is? That’s right…
Chipotle. And while I can confidently say YES to the upcharge for guacamole – I think you get the point.
My point is that millionaires who have enough money to afford all of the frivolous purchases in the world still often choose to live a much more frugal life than you might expect.
The very traits that allowed these people to become millionaires in the first place cause came from being frugal and cautious with their money and that continues even after they have earned a fortune.
Myth #2: Millionaires Take a Lot of Risks
For some reason, most people assume that becoming a millionaire requires you take a ton of risks with your money.
In reality, millionaires invest in things that they’re SURE will make them money in the long term.
Millionaires have learned that success requires you to minimize your risk as much as possible rather than chasing risky investments with reckless abandon.
Same thing when it comes to investing, instead of treating the stock market as a casino, those who have made millions have learned to only put their money into investments when they are certain that those investments will turn a profit.
For the average person, this is great news. You don’t have to take on undue amounts of risk in order to make money.
In fact, the best investing approaches seek to minimize risk as much as possible.
While there may be some exceptions, most people who become millionaires are very cautious investors who try to lower their risk as much as they are able.
Myth #3: Millionaires all Start out With Plenty of Money
If you’ve ever heard the old adage “it takes money to make money” then you understand why most people assume that all millionaires started out with a lot of money in the first place.
In some cases, this is certainly true. After all, plenty of people are born into wealth.
But, for every millionaire that was born into their wealth, there are two to three times more self-made millionaires that started out with no more money than the average person.
This also includes people who become millionaires in retirement – people like you, that are using investing to live a life of freedom.
Most millionaires started out as ordinary, every-day people with a normal job and a normal income. Some millionaires earn their fortune by starting successful companies, but the majority of people who become millionaires do so through investing in individual companies and living it up in retirement.
When it comes to investing, the adage that it takes money to make money doesn’t necessarily ring true.
When I first started investing, I was a Grand Canyon river guide living in a tent and in 5 years I was a millionaire.
If I can do it, anyone can do it.
You don’t have to take a bunch of risk or be born with a ton of money, you just need to be willing to follow a simple set of rules, and then repeat until you’re rich. Can you do that?
Now I’d love to hear from you. What other myths about millionaires are out there?
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.