Purpose: Present review of studies of how people become wealthy and disputes myths of who the wealthy are in the US.
"Those people we define as weathly get pleasure from owning substantial amounts of appreciable assets than from displaying a high-consumption lifestyle."
1. Millionaires described in this book have over $1M, are financially independent, and could maintain their current lifestyle for years without earning any money.
2. 1/2 of the wealth of the US (personal wealth in America was $22 trillion in 19996) is owned by 3.5% of the households
3. Many people who have a great deal of wealth do not live in upscale neighborhoods, live a flashy or "big" lifestyle.
4. More than 80% of millionaires are ordinary people who have accumulated their wealth in one generation.
5. Affluent people typically follow a lifestyle conducive to accumulating money. Seven common denominators:
a. live well below their means
b. allocate their time, energy, and money efficiently, in ways conducive to building wealth
c. believe that financial independence is more important than displaying high social status
d. parents did not provide economic outpatient care (this chapter is a "must read" for those of us sending our kids off to college
e. adult children are economically self-sufficient
f. proficient in targeting market opportunities
g. choose the right occupations
6. Rule of thumb for determining your net worth: multiply your age times your reallized pretax annual household income from all sources except inheritances. Divide by 10. This, less any inherited wealth, is what your net worth should be.
7. The goal is to become a PAW (prodigious accumulator of wealth) rather than an AAW (average accumlator of wealth) or a UAW (uner accumulator of wealth).
8. The average American millionaire realizes significantly less than 10% of his net worth in annual income.