In 2004, I started researching why the rich are rich and why the poor are poor. When I began my research on Wealthy Habits, I had ingrained negative beliefs about the wealthy that I acquired from my non-wealthy upbringing.
However, as I learned more about the drivers of wealth and poverty, my perspective changed.
Instead of hating the rich, I grew to love them. The self-made rich that I wrote about in my Rich Habits books, became real heroes to me.
Here are 7 money myths about the rich that turned out to be false:
Myth #1: Rich People Inherit Their Money
In my research, 76% of the wealthy in my study did not gain anything. Nada, zip, zero. Of this 76%, 31% come from poor homes and 45% come from middle class homes. The annual Wealth X survey seems to peg the self-employment percentage at anywhere from 75% – 84%, depending on the year of the survey.
Only 24% of the wealthy people in my research, grew up in wealthy homes and earned their wealth. So, no – most rich people are self-made. Which is great because it means that most of the rich come from poverty or middle class backgrounds.
Myth #2: Rich People Pay Less in Taxes Than Everyone Else
According to the IRS, the income tax rate for the top 1% of earners in the US is 22.83% while the top 50% of income earners in the US pay 14.33%. The bottom 50% of income earners in the US pay 3%.
The top 1% of income earners in the US pay 45.7% of the income tax collected by the IRS. In fact, the 1% carry 46% of the bucket for the other 99%.
Myth #3: The Rich Are Just Lucky
Only 8% of the self-made millionaires in my research said they amassed their wealth through luck. But, interestingly, the remaining 92% agreed that luck was important in accumulating wealth. However, it was a different kind of luck which I gave a name – “Chance of Luck”.
Chance Luck is a special, unique type of luck that is the product of hard work, persistence, Rich Relationships and habits. These 92% in my Rich Habits Study never give up on themselves, their goals and dreams. They endure great hardship and, sometimes great danger. They dance on the edge that separates success from failure. They refused to surrender. They survived and succeeded.
Myth #4: The Rich Are Better Learned
Thirty-six percent of the self-made millionaires in my study never earned a college degree.
Of those who received a college degree, 46% paid their own tuition after college and 23% attended college part-time, while working.
Myth #5: Rich People Are Helpless
Sixty-two percent of the wealthy in my Wealth Habits study said they gave 10% or more of their net income to charity. Many of the charities they supported included local, community food banks, homeless shelters, cost-based scholarship programs and organizations that benefited underprivileged children.
And they didn’t stop there.
72 percent give five or more hours a month to some kind of help. Their voluntary work included helping to manage charities, either through board membership, or as part of various committees.
Myth #6: Money Doesn’t Buy Happiness
Eighty-two percent of the wealthy in my survey said they were happy.
According to my analysis of the wealthy, they had 58% fewer problems than everyone else. When you are rich, you can eliminate much of the stress caused by everyday problems and thus, eliminate the unhappiness associated with those problems.
If you are poor, everyday problems, such as fixing a car, often last a long time and cause long-term or chronic stress, which not only destroys happiness but chronic stress disrupts the immune system, inviting disease, illness and poor health.
Myth #7: Rich People Live Extravagant Lives
Whenever I think of the luxurious life of the rich, I envision private jets, yachts, luxury vacations, expensive cars, etc.
Another myth.
Fortunately, I collected a lot of data about the spending habits of the wealthy. Here is some of that data:
- 67% said they save their money.
- 8% still shop at thrift stores.
- 30% coupons recorded.
- 92% have never been on a yacht vacation.
- 55% of wealthy people spend less than $6,000 a year on their vacations. Only 23% admitted to spending $10,000 or more on their annual vacation. Most of those 23% are those who earn their wealth.
- 87% said they have never bought a luxury car in their life.
- 44% said they buy a used car every five years.
Many in our country grew up poor or middle class and too many were taught the above money myths about the rich.
The truth is, the rich are rich for many reasons. And most of those reasons have to do with hard work, persistence, taking learning risks, good habits, making good decisions, saving their money, living within their means and building strong relationships with decision makers who can open doors over the phone.
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