#215 – Revisiting How To Stay A Millionaire, And Other Lessons from The Millionaire Next Door

Wes Moss [00:01:39]:
And we’re going to compare this to before. The pandemic has surged dramatically despite all the speed bumps and booby traps we’ve been through in the last three to four years. So if you think back to the millionaire next door, that was a book written in the mid 1990s. I remember I was an intern in the financial industry, and it was a new book at the time. It had been out for a year or two and started to get some real traction. And then to this day, I think the book is just as popular as it was 25 years ago. Those methods of gaining financial independence and creating wealth in the United States, I think today are maybe more popular than ever. I still wonder because I was still in college at the time, did the term millionaire next door really exist? Or was it a part of the us psyche before Thomas Stanley and Bill Danko wrote that book and did all that research? I’m not sure, but it’s certainly in the vernacular today, the millionaire next door, of course, is someone that we think about who doesn’t necessarily seem rich, doesn’t necessarily act rich, but if you look@their.net worth, their bank account, their real estate holdings, their overall net worth, and it’s way into the seven figures.

Wes Moss [00:03:03]:
That’s a millionaire next door. I think those lessons have become more and more well known. I think there’s better financial education in the United States today than there ever has been. There are multiple money podcasts. There’s stacking Benjamin’s how to money deeper pockets, retire sooner podcasts and the advice that only the really rich had back in the eighties with their financial advisor or stockbroker back decades ago today is fully available. In fact, I would argue that the advice today that’s easy to access, whether it’s online or through podcasts, is probably a lot more objective today than it was 30 or 40 years ago. Meaning that today you’ve got financial educational resources that are writers. They’re not in it for an asset management fee.

Wes Moss [00:03:59]:
They’re not in it for a commission. Used to be a time in the 1980s where to buy 100 shares of a stock, it could cost $100 a dollar per share. Then it went to share, then twenty cents a share. Then trades became a flat price. 1990, 912 bucks, $5. And then a few years ago, big companies like Schwab led the way and just said, hey, no more trading costs. So the walls of financial advice, the impediments, have largely gone away. The costs has come down dramatically.

Wes Moss [00:04:38]:
The access has been fully democratized. And maybe that’s why we’re seeing so many new millionaires here in the United States. Whatever the late, great Thomas Stanley did, and the great still living with us, Bill Danko, who was, he’s been here on the retired senior podcast. Their work rings true to this day, maybe more than ever. According to this brand new study from the Federal Reserve, there are more millionaires today in the United States by overall net worth than ever before. 16 million. 16 million american families. That’s a lot.

Wes Moss [00:05:16]:
That’s 12% of all us families, up from only 9.8 million at the end of 2019. So we’re talking about just a three year period here. We’re looking at numbers that ended in 2019, that we had 20. 202-021-2022, that three year period, which there was peak pandemic years. Take it one step further. There are 8 million families in the United States. So part of that 16 million with $2 million or more. In fact, the average or mean net worth in America right now is just over a million dollars.

Wes Moss [00:05:49]:
Whoa, wait a minute. The average family in America is worth a million bucks. Now, that’s a little bit misleading, because remember, when we’re looking at average and we’re looking at median, they’re very, very different ways to find those two numbers. Median is when you look at the entire population, think of it in a giant lineup, and you take the middle person so that the billionaire has just as much weight on picking the center of that line as somebody with zero money. That’s the median number. And when it comes to looking at big data sets, particularly around wealth, net worth, income, it’s probably much more representative to think about numbers from a median perspective. Choose the middle. The typical, if you will, when you think about the average in the United States, particularly with something like wealth, because we have 1000 or so multi multi billionaires in the United States, maybe it’s not a thousand.

Wes Moss [00:06:49]:
There used to be the Forbes 400, I remember, and I haven’t looked at the Forbes 400 list for a while. But for the most part, you’ve got to be a billionaire to be on that list. And I think there’s. That could be an even bigger list if it were just billionaires. Now, when we’re looking at an average, that number can be greatly skewed by the several hundred billionaires here in the United States. I remember looking at the Forbes 400 list many years ago, and the bottom few folks were just under a billion. So you essentially had to be a billionaire to be a top Forbes 400. Today, there’s almost 800 billionaire families in the United States.

Wes Moss [00:07:31]:
So the average wealth in the United States is skewed by that group. So even though the average net worth in America right now is just over a million dollars, up 42% from 2019, when it was just shy of 750,000. If you look at it from a median perspective, that numbers 193,000. That seems to make more sense when you’re looking at the entire us population. But again, that number is up 37% since 2019. The median american family, $193,000 in net worth. Now, there’s also some real trends in who’s becoming a millionaire. And part of this is a study around emerging folks.

Wes Moss [00:08:17]:
Who is the next crop, or the emerging group of people that will hit that millionaire number sooner than we all might think if we look at what happened during that period of time. So think those three years, 20, 2021, 22, the big jump. This is a huge jump in net worth and the number of people that have hit this million mark. It makes sense because we saw values for two things go up dramatically over that period of time. Look at the case Shiller home price index. That’s the aggregate measure of home values in the United States. An enormous part of what makes up the net worth here in our country. Keith Sheller Home price index went from 212 to almost 95 during that period of time.

Wes Moss [00:09:12]:
That’s up almost 40% during that window. And the S and P 500 was up almost 20% from the end of 2019 through 2022. So it’s home values and really almost any other asset that’s been able to keep up with inflation. Now, what else do these emerging millionaires look like? Number one, they have good incomes, not amazingly high incomes. So they have good incomes, not millions a year. They earn between $150,000 a year to $250,000 a year. What’s interesting is this emerging group. They’re the top 20% of earners.

Wes Moss [00:09:53]:
Not the top ten, not the top five, not the top one. This is the top 20% group. And they’ve seen bigger gains than even the top 10% of earners in the US, up 69% in overall wealth, adjusted for inflation, to a median of almost $750,000. So you could call these mini millionaires, like the Wall Street Journal is saying, or you can call this group emerging millionaires. In fact, if you really think about this, this emerging group only needs to go up in net worth by about 33 and a half percent. Then they’re at the million mark. From a stock market perspective, who knows? If the market averages 10% a year, that’s about three, four years from now. If that net worth is really tied up in real estate, it might be five or ten years as real estate, after the big surge we’ve had, is more likely to go back to that baseline, two to 4% a year that we’ve seen historically for housing.

Wes Moss [00:11:00]:
But either way, it’s not too far down the line. But what got this group there, yes, they have good earnings, but there’s a couple other really key items we’ve already touched on. A few they’re investors. Not only are they savers, which of course the millionaire next door authors would certainly agree with, but they’re investors as well. They didn’t just save their way there. They have saved and likely invested and gotten the tailwind of the eight to 10% in markets and three to 5% in real estate. It’s really tough to save your way to being a millionaire. It’s a little easier.

Wes Moss [00:11:38]:
Still not easy to invest your way to being a millionaire. So they own inflation and hedging assets like real estate and us stocks, even if it’s just in the 401K. But here’s another really interesting part. They’re college educated. They’re an educated group. If you look at the overall share of families who are millionaires by age group one, we see the percentage rise as you get older. Of course, that makes sense because it takes time. For example, only 1% of families under age 35 are millionaires.

Wes Moss [00:12:16]:
But then that rises with age. By ages 55 to 64, 21% of families are millionaires. That’s for the overall population of the United States. Now, if you look at just families that are headed by college graduates, now look into that same category, 55 to 64 years old, that number jumps to 45%. So 21% for the general population, 45% if you’re college educated. I look at that as you’re two times more likely, two x more likely to end up in the millionaire camp if you have a college education. For the last decade, and maybe rightly so, because college debt and student loan debt has ballooned to over a trillion dollars in the United States, the argument is college worth it? It’s so expensive, really gets ping ponged around. Is it worth it? Is it not worth it? Go to a two year school, don’t go to a four year school.

Wes Moss [00:13:23]:
If I were arguing the point, is it worth it or not to go to college, is it worth the money? I think this settles it. Looks like college is worth it after all. Just looking at the numbers here in the United States, I don’t even think it’s an argument. So not only have we seen assets go up, but we’ve also seen debt for these families go down. Over 90% of these families. This is the emerging millionaire group report, owning stocks. Over 90%, either either directly or through some sort of retirement account at work, 87% of this group owns a home, 87%. So not only have they seen home values go up, they’ve been in the tailwind of extraordinarily low interest rates.

Wes Moss [00:14:12]:
Now, not 2023, when rates went through the roof, but 20. 202-021-2022 people were able to refinance at historically low interest rates. What did that do? It cut debt payments as a share of their income, which was 19%. So debt payments relative to income at 19% in 2007 to less than 13% in 2022. So not only did assets go up, overall debt became more manageable. Now, here’s an example. What if, I’m going to do two examples here. One with a million and one with $500,000? What if someone was in retirement and I’m going to cherry pick a really bad year to retire? For markets, that was 1990.

Wes Moss [00:15:05]:
919, 99 was a great year. And then what followed that? And that’s if you look at history, it’s really what happened the preceding years when you were no longer working, no longer saving, trying to live off your investments. 2000 was a rough time to really start. So we looked at a 25 year stretch going back, starting to right after 1990. And looking at this group, that’s not necessarily saving, they’re just living off their money. What did that look like? Here’s a couple of scenarios. A million dollars invested in three separate ways. One, a balanced portfolio, 60% s and p 540% bonds, agribond index number.

Wes Moss [00:15:47]:
Two, a portfolio that’s only investing into one year treasury. So every year you get the prevailing treasury interest rate, one year. And then three, a portfolio fully invested in something just paying a fixed 4.5%. We picked that rate because that’s around the prevailing cd rate back in 1999. Now, you would have had to lock in a 25 year cd, but let’s just say that was the case in all three scenarios. These are people that had stopped working. They’re pulling from their assets. We’re going to use the 4% rule.

Wes Moss [00:16:21]:
We’re going to say year one, 4% is $40,000. And then every year, inflation goes up, we ratchet up to 40. So in all three scenarios, those retirees that were right just at the million dollar mark in liquid assets, they all withdrew the same amount, $1.3 million, $40,000 per year over the last 25 years, ratcheted up for inflation. Mathematically works out to 1.3 million. What’s each retiree left with? Well, choosing the fixed rate, let’s say we could just magically have waived a one, gotten four and a half percent per year. Million dollars took out 1.3. It’s actually $1.34 million. There’s still money left at the end 25 years later, just shy of three quarters of a million.

Wes Moss [00:17:13]:
So you start with a million, took out 1.3, and you would have ended at $744,000. Not. Not bad. If you did the one year treasury strategy, which is probably closer or more realistic to reinvesting in a one year cd each year, million bucks to start, you take out 1.34. But in this scenario, whether it’s one year treasuries or if it were to have been one year cds, it’s similar. Pretty much ran out of money. $62,000 started at a million, pulled out 1.34 million, down to close to zero. But the good old fashioned balanced portfolio, both stocks and bonds, that’s gotten a really bad rap over the last few years because bonds have had a terrible run over the last two and a half, three years.

Wes Moss [00:18:08]:
The retiree that had a balanced portfolio still took out 1.34 million, using the 4% rule, adjusting for inflation. At the end of the 25 years still left with over $1.2 million. Again. Takes investing to become a millionaire. Takes investing to stay a millionaire as well. If you’ve ever done a Jane Fonda workout or if you remember as a kid rocky running the steps, and if Michael Keaton is still Mister mom to you, then guess what? It’s officially time to do some retirement planning. It’s Wes Moss from money matters. Weren’t those the good old days? Well, with a little bit of retirement planning, there are plenty of good days ahead.

Wes Moss [00:19:00]:
Schedule an appointment with our team today@yourwealth.com. dot that’s your, yourwealth.com dot. So there are the numbers. 16 million households have already crossed the million mark. Half of those are 8 million or 2 million. We’ve got this big burgeoning group of the many millionaires. We call them emerging millionaires. The question is, what are those habits from the millionaire next door that get us there? And we’ll bring in producer Mallory as we talk these through.

Mallory Boggs [00:19:32]:
Oh, yay. Thank you for bringing me in.

Wes Moss [00:19:34]:
I really meant to bring you in at the very beginning of this. And then I just, when it was.

Mallory Boggs [00:19:38]:
So good, though, I just, I love whenever you find a topic that you’re really passionate about and you can just really feel that as you talk through it. It’s so interesting and engaging the way.

Wes Moss [00:19:47]:
That you do that. Oh, interesting. Thank you so much. It is so interesting.

Mallory Boggs [00:19:50]:
I guess I’m biased.

Wes Moss [00:19:51]:
All right, so we’ve got million xdor. We’ve all read it. If you haven’t read the book, it’s one of the best. It’s one of the all time greats. I was at one of my kids schools the other day and it was on the bookshelf.

Mallory Boggs [00:20:05]:
I was just looking it up on Amazon. It’s still definitely in the top selling books on there. You know what’s funny, though? I actually found the millionaire next door on my parents shelf when I was in college. But it was the millionaire woman next door, so they had kind of a different take on it. And I was taking a personal finance class at the time, so I flipped through there. That was really my first introduction.

Wes Moss [00:20:25]:
Were you taking personal finance? You’re saying this is college or high school?

Mallory Boggs [00:20:28]:
College.

Wes Moss [00:20:28]:
Oh, you took personal finance?

Mallory Boggs [00:20:30]:
Yeah. Actually at UGA they offer a class through the School of economics, it’s. Which is a little bit more like it’s home. Eck, actually. But it was great. It was so helpful. I learned then to, like, you know, they had all kinds of great rules of thumb. They explained, like, the difference between, like, leasing versus buying a car outright and kind of the benefits and like, pros and cons there.

Wes Moss [00:20:47]:
Do they have the 4% rule?

Mallory Boggs [00:20:49]:
You know, I think they might have talked through that. That’d been.

Wes Moss [00:20:51]:
I don’t think so.

Mallory Boggs [00:20:52]:
I wonder now, honestly, though, I’ve learned so much about finance, I can’t even keep it straight.

Wes Moss [00:20:57]:
Well, now, now look, you’re the producer of the retire Sooner podcast, but really you were in marketing that you were in real estate, commercial real estate marketing. And then you, many, many years ago, you joined our team, and now you’ve become the producer of the retire Sooner podcast. So you’re in finance now, whether you like it or not. And let’s talk through some of these. There are dozens of really great lessons in the book, so I wanted to distill them down in just five. Maybe we can remember a shorter list. And I think this really does it. And this entire group lives below or well below their earnings.

Wes Moss [00:21:32]:
Two, millionaire next door families focus their time and energy on wealth building activities. They’re always thinking about growing their wealth in some way. Three, they’re seeking independence and financial freedom. They’re not seeking status. That was a really big theme from Stanley and Danko. Four, they raise independent children, which is interesting. And number five, they’re really almost always just plain hard workers who are also thinking about achieving financial independence and really have that mindset. And I’ll start there.

Wes Moss [00:22:11]:
How many people do you know that are wealthy either from inheritance lottery or hitting it kind of big in almost like a Facebook story where they were at a startup and they have tons of money because they happen to be at XYZ Snapchat.

Mallory Boggs [00:22:31]:
I don’t know if I can name a single one, quite frankly.

Wes Moss [00:22:33]:
Not a single one.

Mallory Boggs [00:22:34]:
I don’t know if I’ve really got a lot of people like that in my rolodex. What about you? How many do you know? How many lives?

Wes Moss [00:22:41]:
Okay, so over all these years, working with thousands of families over the years, and not working directly with every single one, but knowing a lot of the families that are, that our firm works with, I’ve talked to thousands of families around this. I would say only, I’d say I could count them on one hand, it’s a small number one lot, one lottery.

Mallory Boggs [00:23:06]:
Reeves and I always like to say whenever the lottery gets to about a billion, we’re like, it’s time to invest in our financial future. We gotta buy lottery tickets.

Wes Moss [00:23:13]:
I can’t argue with that number two inheritance. I don’t know if I very rarely have I ever seen it be an unexpected, all of a sudden, oh, my long lost uncle aunt from many states away left me 2 million, 3 million, $5 million. I’ve seen that. But again, only two or three times that I can really remember now, generational wealth and families that is a little bit more common, where the family is already wealthy, and it’s not necessarily that they inherited, but the whole family already is wealthy, from grandfather to father to next generation. So that’s a little more common. But again, not hundreds. This is a few dozen people over the years. And then again, I could count on one hand, and again, it’s not never folks that were with a small company that either went public and their stock went through the roof, they owned one or half a percent of something and it became several million dollars.

Wes Moss [00:24:20]:
Or their company that was private got bought by a bigger private or public company and that became a windfall. Somebody getting ten, $20 million, that really in a short period of time. So it absolutely happens. I’d say the generational wealth is more common, but the sudden wealth from nothing to several million, it definitely happens, but I’d say it’s less than 1% of the time, even in an industry that is typically working with people that have been focusing on and accumulating wealth. So it’s not never, and it’s not never. And I love those stories. Someone who is the fifth person at a company that got bought by a bigger software company, I love those where they look up three, five, seven, even seven years later and all of a sudden have $10 million. Those are awesome stories.

Wes Moss [00:25:13]:
And those people, 95% of those people didn’t just get lucky. They’re also exceptional because they happen to be in that spot. And they were part of the reason that company grew. But again, it’s rare. The majority of these folks are in it for the long haul and they’re hard workers and they were almost always able to grind away one self employment. A significant proportion of the millionaire surveyed in the book Millionaire next door were self employed business owners or they were in careers that didnt have a lot of cap on the upside. So think of a revenue sharing job or a sales oriented job, some of the riskier jobs that can end up really having high incomes, that maybe get you there a little faster.

Mallory Boggs [00:25:59]:
It sounds like you know, you really gotta have some cojones to be able to the millionaire next year.

Wes Moss [00:26:03]:
These are not, these are not the safe, stable jobs that you’re gonna get tenured. However, speaking of a lot of folks that end up in this category that are teachers and accountants and engineers and managers. But they hit that mark by living by, number one, living well below their earnings or living well below their means.

Mallory Boggs [00:26:27]:
Not keeping up with the Joneses or the Kardashians.

Wes Moss [00:26:30]:
Lord or the Kardashians. That’s tough to keep up with.

Mallory Boggs [00:26:33]:
Yeah, that one. It’s entertaining to watch. And it’s exhausting to think about the expenses.

Wes Moss [00:26:38]:
Yeah. I always see the Maybach cars and those really ultra limo things. And I think I can see how if you’ve got a really high income, that works, but it’s the, you know, the private jets that those people fly around on. Oh, you’re talking about $20 to $50,000 per leg.

Mallory Boggs [00:26:59]:
Oh, my gosh. It’s so wild to actually, like, wrap.

Wes Moss [00:27:02]:
Your head around from Philly to Miami.

Mallory Boggs [00:27:04]:
And you could get such great, like, first class seats. I don’t. And now. And actually, they even have, like, that private terminal through the airport here in Atlanta. Have you heard about that?

Wes Moss [00:27:14]:
That’s interesting. And for those who don’t live in Atlanta, we’re the busiest airport on planet Earth. That the statistics say it. And a Monday morning says it. When you can’t even walk to your gate because the plane train, which is their name for the bus, is backed up by 1 minute. The entire causeway is filled with people. And you almost have to, like, you almost have to weave your way through. It is a mess.

Wes Moss [00:27:40]:
So they put in place something that a friend of mine told me about, asked me if I was a member of. I read about it, something like five grand to join the, this really nice lounge at the Atlanta airport. And there’s a few others. I think there’s one in Heathrow, there’s one in LA. But I don’t understand why you would pay that much if you live in Atlanta, because you’re not in a layover in Atlanta. You’re going to your flight and you’re getting on your flight. So I don’t understand why anybody from Atlanta would ever pay that much money to have a better experience, not to have to weed. I get not wanting to weave through all the people.

Wes Moss [00:28:20]:
There’s a price. I don’t know what it is for me, but I don’t know why you would do it in your home airport.

Mallory Boggs [00:28:26]:
So I will say, I mean, I actually, I take it back. It was.

Wes Moss [00:28:29]:
And by the way, and by the way, we’re totally off track here, but I love this topic.

Mallory Boggs [00:28:32]:
I mean, it’s just kind of crazy, right? I mean, like, you know, you gotta. If you’re gonna talk about millionaires, I feel like you gotta talk about like some, some crazy lifestyle things too. Even though our people aren’t normally taking part of these. But. So it wasn’t an article that I read. It was actually a TikTok, which was even better. Cause I was able to see.

Wes Moss [00:28:46]:
Gotta listen to TikTok.

Mallory Boggs [00:28:47]:
I love the Tiktoks, Mandy. So interesting, because apparently the whole thing is that they have the security there so you don’t go through that main part of the security. Right. Like that would be an argument to have it with your hometown airport.

Wes Moss [00:28:59]:
Way quicker security.

Mallory Boggs [00:29:00]:
Way quicker security.

Wes Moss [00:29:02]:
And that’s a good point.

Mallory Boggs [00:29:03]:
And then you hang out at the lounge and then it drives you to the plane.

Wes Moss [00:29:06]:
What drives you?

Mallory Boggs [00:29:07]:
Like a car.

Wes Moss [00:29:08]:
What? And then apparently when you just walk up the steps. Yeah.

Mallory Boggs [00:29:11]:
And you walk up the steps and then an Uber will come and pick you up, like whenever you’re going to leave. I’m not gonna lie.

Wes Moss [00:29:17]:
You know, this sounds like your typical.

Mallory Boggs [00:29:20]:
I don’t know if I’d spend the money on it product.

Wes Moss [00:29:22]:
That sounds good and is good. But so many people like the sky club, get a dollar 500 Amex card and you can be part of the sky club, which is great. Well, it is great. But guess what? Everybody else thinks it’s great and everybody else buys the card. And now the sky club, there’s a line out the door and you’ve got 1400 people crammed into space sneezing on your food buffet. So the sky club went from great to largely terrible. And Delta’s had to change their entire business model around it and people are up and even about that. So we’ll see.

Wes Moss [00:30:01]:
Because how many, how many individual cars can be driving around on the tarmac taking people to their planes.

Mallory Boggs [00:30:06]:
Yeah, but I get if they’re saving money because otherwise they’d be flying private, I guess it’s still that millionaire next door mindset, right. If you’ve got the option of like, pay $5,000 a month or not a month. God, I hope it’s not a month.

Wes Moss [00:30:18]:
5000 a year.

Mallory Boggs [00:30:19]:
Okay. 5000 a year for this private access to a public plane. Right.

Wes Moss [00:30:23]:
Okay. And it’s a middle of the road.

Mallory Boggs [00:30:25]:
Yeah. Versus like. Yeah, like paying $20,000 a leg for a private plane. I guess, you know, you’re still technically saving.

Wes Moss [00:30:32]:
I know the jury’s still out on that, and even that’s gone through the roof with inflation. So not only is this group really hard work, that’s number five. Number one is they live well below their earnings. In your case, you’re saying join the private group to take public planes. Maybe that works. So, look, being frugal, of course, can be part of the process. It usually is part of the process. I have seen many folks scrimp and underspend their way to wealth.

Mallory Boggs [00:31:00]:
I think there’s some probably much better examples than a private plane versus versus not versus not.

Wes Moss [00:31:06]:
Correct. This is a group that takes coach. It does, yes. Business class, probably. But it doesn’t mean that they also don’t spend a little for first class, because, yes, I’ve seen people scrimp and save and only fly coach no matter how much money they have. The great Byron Wein, the late, great Byron Wein, who passed away in 2023, worked into his nineties, obviously very wealthy guy, one of the most famous guys on Wall street. One of his life lessons was to never fly private.

Mallory Boggs [00:31:39]:
Oh, wow. I know.

Wes Moss [00:31:40]:
I don’t know what his net worth was, but it. And this is a guy who, according to Market.com, comma, worth an estimated $100 million. So there’s a nuance here. Not all millionaire families live on beans and rice and library books. There are plenty of wealthy families that spend a fair amount, but they simply have the earnings, either wage or residual investment income to support it, to support the spending, no matter what. And this is, I would say, indisputable and a no brainer. Spending, of course, needs to be moderate relative to earnings. All right, number two, Mallory, these families focus their time and energy on wealth building activities.

Wes Moss [00:32:26]:
What does that mean to you?

Mallory Boggs [00:32:28]:
To me, I feel like that means that they are actually. I’m gonna have to think about it. It’s kind of like they are. It sounds like they’re focused on actually purchasing a house and they’re focused on setting up a. They’re not necessarily just chasing the latest, greatest fun new thing that they can spend their money on.

Wes Moss [00:32:56]:
Yeah, I think it’s partially right. The thought here is that they put a lot of stock in advice, and they’re very happy to spend time with their CPA and talk about taxes.

Mallory Boggs [00:33:08]:
Okay.

Wes Moss [00:33:08]:
They’re very happy to sit down with an advisor or multiple advisors and understand what they should be investing in. Although I’m going to. I’m going to put my money to work. Where are the best places to do this, what investment should I make? What building should I look into? They’re thinking about that in terms of where can my money be working for me? Which is really different from where can my money be the safest? So yes, we can think where can I get the best cd rate? That’s kind of the height of safety. And yes, even those savers want the best rate they can have, but it is different from having this ownership type mindset on where is my money going to be really working and compounding for me. So they’re very happy to spend time on that financial thought. So investment planning equals wealth accumulation essentially. That’s the way I look at it.

Mallory Boggs [00:34:01]:
That makes sense. They surround themselves with smart people and they keep learning.

Wes Moss [00:34:07]:
Yeah. And they’re very happy to. They’re happy to pay for advice in someone else’s area of expertise. So here’s the next one they’re seeking independence and freedom versus status. And again, most of our listeners probably thinking, I don’t think, I don’t think of money as status, but just be honest with yourself.

Mallory Boggs [00:34:27]:
This comes back to the private plane.

Wes Moss [00:34:28]:
Is there a little bit in any sort of purchase? I mean, we all have a little bit of that in us, right? Do you feel as though a house represents what, where you should be living? We could all, not all of us, but we could probably live in less expensive houses. We could drive less expensive cars. Speaking of cars, this is back in the original work from Stanley and Danko. About 81% of millionaires, about 81% of this millionaire next door population purchase their vehicles. Only about 20% lease. Now, it doesn’t mean leasing is necessarily a bad deal. In fact, there’s been a wild swing throughout Covid and used car prices. And used car and new car prices.

Wes Moss [00:35:21]:
And people who leased ended up in a great spot because they got more for their car than they maybe thought they were going to get. So there are always exceptions to these rules. But I think it has to do with more of this ownership mentality. I want to own something. I don’t want to rent it or own a car versus rent a car. I want to own a house rather than rent a house. I want to own stocks rather than I want to own part of a company rather than take my money and rent some interest in the bank.

Mallory Boggs [00:35:53]:
I wonder how Thomas Stanley would feel about the rental market now. When I think about things like Uber and Lyft and the little bird scooters and Netflix, even you rent everything.

Wes Moss [00:36:06]:
Now I’ll tell you exactly how the classic millionaire store would think about that you’re crazy to use Uber. Anything, $10, $15 delivery fee when you could just get in your car and go to the cheesesteak shop and get a cheesesteak. You’re crazy to pay $30 to go across town in an Uber. You’re crazy to rent one of those ridiculous bird scooters, which, by the way, people leave on my sidewalk. And they’re the worst invention in the history of mankind.

Mallory Boggs [00:36:43]:
You haven’t ridden one, clearly.

Wes Moss [00:36:45]:
And I’ve ridden them, and I just think they’re the worst.

Mallory Boggs [00:36:48]:
Oh, they’re so fun.

Wes Moss [00:36:49]:
Oh, they’re the worst. And you probably, you and your hippie friends probably leave your bird scooters and your lime scooters laying on my sidewalk.

Mallory Boggs [00:36:59]:
I actually make a point of it. We like to stop by there.

Wes Moss [00:37:02]:
I want them to ban them from all existence. But again, the cost of that would say, just buy your own scooter and charge it in your garage and own your car and pick up your food. Go to the grocery store, don’t have instacart deliver. I think that’s what Stanley and Danko would probably say. Again. Again, we don’t all follow all the rules, and I’m guilty of using way too much uber, particularly eats.

Mallory Boggs [00:37:32]:
That’s fair. Everything in moderation. Including moderation.

Wes Moss [00:37:36]:
Including moderation. All right. And the last one, which was number four out of the five. We started with five independent kids. They raise independent children. Wait, why is this so important? Why do you think it’s so important? You’re an independent child.

Mallory Boggs [00:37:49]:
Thank you. I. You know, you reach a certain age.

Wes Moss [00:37:52]:
Of early retirees or newer retirees.

Mallory Boggs [00:37:55]:
There we go.

Wes Moss [00:37:56]:
And they’re in really good shape. And it’s no surprise to me that you’re totally independent. You have been since you’ve been probably 22.

Mallory Boggs [00:38:02]:
Yeah. Yeah. All of that’s accurate.

Wes Moss [00:38:04]:
That’s the whole reason your parents are millionaire next doors.

Mallory Boggs [00:38:07]:
Oh, you know, it’s so nice. I’m so glad we finally got to the source of this. Yes, you’re right. You’re welcome, mom and dad. You’re welcome. I love that my sister gave him a grandbaby last week, but I’m the one who made the millionaire next doors, so I’m pretty sure I win.

Wes Moss [00:38:23]:
This was a great part of the research. They foster independent kids, and the family puts a huge emphasis on education. We just talked about educational statistics and how the percentage of folks educated or the percentage of millionaire families through the roof. But all of that includes a wealth building mindset. It includes saving, investing, entrepreneurship, we also know this is from some of our research of the retire sooner team, is that a Trobs raise their adult children to be economically self sufficient. A Trobs happy, happiest retirees on the block support their children less than dollar 500 a month, on average. Their adult children, the unhappy group, set more than $700 per month. There’s a big difference between those two.

Mallory Boggs [00:39:10]:
Zachary. I remember being shocked by that statistic that I figured that happy retirees would not support their children or like, it would be a very small dollar amount. So the $500 a month for a happy retiree couple I thought was pretty high. But do you remember, too, and then, like the most unhappy retirees, remember that dollar amount? That’s also shocking.

Wes Moss [00:39:32]:
Well, it was 700 way plus.

Mallory Boggs [00:39:34]:
Well, it was. If you were, you were four times more likely to be an unhappy retiree if you were supporting your kids by $2,000 a month.

Wes Moss [00:39:41]:
That’s right. That was the more extreme case. As the numbers climbed, your retirement happiness declined precipitously. And it’s because you can’t afford everything. We can’t afford our own retirements and our kids into their thirties. It’s just too taxing for most Americans. The other thing, when it comes to career development, this is a study I found from the Journal of Vocational Behavior that financial support from parents can lead. Of course.

Wes Moss [00:40:07]:
Well, this makes sense. Can lead to delay in career development for their young adults, may reduce the urgency to get financially independent through career progression. And I’ve seen that. I’ve seen financial support that can work in both ways. And this one is also nuanced. I’ve seen financial support really support people and launch adult children. I’ve seen adult children be overly dependent and stay dependent on financial gifts, financial support from their parents. And ultimately, I think it’s the millionaire next to their own independence that often translates to their children, and then they take that into adulthood.

Wes Moss [00:40:47]:
There’s a great sense of independence. So hard work and independence, I think you put those two together with this, just not an obsession, but a real mindfulness around, I want my money working for me. I want to be an investor. You put that together, throwing sprinkle in some education and at least a dash of frugality, and voila. That’s the recipe right there. So it’s probably more of a recipe, and it’s a long one. This is a cake that takes a long time to bake. It’s not a magic potion.

Wes Moss [00:41:21]:
This isn’t a dash of wart frog that all of a sudden scratches off a $2 million lottery ticket. It’s not a potion, it’s a recipe. It’s a lifelong journey. And that’s the reality for almost any investor. It takes investing to get to be one of these millionaire families. And then, maybe just as interestingly, taking a look at some of the numbers we went over in today’s episode, it takes investing to stay a millionaire family as well. So here on the retire Sooner podcast, I hope that we’re helping you get on and stay on. So I hope here on the retire Sooner podcast, we’re doing our part to help you, encourage you, educate you, motivate you to stay on that same path to being a millionaire next door, maybe retiring just a little bit sooner.

Mallory Boggs [00:42:18]:
Hey y’all. This is Mallory with the retire sooner team. Please be sure to rate and subscribe to this podcast and share it with a friend. If you have any questions, you can find us@wesmoss.com dot. That’s wesmoss.com dot. You can also follow us on Instagram and YouTube. You’ll find us under the handle Retire Sooner podcast. And now for our show’s disclosure.

Mallory Boggs [00:42:39]:
This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal. There is no guaranteed offer that investment return, yield, or performance will be achieved. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions for stocks paying dividends. Dividends are not guaranteed and can increase, decrease, or be eliminated without notice. Fixed income securities involve interest rate, credit inflation and reinvestment risks and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Past performance is not indicative of future results.

Mallory Boggs [00:43:19]:
When considering any investment vehicle. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Investment decisions should not be based solely on information contained here. This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment tax, estate or financial planning considerations or decisions. The information contained here is strictly an opinion and it is not known whether the strategies will be successful. The views and opinions expressed are for educational purposes only as of the date of production and may change without notice at any time. Based on numerous factors such as market and other conditions.