Book review: The Middle-Class Millionaire
I like studies that try to explain how societies work. I also like books that explain how we think about money and how our beliefs affect what we do with it. So I enjoyed reading the The Middle-Class Millionaire: The Rise of the New Rich and How They Are Changing America. It was an entertaining book to be taken with a grain of salt.
The authors compared a group of people with a net worth between $1 million and $10 million to a group of people that made between $50,000 and $80,000 a year with a net worth of under $1 million. They concluded that both groups considered themselves middle class. (Interestingly enough, the poorer group was more likely to consider themselves upper middle class than the richer group.) The two groups did vary on a couple of key points.
- The millionaires were much more likely to work for themselves and to place a very high value on career and self-development. They were more likely to hire personal coaches and to own their own businesses.
- They also work many more hours – 70 hours/week on average compared to 40 hours/week in the control group.
- They were more likely to try again in the face of failure. While most of the "regular" middle class would try something different if their first venture ended in bankruptcy, the millionaire group said that they'd try again or you wouldn't benefit from what you learned.
- While they both valued education highly, the millionaire group was much more likely to take their kids' failure in school as their own failure and much more likely to pick a house based on schools. The control group was more likely to pick a house near work than a house near good schools. (The millionaire group was also very likely to tear down an old house in a neighborhood they liked to build the house they wanted where they wanted it. The book theorized you can tell the best schools by looking at neighborhoods with the most tear downs!)
- They are much more likely to refer specialists (doctors, accountants, lawyers, etc) to friends and much more likely to pick one based on referrals.
Both groups valued education, family, and high ethical standards.
However the point of the book wasn't to point out how different the groups were (although they did a lot of that) but rather to point out how the millionaire group often leads the way when it comes to lifestyle, shopping and habits. (And this group of people, according to the book's study, spend a lot of money!) Middle-class millionaires are the first to buy Tesla cars (cool electric cars) and eventually cheaper models will be developed. They are the first to have home generators, solar power, coaches, health care advocates, etc. The book recommended developing and marketing new products to this group.
The authors obviously considered themselves part of the regular middle class and aspire to be middle-class millionaires. The last chapter covers how to become a middle class millionaire. In short, work lots, start your own business, try and try again, network lots. And did I say work lots? Oh, and pick a profitable field.