Dave Ramsey’s survey of millionaires

[iris lily]

https://www.gobankingrates.com/money/jobs/dave-ramsey-lists-top-careers-of-millionaires-theyre-not-what-youd-expect/?utm_term=incontent_link_8&utm_campaign=1246003&utm_source=nasdaq.com&utm_content=11&utm_medium=rss

Dave Ramsey made a recent survey of millionaires in the United States. I don’t know how valid his methodology was, but in skimming results here and elsewhere, the outcomes remind me of those reported in Thomas Stanley’s bookThe Millionaire Next-Door..

 I remember in Stanley‘s book engineers figured promptly in top five professions. I think higher ones were small business owners and auctioneers.

I’ll poke around the Internet and see if I can find any more results of this Ramsey survey, but it’s interesting.

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

[use2betrix]

Good article! Does seem to align in philosophy with the millionaire next door. The millionaire mind was good as well. It’s been well over a decade since reading them, and something I should do again.

I’ve been with my wife for 12 years and had a negative NW when we met. Although she’s mostly been a stay at home wife and now SAHM, she’s been instrumental in us becoming millionaires (at 33) just off my salary. While she is significantly more frugal than me, she’s also catered to making our lives much easier outside of my work, so I have had that much more energy to focus on the career. Fortunately, this year, we finally did a major downshift on work/income and it’s been wonderful.

[clarkfan1979]

https://www.gobankingrates.com/money/jobs/dave-ramsey-lists-top-careers-of-millionaires-theyre-not-what-youd-expect/?utm_term=incontent_link_8&utm_campaign=1246003&utm_source=nasdaq.com&utm_content=11&utm_medium=rss

Dave Ramsey made a recent survey of millionaires in the United States. I don’t know how valid his methodology was, but in skimming results here and elsewhere, the outcomes remind me of those reported in Thomas Stanley’s bookThe Millionaire Next-Door..

 I remember in Stanley‘s book engineers figured promptly in top five professions. I think higher ones were small business owners and auctioneers.

I’ll poke around the Internet and see if I can find any more results of this Ramsey survey, but it’s interesting.

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

He paid a company to collect the data. Their methods are going to be proprietary, so I don't think you can get full disclosure on methodology. However, the data aligns with the original millionaire next door data set, new millionaire next door data set and the data set of clients from the Money Guy show. These 4 data sets demonstrate a high level of concurrent validity.

The biggest take-away for me is that 88%-91% of millionaire households have their highest level of education being "4-year degree or higher" I am a full-time college professor, so I'm going to be biased toward higher education. However, the data on this concept is robust. My dad was a highly compensated construction worker. However, he didn't have the education to turn his paycheck into wealth.

[GilesMM]

This should be combined with another Ramsey thread here.


https://forum.mrmoneymustache.com/welcome-to-the-forum/what-is-your-opinion-of-dave-ramsey/?topicseen

[Fomerly known as something]

And the marriage part is “unnecessary” but if you do get married I think the not getting divorced is the important part.

[Louise]

And the marriage part is “unnecessary” but if you do get married I think the not getting divorced is the important part.

Not necessary, but if you made middling salaries like my spouse and I did, it's helpful if you have other goals like having a family, buying a house, etc. I know I couldn't have all three if I weren't married.

[farmecologist]

And the marriage part is “unnecessary” but if you do get married I think the not getting divorced is the important part.

Not necessary, but if you made middling salaries like my spouse and I did, it's helpful if you have other goals like having a family, buying a house, etc. I know I couldn't have all three if I weren't married.

Yeah...exactly.  I'd argue that a marriage partnership helps folks achieve millionaire status far more than it hurts....IF your partner has aligned goals ( as Ramsey has pointed out ).

[Chris Pascale]

https://www.gobankingrates.com/money/jobs/dave-ramsey-lists-top-careers-of-millionaires-theyre-not-what-youd-expect/?utm_term=incontent_link_8&utm_campaign=1246003&utm_source=nasdaq.com&utm_content=11&utm_medium=rss

Dave Ramsey made a recent survey of millionaires in the United States. I don’t know how valid his methodology was, but in skimming results here and elsewhere, the outcomes remind me of those reported in Thomas Stanley’s bookThe Millionaire Next-Door..

 I remember in Stanley‘s book engineers figured promptly in top five professions. I think higher ones were small business owners and auctioneers.

I’ll poke around the Internet and see if I can find any more results of this Ramsey survey, but it’s interesting.

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

A data point that is misleading is that "they went to public universities," and I say this as someone who's insisted his kids go to community college (2 down, 2 to go!).

13.5 million or 72.5% of all postsecondary students attend public institutions - https://educationdata.org/college-enrollment-statistics
Nearly 150,000 students are enrolled across the eight [Ivy League] colleges. Harvard is the biggest, with just over 30,000 students - https://www.mastersportal.com/articles/1958/what-are-ivy-league-universities.html

At a ratio of 90:1, if it wasn't at least half and half for where millionaires are educated, then that would mean there's something truly amazing about the Ivy League schools, and something very wrong with the workforce/economy, especially since some people attend a school like Harvard with no intention of being rich (clergy and missionaries, for example).

All in all, though, a decent article. I will say, do not waste your time with Everyday Millionaires. It does not measure up to the work of Thomas Stanley.

[wageslave23]

https://www.gobankingrates.com/money/jobs/dave-ramsey-lists-top-careers-of-millionaires-theyre-not-what-youd-expect/?utm_term=incontent_link_8&utm_campaign=1246003&utm_source=nasdaq.com&utm_content=11&utm_medium=rss

Dave Ramsey made a recent survey of millionaires in the United States. I don’t know how valid his methodology was, but in skimming results here and elsewhere, the outcomes remind me of those reported in Thomas Stanley’s bookThe Millionaire Next-Door..

 I remember in Stanley‘s book engineers figured promptly in top five professions. I think higher ones were small business owners and auctioneers.

I’ll poke around the Internet and see if I can find any more results of this Ramsey survey, but it’s interesting.

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

He paid a company to collect the data. Their methods are going to be proprietary, so I don't think you can get full disclosure on methodology. However, the data aligns with the original millionaire next door data set, new millionaire next door data set and the data set of clients from the Money Guy show. These 4 data sets demonstrate a high level of concurrent validity.

The biggest take-away for me is that 88%-91% of millionaire households have their highest level of education being "4-year degree or higher" I am a full-time college professor, so I'm going to be biased toward higher education. However, the data on this concept is robust. My dad was a highly compensated construction worker. However, he didn't have the education to turn his paycheck into wealth.

Could it be that the reason your dad didn't go to college is the same as the reason he didn't become a millionaire? I think that I have always been wired to be a millionaire regardless if I went to college or not. I made a calculated decision to go to college. I think in general, people that go to college are more intelligent and that's why they go to college, not because of it.  But I guess we will never know because it's unethical to assign people to college or non college groups randomly.  I just know that I didn't get much out of my degree.

[solon]

This study is detailed in his book Baby Steps Millionaires. The last half of the book is all about the study itself, the methodology, and controls they had in place to ensure validity.

The first half of the book is pretty good too. Lots of stories from people who did it.

[Greystache]

I have always been skeptical about studies that suggest a college education is the cause of success and not merely correlated with success. If you are going to college, you probably have at least average intelligence, know how to show up, know how to delay gratification, etc.  I suspect that people like this would find a way to succeed regardless of whether they attended college or not.  In my family of 6 siblings, two went into the trades and became contractors, four went to college.  All achieved similar levels of success and all were millionaires when they retired/died.

[farmecologist]

I have always been skeptical about studies that suggest a college education is the cause of success and not merely correlated with success. If you are going to college, you probably have at least average intelligence, know how to show up, know how to delay gratification, etc.  I suspect that people like this would find a way to succeed regardless of whether they attended college or not.  In my family of 6 siblings, two went into the trades and became contractors, four went to college.  All achieved similar levels of success and all were millionaires when they retired/died.

I agree.  However, many professions require a degree...and in the sciences often an advanced degree.   And that isn't going to change.

It is all about choosing your career path...and how to get there.

[Paper Chaser]

I wonder how many of the millionaires went to college 20+ years ago, and what the likelihood of success would be if they were attending now. Cost/benefit of college seems worse now than it has been in quite some time. How many of them would've ended up in the same spot if they'd had something equivalent to modern student debt loads when they graduated.

[Psychstache]

I have always been skeptical about studies that suggest a college education is the cause of success and not merely correlated with success. If you are going to college, you probably have at least average intelligence, know how to show up, know how to delay gratification, etc.  I suspect that people like this would find a way to succeed regardless of whether they attended college or not.  In my family of 6 siblings, two went into the trades and became contractors, four went to college.  All achieved similar levels of success and all were millionaires when they retired/died.

I think you should be skeptical* of just about any non-RCT that claims it's results are casual and not correlational.

*Skeptical in the sense that you should dig further into the research to assess their claims, not skeptical in the sense that you should write off them off completely without learning more.

[Ron Scott]

And the marriage part is “unnecessary” but if you do get married I think the not getting divorced is the important part.

Actually some people probably shouldn’t get married…

But money is only one of the top 3 problems and even then the issues are less likely to be related to investing and retiring than debt and gambling. Sex and drugs/alcohol are the big ones. 

Still, not really sure I care what Dave or his survey has to say about anything. He’s a one trick pony who thinks he’s hot shit. Not feeling it.

[nick663]

I've seen a bit about this study but it's short on details unfortunately.  Biggest things I wonder are how they selected the group of millionaires (were they Ramsey listeners or randomly selected) and how they defined "millionaire" (individual vs household wealth).  Both of those items could have skewed the results on certain items.

[roomtempmayo]

I don’t know how valid his methodology was

One of the common but incorrect interpretations of this survey is that teachers are more likely to become millionaires than medical doctors.

The reason it's incorrect is that he's reporting* the raw number of millionaires by occupation, not the probability of any given person with a given occupation becoming a millionaire.

The result is that the list is full of common occupations, with high earning but less common occupations left out.

A more useful measure would be the percentage of each occupation that becomes millionaires, but that would probably just be a list of rarified professions and C Suite managers, which wouldn't generate the same clicks.

But no, becoming a teacher isn't a better path to becoming a millionaire than becoming a medical doctor, a point I've heard secondhand from people who listen to his show.  His presentation of the numbers is misleading.

*He's just pulling BLS numbers that are publicly available.  As far as I've ever seen, he doesn't gather his own data.

[iris lily]

[quote author=solon link=topic=133113.msg3210962#msg3210962 date=1702999528]
This study is detailed in his book Baby Steps Millionaires. The last half of the book is all about the study itself, the methodology, and controls they had in place to ensure validity.

The first half of the book is pretty good too. Lots of stories from people who did it.
[/quote]

Thanks! Now I will go off to find this book Baby Steps Millioinaires

I just recently started listening to Ramsey podcast after knowing about him for decades. The Stanley book is my favorite, so anything that resembles it is something I’m going to check out.

[iris lily]

I've seen a bit about this study but it's short on details unfortunately.  Biggest things I wonder are how they selected the group of millionaires (were they Ramsey listeners or randomly selected) and how they defined "millionaire" (individual vs household wealth).  Both of those items could have skewed the results on certain items.

 I don’t know how they selected the millionaires for this book, but I know how Dave Ramsey define millionaires because he had he invited millionaires to come on his show a couple months ago and I just listened to that podcast yesterday.

He uses the traditional measure of net assets and yes, that includes equity in a house.

Remember who his audience is, people who cannot fathom ever reaching net assets of $1 million.

Sure those of us here on this website know that anyone with a balance sheet showing assets of 1.2 million who lives in Southern California in a house they bought in 1983 is not all that rich.

[Metalcat]

I have always been skeptical about studies that suggest a college education is the cause of success and not merely correlated with success. If you are going to college, you probably have at least average intelligence, know how to show up, know how to delay gratification, etc.  I suspect that people like this would find a way to succeed regardless of whether they attended college or not.  In my family of 6 siblings, two went into the trades and became contractors, four went to college.  All achieved similar levels of success and all were millionaires when they retired/died.

I agree.  However, many professions require a degree...and in the sciences often an advanced degree.   And that isn't going to change.

It is all about choosing your career path...and how to get there.

While this may be true, I firmly stand by the position that most people who are very successful in careers that require a lot of education could likely be more financially successful if they dedicated the same level of work to another field that doesn't require lengthy post-secondary education investment.

I've worked with enough surgeons to have concluded that relative to the financial, time, and human capital they invest in their careers, it's a TERRIBLE career choice for anyone who isn't in it for the love of surgery.

And this is what's really missed in comparisons of different careers to highly education barrier careers. It's comparing apples to oranges. How many workers are putting in the kind of ferocious, 80-100hr, batshit insane work weeks that a lot of professional graduate students are for years on end? All while taking astronomical amounts of abuse??

Take someone that driven, competitive, smart, resourceful, who is willing to be treated like human garbage while working 36 hours straight and cramming knowledge into their brains more feverishly than an addict snorts lines?

Yeah, they're probably going to be the ones to figure out how to be successful in just about any industry, and probably put that resourceful ability to learn more towards figuring out how to make more money.

As a friend of mine with no degree and more money than God once said to me "I make money off of the fact that people smarter than me are taught to learn how to do really hard things, not how to make money."

[iris lily]

I have always been skeptical about studies that suggest a college education is the cause of success and not merely correlated with success. If you are going to college, you probably have at least average intelligence, know how to show up, know how to delay gratification, etc.  I suspect that people like this would find a way to succeed regardless of whether they attended college or not.  In my family of 6 siblings, two went into the trades and became contractors, four went to college.  All achieved similar levels of success and all were millionaires when they retired/died.

I agree.  However, many professions require a degree...and in the sciences often an advanced degree.   And that isn't going to change.

It is all about choosing your career path...and how to get there.

While this may be true, I firmly stand by the position that most people who are very successful in careers that require a lot of education could likely be more financially successful if they dedicated the same level of work to another field that doesn't require lengthy post-secondary education investment.

I've worked with enough surgeons to have concluded that relative to the financial, time, and human capital they invest in their careers, it's a TERRIBLE career choice for anyone who isn't in it for the love of surgery.

And this is what's really missed in comparisons of different careers to highly education barrier careers. It's comparing apples to oranges. How many workers are putting in the kind of ferocious, 80-100hr, batshit insane work weeks that a lot of professional graduate students are for years on end? All while taking astronomical amounts of abuse??

Take someone that driven, competitive, smart, resourceful, who is willing to be treated like human garbage while working 36 hours straight and cramming knowledge into their brains more feverishly than an addict snorts lines?

Yeah, they're probably going to be the ones to figure out how to be successful in just about any industry, and probably put that resourceful ability to learn more towards figuring out how to make more money.

As a friend of mine with no degree and more money than God once said to me "I make money off of the fact that people smarter than me are taught to learn how to do really hard things, not how to make money."

Sure I agree with this, especially the bolded part I like how your friend says that.

[roomtempmayo]

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

This perhaps pushes the question of whether the behavior of "millionaires" is even financially instructive anymore, at least in the specific sense of how to make money and how to invest it.

A massively common formula (maybe the most common) for becoming a millionaire goes something like: be born middle class and white + go to college and graduate with little debt + marry and stay married to someone with similar education and earning power + buy a house in a rising market + invest in the company 401k + don't develop a cocaine habit.  Do that for 30 or 40 years without getting profoundly unlucky or finding a way to actively screw it up and you'll be a millionaire, at least in recent history. 

I'm not sure that in the main millionaires are outliers in their specific financial decisions.  It seems much more a combination of starting with some advantages and avoiding bad choices and bad luck for a long period.  Perhaps that trajectory tells us more about what not to do than it does what we ought to do.

[nick663]

I've seen a bit about this study but it's short on details unfortunately.  Biggest things I wonder are how they selected the group of millionaires (were they Ramsey listeners or randomly selected) and how they defined "millionaire" (individual vs household wealth).  Both of those items could have skewed the results on certain items.

 I don’t know how they selected the millionaires for this book, but I know how Dave Ramsey define millionaires because he had he invited millionaires to come on his show a couple months ago and I just listened to that podcast yesterday.

He uses the traditional measure of net assets and yes, that includes equity in a house.

Remember who his audience is, people who cannot fathom ever reaching net assets of $1 million.

Sure those of us here on this website know that anyone with a balance sheet showing assets of 1.2 million who lives in Southern California in a house they bought in 1983 is not all that rich.

My point was more that if he is using household wealth it would overrepresent married people due to the dual incomes and the wealth being split across 2 people.  Yes, they're millionaires by definition but their expenses are also higher than a single household which makes the 1 million net worth less meaningful.

I didn't even think about factoring home values in but the flaws you identified are completely correct.  Yikes.

[ender]

Comparing 2023 millionaires to 1996 millionaires when the Millionaire Next Door came out is a bit weird to me.

Inflation has almost exactly doubled in that timeframe, so someone with $1M in 1996 would need around $2M now.

[bmjohnson35]

I could have possibly reached the same level in my career without my degree, but probably not much higher.  The University's focus on group work and presentations probably paid me the most dividends in my career.  Going to college and working with other degreed professionals provides networking benefits that can help with career development and other financial related opportunities.

It would be interesting to see how employees vs. entrepreneurs would compare.  I have always felt that starting your own business was the best way to build wealth, even if I was always too risk adverse to do so myself.

A long-term successful marriage/relationship has a lot of benefits. When it comes to building wealth though, having a partner/spouse with a shared vision and execution toward financial independence is a huge benefit.

[afox]

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

This perhaps pushes the question of whether the behavior of "millionaires" is even financially instructive anymore, at least in the specific sense of how to make money and how to invest it.

A massively common formula (maybe the most common) for becoming a millionaire goes something like: be born middle class and white + go to college and graduate with little debt + marry and stay married to someone with similar education and earning power + buy a house in a rising market + invest in the company 401k + don't develop a cocaine habit.  Do that for 30 or 40 years without getting profoundly unlucky or finding a way to actively screw it up and you'll be a millionaire, at least in recent history. 

I'm not sure that in the main millionaires are outliers in their specific financial decisions.  It seems much more a combination of starting with some advantages and avoiding bad choices and bad luck for a long period.  Perhaps that trajectory tells us more about what not to do than it does what we ought to do.

I totally disagree with all of that. House value isnt even usually included in net worth so not buying a house will be more likely to give you the cash on paper necessary to join the millionaires/2 millionaires club.

[nick663]

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

This perhaps pushes the question of whether the behavior of "millionaires" is even financially instructive anymore, at least in the specific sense of how to make money and how to invest it.

A massively common formula (maybe the most common) for becoming a millionaire goes something like: be born middle class and white + go to college and graduate with little debt + marry and stay married to someone with similar education and earning power + buy a house in a rising market + invest in the company 401k + don't develop a cocaine habit.  Do that for 30 or 40 years without getting profoundly unlucky or finding a way to actively screw it up and you'll be a millionaire, at least in recent history. 

I'm not sure that in the main millionaires are outliers in their specific financial decisions.  It seems much more a combination of starting with some advantages and avoiding bad choices and bad luck for a long period.  Perhaps that trajectory tells us more about what not to do than it does what we ought to do.

I totally disagree with all of that. House value isnt even usually included in net worth so not buying a house will be more likely to give you the cash on paper necessary to join the millionaires/2 millionaires club.

House value is definitely included in net worth.  Net worth is assets minus liabilities and housing is definitely a component of that picture.

You shouldn't do retirement planning with the value of your home included (unless you plan to tap that equity in some way) but that is a different number than net worth.

[farmecologist]

I've seen a bit about this study but it's short on details unfortunately.  Biggest things I wonder are how they selected the group of millionaires (were they Ramsey listeners or randomly selected) and how they defined "millionaire" (individual vs household wealth).  Both of those items could have skewed the results on certain items.

 I don’t know how they selected the millionaires for this book, but I know how Dave Ramsey define millionaires because he had he invited millionaires to come on his show a couple months ago and I just listened to that podcast yesterday.

He uses the traditional measure of net assets and yes, that includes equity in a house.

Remember who his audience is, people who cannot fathom ever reaching net assets of $1 million.

Sure those of us here on this website know that anyone with a balance sheet showing assets of 1.2 million who lives in Southern California in a house they bought in 1983 is not all that rich.

My point was more that if he is using household wealth it would overrepresent married people due to the dual incomes and the wealth being split across 2 people.  Yes, they're millionaires by definition but their expenses are also higher than a single household which makes the 1 million net worth less meaningful.

I didn't even think about factoring home values in but the flaws you identified are completely correct.  Yikes.

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

[Fomerly known as something]

And the marriage part is “unnecessary” but if you do get married I think the not getting divorced is the important part.

Not necessary, but if you made middling salaries like my spouse and I did, it's helpful if you have other goals like having a family, buying a house, etc. I know I couldn't have all three if I weren't married.

Yeah...exactly.  I'd argue that a marriage partnership helps folks achieve millionaire status far more than it hurts....IF your partner has aligned goals ( as Ramsey has pointed out ).

My point is that they ignore single people. 

ETA:  I might be projecting, but in both millionaire next door and in the example in this thread, the wife is a help mate and very frugal vs going out and earning income themselves.

[nick663]

I've seen a bit about this study but it's short on details unfortunately.  Biggest things I wonder are how they selected the group of millionaires (were they Ramsey listeners or randomly selected) and how they defined "millionaire" (individual vs household wealth).  Both of those items could have skewed the results on certain items.

 I don’t know how they selected the millionaires for this book, but I know how Dave Ramsey define millionaires because he had he invited millionaires to come on his show a couple months ago and I just listened to that podcast yesterday.

He uses the traditional measure of net assets and yes, that includes equity in a house.

Remember who his audience is, people who cannot fathom ever reaching net assets of $1 million.

Sure those of us here on this website know that anyone with a balance sheet showing assets of 1.2 million who lives in Southern California in a house they bought in 1983 is not all that rich.

My point was more that if he is using household wealth it would overrepresent married people due to the dual incomes and the wealth being split across 2 people.  Yes, they're millionaires by definition but their expenses are also higher than a single household which makes the 1 million net worth less meaningful.

I didn't even think about factoring home values in but the flaws you identified are completely correct.  Yikes.

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

I don't think we disagree.  I was saying that combined expenses are higher than the household with only 1 person so if each household has $1M, it better supports the household with only 1 person.  On a per person basis it is lower due to efficiencies from sharing resources but that would mean the married household only has 500k each to cover those expenses.

Agree that it's easier to build wealth (which results in them being overrepresented in the population if we're only looking at household wealth).

[Must_ache]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

[iris lily]

It’s true, that a measure of household wealth, which is what these measures usually are, handicaps the single person.

I sometimes wonder what my net worth would be if I had remained single. I married relatively late in life. I always earned twice+ as much money as DH, but he added tremendous value to our balance sheet by being able to build anything fix anything. And then he came to our marriage with significant assets so there was that.

[iris lily]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

[roomtempmayo]

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

This perhaps pushes the question of whether the behavior of "millionaires" is even financially instructive anymore, at least in the specific sense of how to make money and how to invest it.

A massively common formula (maybe the most common) for becoming a millionaire goes something like: be born middle class and white + go to college and graduate with little debt + marry and stay married to someone with similar education and earning power + buy a house in a rising market + invest in the company 401k + don't develop a cocaine habit.  Do that for 30 or 40 years without getting profoundly unlucky or finding a way to actively screw it up and you'll be a millionaire, at least in recent history. 

I'm not sure that in the main millionaires are outliers in their specific financial decisions.  It seems much more a combination of starting with some advantages and avoiding bad choices and bad luck for a long period.  Perhaps that trajectory tells us more about what not to do than it does what we ought to do.

I totally disagree with all of that. House value isnt even usually included in net worth so not buying a house will be more likely to give you the cash on paper necessary to join the millionaires/2 millionaires club.

Dave Ramsey's definition of millionaire includes home equity, which is the subject of this thread.

My point above was that once you're using that definition, whole swaths of the population who have made very different financial choices are included.  The real drivers aren't the money management choices, it's mostly having a two income household with a big home equity tailwind.

I don't think that group of people tells us all that much about how to manage money.

[maizefolk]

A data point that is misleading is that "they went to public universities," and I say this as someone who's insisted his kids go to community college (2 down, 2 to go!).

13.5 million or 72.5% of all postsecondary students attend public institutions - https://educationdata.org/college-enrollment-statistics
Nearly 150,000 students are enrolled across the eight [Ivy League] colleges. Harvard is the biggest, with just over 30,000 students - https://www.mastersportal.com/articles/1958/what-are-ivy-league-universities.html

I think that statistic must be wrong or perhaps it is counting a bunch of students in programs other than four year undergrad degrees? And to be clear, I realize if anything this makes the point you're trying to make more valid not less.

Harvard's incoming freshman class is typically on the order of 1,600-1,700 students, so I'd guess they have something like 7,000 total undergrads enrolled at any given time. Cornell is by far the biggest Ivy and they only have about 15,000 undergraduates enrolled. https://en.wikipedia.org/wiki/Ivy_League#Members

[Chris Pascale]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

Friend of mine was very confused during a recent conversation about kids. I had to explain to him that as they get older it's more expensive.

[ender]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

What are the major expense differences for a married couple vs someone living with a roommate?

I went from living with two other people to living with one, so when I got married my expenses went up actually.

[EvenSteven]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

Friend of mine was very confused during a recent conversation about kids. I had to explain to him that as they get older it's more expensive.

Gosh I hope not, 2 kids in full time daycare runs me $3500 a month. Looking forward to phasing that out with school starting soon. After school care drops to about 200/mo for 5 days a week.

Swimming lessons turns into swimming team, which is a price drop. Other activities look like they stay about the same price (dance, theatre).

I often hear that they get more expensive as they age, but I would be interested in hearing which areas those expenses increase.

[mistymoney]

https://www.gobankingrates.com/money/jobs/dave-ramsey-lists-top-careers-of-millionaires-theyre-not-what-youd-expect/?utm_term=incontent_link_8&utm_campaign=1246003&utm_source=nasdaq.com&utm_content=11&utm_medium=rss

Dave Ramsey made a recent survey of millionaires in the United States. I don’t know how valid his methodology was, but in skimming results here and elsewhere, the outcomes remind me of those reported in Thomas Stanley’s bookThe Millionaire Next-Door..

 I remember in Stanley‘s book engineers figured promptly in top five professions. I think higher ones were small business owners and auctioneers.

I’ll poke around the Internet and see if I can find any more results of this Ramsey survey, but it’s interesting.

In his show Dave talked about the importance of choosing a marriage partner who shares financial goals. Two people teamed up in America to build wealth can do it on modest salaries. That was a lesson in Stanley‘s book too, get married, and stay married.

They can stuff it up their backside!

https://youtu.be/rDyb_alTkMQ?t=90

[nereo]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

Friend of mine was very confused during a recent conversation about kids. I had to explain to him that as they get older it's more expensive.

Gosh I hope not, 2 kids in full time daycare runs me $3500 a month. Looking forward to phasing that out with school starting soon. After school care drops to about 200/mo for 5 days a week.

Swimming lessons turns into swimming team, which is a price drop. Other activities look like they stay about the same price (dance, theatre).

I often hear that they get more expensive as they age, but I would be interested in hearing which areas those expenses increase.

Collective experience among my cohort is that kids are most expensive from 0-5, then it declines substantially before rising again in the teen years. Daycare/childcare of course leads that charge, and medical care as well. This has certainly been the experience in our families as well, though individual circumstances (every kid and their needs are different) means everyone’s individual experience may be much different from that trend. It also seems to be extremely US centric

[Chris Pascale]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

Friend of mine was very confused during a recent conversation about kids. I had to explain to him that as they get older it's more expensive.

Gosh I hope not, 2 kids in full time daycare runs me $3500 a month. Looking forward to phasing that out with school starting soon. After school care drops to about 200/mo for 5 days a week.

Swimming lessons turns into swimming team, which is a price drop. Other activities look like they stay about the same price (dance, theatre).

I often hear that they get more expensive as they age, but I would be interested in hearing which areas those expenses increase.

My POV is skewed by one of us being home for most of it, so our upfront costs didn't include daycare, but, of course, on the back-end we didn't have retirement contributions during that time.

Other categories:
 - They eat more
 - Their interests may cost more. One of my daughters plays 3 instruments. She paid for most of her own piano, and recently bought herself an electric guitar but until recently she was getting private lessons for all 3. In HS one of my daughters was pretty intensely into wrestling, so she went to a couple camps during the summer. The camps are not that expensive, but when your kid is wrestling for 8 hours your grocery budget goes up that week, especially with the food you're packing them for that day
 - College. My kids pay a small portion and are in community college and a public university right now. As cheap as it gets, especially since I get reimbursed by the community college since I'm an adjunct
 - Weddings. I have not had to pay for a wedding yet, but I anticipate helping them with some plans, trying to convince them that pretty much everything with a wedding is bullshit, and that a reception on a Sunday afternoon might be much nicer than one on Saturday night, but in the end it's up to them. Then I'll cut them a check for $20,000 and hope they have some to keep. But in addition to that, it's going to cost me a butt-load to outfit myself and the other kids for the party
 - Helping your adults. You really don't know what the future holds - good and bad - because you're going to be helping your kids if you have a relationship with them

[EvenSteven]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

Friend of mine was very confused during a recent conversation about kids. I had to explain to him that as they get older it's more expensive.

Gosh I hope not, 2 kids in full time daycare runs me $3500 a month. Looking forward to phasing that out with school starting soon. After school care drops to about 200/mo for 5 days a week.

Swimming lessons turns into swimming team, which is a price drop. Other activities look like they stay about the same price (dance, theatre).

I often hear that they get more expensive as they age, but I would be interested in hearing which areas those expenses increase.

My POV is skewed by one of us being home for most of it, so our upfront costs didn't include daycare, but, of course, on the back-end we didn't have retirement contributions during that time.

Other categories:
 - They eat more
 - Their interests may cost more. One of my daughters plays 3 instruments. She paid for most of her own piano, and recently bought herself an electric guitar but until recently she was getting private lessons for all 3. In HS one of my daughters was pretty intensely into wrestling, so she went to a couple camps during the summer. The camps are not that expensive, but when your kid is wrestling for 8 hours your grocery budget goes up that week, especially with the food you're packing them for that day
 - College. My kids pay a small portion and are in community college and a public university right now. As cheap as it gets, especially since I get reimbursed by the community college since I'm an adjunct
 - Weddings. I have not had to pay for a wedding yet, but I anticipate helping them with some plans, trying to convince them that pretty much everything with a wedding is bullshit, and that a reception on a Sunday afternoon might be much nicer than one on Saturday night, but in the end it's up to them. Then I'll cut them a check for $20,000 and hope they have some to keep. But in addition to that, it's going to cost me a butt-load to outfit myself and the other kids for the party
 - Helping your adults. You really don't know what the future holds - good and bad - because you're going to be helping your kids if you have a relationship with them

Thanks for the thoughts. I can see the food budget going up. Right now they are terrible about food waste, and I hope that gets better with age, but yes I can see the food cost for them maybe doubling.

Interests seem like a crap shoot with kids, with some percentage getting interested in more expensive activities.

With college I think I do some mental accounting, because we are funding 529s to the tune of about 5k per year. Those feel like an expense now, and will make college feel cheaper later, even though it really should be counted as an expense for when they are older. We have made the choice to fully fund their college, so that has the possibility of a larger price tag.

I hadn't even thought of weddings yet, but I am guessing my approach will be similar to yours.

Overall I think the day care costs out-weigh the K-12 costs, but I can see they expense rising form K till independence.

[engineerjourney]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

Friend of mine was very confused during a recent conversation about kids. I had to explain to him that as they get older it's more expensive.

Gosh I hope not, 2 kids in full time daycare runs me $3500 a month. Looking forward to phasing that out with school starting soon. After school care drops to about 200/mo for 5 days a week.

Swimming lessons turns into swimming team, which is a price drop. Other activities look like they stay about the same price (dance, theatre).

I often hear that they get more expensive as they age, but I would be interested in hearing which areas those expenses increase.

I posted about this, interesting discussions happened: https://forum.mrmoneymustache.com/mini-money-mustaches/cost-of-older-kids/

[Chris Pascale]

@Even Steven $5k a year for 529s is really incredible. You might find yourself feeling pretty rich in those college years.

[mizzourah2006]

Don't agree with you at all on the marriage take.  Married couples almost always have fewer household expenses than if they were separate.  Thus, much easier to build wealth.

Except one tiny detail (generally): kids

DINKs rule in the middle class millionaire group! That’s for sure.

Friend of mine was very confused during a recent conversation about kids. I had to explain to him that as they get older it's more expensive.

Gosh I hope not, 2 kids in full time daycare runs me $3500 a month. Looking forward to phasing that out with school starting soon. After school care drops to about 200/mo for 5 days a week.

Swimming lessons turns into swimming team, which is a price drop. Other activities look like they stay about the same price (dance, theatre).

I often hear that they get more expensive as they age, but I would be interested in hearing which areas those expenses increase.

Collective experience among my cohort is that kids are most expensive from 0-5, then it declines substantially before rising again in the teen years. Daycare/childcare of course leads that charge, and medical care as well. This has certainly been the experience in our families as well, though individual circumstances (every kid and their needs are different) means everyone’s individual experience may be much different from that trend. It also seems to be extremely US centric

This has been our experience. We have one in 2nd grade and one in kindergarten and we can split early days to not have to pay for after school care, so outside of summer camps and ice hockey which they both play they don't add that much cost wise (soccer is relatively inexpensive). Sure they add a bit via cost to food and they add about ~$80/month to the cost of my health insurance, but if you spread the cost of both of them out and their extracurriculars, etc. I'd say they each cost about ~$350-$375/month right now, with most of that loaded into the summer for summer camps. Of course that ignores the $5k we put in their 529s each year, but that's more a savings for a future cost than a direct cost today.

[roomtempmayo]

- Helping your adults. You really don't know what the future holds - good and bad - because you're going to be helping your kids if you have a relationship with them

This is a wildcard we don't talk enough about here.  Failure to launch is real, and a little terrifying.

[getsorted]

"Get married and stay married" is just the worst takeaway from this.

Staying married to a financially irresponsible partner will ruin you. Much more importantly, staying in an emotionally fraught marriage or even a marriage to a person who is just generally dismissive can wreck your health and reduce your length and quality of life. Staying in an abusive marriage might kill you. It will definitely interfere with your ability to make and execute sound financial decisions. Frankly, marriage is statistically a health and wealth risk for women.

If you marry someone who has similar financial goals, and if they have the executive function and self-regulatory skills to carry them out, and if they don't undergo a significant change in their goals/functioning (something you have no control over), and if they invest in you in a way equal to your investment in them-- sure, maybe that makes you more likely to end up a millionaire?

It's like saying "People who don't have bad things happen to them end up rich more often," and then trying to turn it into advice. You're more likely to be a millionaire if no one steals all your money. You're more likely to be a millionaire if the business you start doesn't fail. Sure, but... not advice. 

[Nutty]

- Helping your adults. You really don't know what the future holds - good and bad - because you're going to be helping your kids if you have a relationship with them

This is a wildcard we don't talk enough about here.  Failure to launch is real, and a little terrifying.

Failure to launch takes many paths.  Medical conditions are real and I know several that are supporting and caring for their adult children.  This went under things that I worried about and had no control over.  Drug OD and incapacitating traffic accidents are the big ones.

In my case, paying for a wedding and then going to graduate school are lengthening the financial connection.  The relationship is wonderful but the hit to the retirement is real.  Worth every penny. 

[nereo]

- Helping your adults. You really don't know what the future holds - good and bad - because you're going to be helping your kids if you have a relationship with them

This is a wildcard we don't talk enough about here.  Failure to launch is real, and a little terrifying.

Failure to launch takes many paths.  Medical conditions are real and I know several that are supporting and caring for their adult children.  This went under things that I worried about and had no control over.  Drug OD and incapacitating traffic accidents are the big ones.

Just the term “failure to launch” makes me cringe. Baked in is the word failure, and reinforces this prejudice against multigenerational households. IMO we shouldn’t equate living with your parents with having failed to become a functional adult.

[maizefolk]

Is that the understood meaning of failure to launch? I'd assumed it was more wrapped up in not having a job (or at least one that is sufficient to cover ones expenses) by ones mid-20s.

I agree that I know people who are living with their folks but earning money and paying their own way. I also know people who, at least for several years post grad school, were living in a separate city from their parents but entirely dependent on their parents for both paying rent and spending money.

I would have described the second as a failure to launch but not the first?