‘The Millionaire Next Door’ is a Myth to Most Millennials

[jkern]

The basic premise of the book is to accumulate wealth from being frugal, wise and not wasteful with your money and then saving and investing over long periods of time. The actual dollar amount is irrelevant. The formula hasn't changed.

I know or know about many millennial's because my daughter is 28 and most of the people I know have kids in the same age group. The vast majority are doing quite well. More than 50% have jobs paying well over $100K per year. My daughter already has a NW of $450K. I'm sure there are many others that aren't doing well, but there always have been people that don't do well. In general, hard work pays off and slacking doesn't.

 

[daylatedollarshort]

There is no better value in education than many community colleges. The one near us has agreements with all of the state universities in state that all credits transfer. So, depending upon the major, a kid does a year or two of gen eds for a bargain, then transfers into the still-reasonably priced state university to finish his/her bachelor's degree.

One of our kids went the transfer degree route and had less than a 6 month payback period on the first job. The other landed the dream job before finishing college, now has employer tuition reimbursement and is going to school part-time.

 

[daylatedollarshort]

The basic premise of the book is to accumulate wealth from being frugal, wise and not wasteful with your money and then saving and investing over long periods of time. The actual dollar amount is irrelevant. The formula hasn't changed.

I know or know about many millennial's because my daughter is 28 and most of the people I know have kids in the same age group. The vast majority are doing quite well. More than 50% have jobs paying well over $100K per year. My daughter already has a NW of $450K. I'm sure there are many others that aren't doing well, but there always have been people that don't do well. In general, hard work pays off and slacking doesn't.

Wow, that is a great NW for her age. What field is your daughter in?

 

[kgtest]

Wow, that is a great NW for her age. What field is your daughter in?

Right? I know even my FIL who was just wrapping up his residency and getting his first real job as a Cardiologist at 28 certainly didnt have a NW of 450k lol. He had a mortgage at like 18% interest and had to borrow from his new wife just to make rent.

At 28 in fairly certain all I had was debt with a mortgage and some minor IRA and 401k balances. 10k maybe lol.

 

[daylatedollarshort]

Right? I know even my FIL who was just wrapping up his residency and getting his first real job as a Cardiologist at 28 certainly didnt have a NW of 450k lol. He had a mortgage at like 18% interest and had to borrow from his new wife just to make rent.

At 28 in fairly certain all I had was debt with a mortgage and some minor IRA and 401k balances. 10k maybe lol.

We were pretty excited recently when our oldest twenty-something felt financially flush enough to pick up the lunch tab.

 

[Luck_Club]

You are 100% correct, the people you describe above will potentially have to work harder, and will have to have more determination to succeed.

If you are saying it is impossible for them to succeed, I disagree. If you are saying people use those as excuses why they cannot succeed, I 100% agree.

The most common issue that prevents success is the self-imposed logic that you cannot succeed, and the self-made choices that prevent it. The deck was stacked against me for a long time. In my teen years, I always thought I would wind up in prison.

Very wise words

 

[marko]

So, sure, it is still possible for young people to do well and retire at a reasonable age, but I'd argue that it's a lot more difficult than it used to be for boomers like me.

An interesting twist we've seen, as a barrier to RE, at least on the successful millennial side of our family is incredible spending peer pressure; more than we ever had as kids.

Our niece and her husband travel to about 10 destination weddings a year, each more extravagant the the previous one, the latest in India.

They must post photos of: "Here we are in Rio having fun!", Jamaica, African Safaris, Bali, Maldives etc etc.

Her own wedding cost about $200K (including an after party where they rented an entire bowling alley for the night). All because their friends had similar events.

You dont want to be branded a loser if you dont post photos of yourself at the Pyramids

As a result, not a lot of saving or LBYM going on for investments.

 

[RAE]

I know or know about many millennial's because my daughter is 28 and most of the people I know have kids in the same age group. The vast majority are doing quite well. More than 50% have jobs paying well over $100K per year. My daughter already has a NW of $450K. I'm sure there are many others that aren't doing well, but there always have been people that don't do well. In general, hard work pays off and slacking doesn't.

Hard work alone is not going to get most young adults a net worth of $450K at age 28 - your daughter's situation is rather exceptional, I'd say. I know plenty of extremely hard-working young people that are doing okay, but have nowhere near that amount of NW at that age. And I also know some young people that are hard-working, but basically struggling to get by (and not because they aren't frugal). I'd also be interested to know what field your daughter is in, and did she incur any college loans that she had to pay off?

 

[dirtbiker]

Right? I know even my FIL who was just wrapping up his residency and getting his first real job as a Cardiologist at 28 certainly didnt have a NW of 450k lol. He had a mortgage at like 18% interest and had to borrow from his new wife just to make rent.

At 28 in fairly certain all I had was debt with a mortgage and some minor IRA and 401k balances. 10k maybe lol.

How did your FIL become a cardiologist at 28? He must have been on the ball. Most people without any break in education finish college at age 22. Finish medical school at age 26. Finish residency at age 29. Cardiology fellowship age 31-32.

And basically no doctor in their 20s has a positive net worth, unless they inherit it, unfortunately. Med school is expensive!

 

[RAE]

An interesting twist we've seen, as a barrier to saving, at least on the successful millennial side of our family is incredible spending peer pressure; more than we ever had as kids.

Our niece and her husband travel to about 10 destination weddings a year, each more extravagant the the previous one, the latest in India.

They must post photos of: "Here we are in Rio having fun!", Jamaica, African Safaris, Bali, Maldives etc etc.

Her own wedding cost about $200K (including an after party where they rented an entire bowling alley for the night). All because their friends had similar events.

As a result, not a lot of saving or LBYM going on for investments.

Sure, that can happen, but a lot of young folks I know are not like that at all. You can always find examples of young folks who foolishly spend too much, who made bad decisions regarding their education, etc. - but there are also plenty of examples of young people who are pretty frugal, and know that they need to save and invest, but struggle to do so because there's just not a whole lot of $$ left over after paying the bills each month. High housing costs, in particular, are killing a lot of young people around here (and in many areas, I think).

 

[Red_E]

I am on the older side for a millennial, but from talking with parents and others in the older generations, we have it pretty good compared to the older generations. Sure, some things are maybe more expensive (housing and college), but many other daily essentials are much more reasonable/reliable.

These types of articles seem like cop outs or excuses for people that are struggling to get ahead. Sure, everyone has their own unique challenges, but we have so many opportunities nowadays that people couldn't even dream of 20 or 30 years ago. I feel like many of my peers have been raised on the silver spoon so to speak and expect the same lifestyle that their parents took 20 years of working to achieve. And, are making poor/sub-optimal financial decisions to meet that unrealistic standard straight off the bat once they get out of school.

It's probably very similar to back in the day (in generalities, not the specifics) where hard work, entrepreneurial tendencies, and fiscal discipline (frugality) are rewarded and allow people to get ahead.

I sure see it as pretty straightforward to get to be a "Millionaire Next Door" with my family. Both my wife and I chose schools that gave us free rides even though we both got into ivies, and both chose careers that were not only interesting, but had reasonable career/income potential. The rest is simple math. Spend less than you earn and invest the difference. Too many of my friends make a ton and spend even more, hard to have too much sympathy when they complain they cant get ahead.

 

[ziggy29]

Telling someone with Down's Syndrome or traumatic brain injury from a car accident to work harder is going work for them?

Pretty much everyone I've known with Down syndrome LOVES to feel useful when given the chance. So sure, they may not be capable of fully supporting themselves through what they do and that's where family, church (if applicable), government and charity can come into it, but I see no reason not to encourage them to do what they can do. There's a good chance it will make them happy, too.

 

[marko]

Sure, that can happen, but a lot of young folks I know are not like that at all. You can always find examples of young folks who foolishly spend too much, who made bad decisions regarding their education, etc. - but there are also plenty of examples of young people who are pretty frugal, and know that they need to save and invest, but struggle to do so because there's just not a whole lot of $$ left over after paying the bills each month. High housing costs, in particular, are killing a lot of young people around here (and in many areas, I think).

Yes, I agree, my point was that not all millenial difficulties reaching RE are the result of a difficult economy, a stacked deck or student debt.

They have a lot of more opportunities and pressures to blow that dough than we had.

 

[Senator]

Pretty much everyone I've known with Down syndrome LOVES to feel useful when given the chance. So sure, they may not be capable of fully supporting themselves through what they do and that's where family, church (if applicable), government and charity can come into it, but I see no reason not to encourage them to do what they can do. There's a good chance it will make them happy, too.

And there is always a chance they could succeed, and succeed big. The sky is the limit, when you set your goal as the sky.

22-year-old John Cronin from New York’s Long Island is a true example that Down’s syndrome shouldn’t be an obstacle for those who have it, nor should be the cause of prejudice in the social and social environment around them.

He has developed a business worth millions and with his success he has given a hope to many with similar problems like his own.

https://luckaround.com/22-year-old-with-down-syndrome-became-a-millionaire-by-selling-socks/

 

[daylatedollarshort]

Pretty much everyone I've known with Down syndrome LOVES to feel useful when given the chance. So sure, they may not be capable of fully supporting themselves through what they do and that's where family, church (if applicable), government and charity can come into it, but I see no reason not to encourage them to do what they can do. There's a good chance it will make them happy, too.

In the context of this thread and my previous post, is the only thing preventing people with those kinds of handicaps from becoming Millionaire Next Doors a lack of hard work? The Down Syndrome story is anecdotal and the business was started in conjunction with his father.

 

[kgtest]

Sure, that can happen, but a lot of young folks I know are not like that at all. You can always find examples of young folks who foolishly spend too much, who made bad decisions regarding their education, etc. - but there are also plenty of examples of young people who are pretty frugal, and know that they need to save and invest, but struggle to do so because there's just not a whole lot of $$ left over after paying the bills each month. High housing costs, in particular, are killing a lot of young people around here (and in many areas, I think).

Housing costs are key and likely everomes bihgest lifetime expense item. So I am a border line millennial gen x guy. I saved money on rent by

1. joining the military
2. Having roommates and sublets
3. Moving back home with mom and dad
4. Moving in with girlfriend
5. Buying a foreclosure that 'needed tlc'
6. Taking advantage of that obama era first time homebuyer credit
7. Maintaining best credit for best interest rate
8. Saving enough of a downpayment to avoid PMI
9. Refinancing when the rate dropped more than 1%
10. Putting extra $ towards principle to reduce interest
11. Renting houses instead of hotels without a kitchen. I save by not going out to eat.
12. Buy low in a saturated market and sell high when housing inventory is low or interest rates are moving higher

I guess I could have ignored all of this along the way and made some pretty lame excuses too.

 

[ziggy29]

In the context of this thread and my previous post, is the only thing preventing people with those kinds of handicaps from becoming Millionaire Next Doors a lack of hard work?

Of course not. But it can make the difference between a zero percent chance and small but nonzero percent chance of it.

 

[Boose]

With social media, you can't unsee wealth.

Gen X here. When I started college in 1989, I met kids who had costly lifestyles and hobbies (skiing, Spring Break rentals, buying from J. Crew catalogs) that I had never been exposed to in my lower-middle-class, pre-Internet life. All I knew was LBYM because that's how everyone in my neighborhood lived. Now, it's simple to find videos of lifestyles to envy/emulate - and that makes it difficult for younger people to defer gratification. Thrift is a muscle that needs to be exercised.

DH and I worked hard, but we had some advantages that Millennials can also employ: not taking on too much student debt (I paid off $10K in Perkins loans within 7 years, DH was on G.I. Bill), we stayed married, ate less meat and ate simply in general, bought fewer clothes, upgraded technology infrequently, worked in state/local government where pensions are still a thing, avoided recreational shopping. In some ways, it wasn't that hard. But it requires discipline.

 

[mickeyd]

Moving in with girlfriend

Uhh, that one had nothing to do with saving rent money. It had more to do w/primal urges.

 

[RIGM]

Well, we can't just keep adding to the debt endlessly without it ending bad for some future generation. And as the debt grows, especially if it grows faster than GDP, the interest on the debt takes more and more of their taxes, paying for what their parents and grandparents borrowed rather than on things to help them and their own children...

And yet the millennials want their college debt eliminated, free college for all, subsidized housing, etc. We are all self-interested. Sometimes that is a good thing, like when it motivates us to work hard and save for the future, and sometimes not, like when we seek to put the cost of something we desire onto others. They are guilty too.

I don’t know if it is harder to become weather today or not, but I think the key thing the millennials miss is this: your “net worth curve” over time either bends upward, with returns on returns adding exponential growth, or the curve flat lines (or turns exponentially downward) from overuse / bad use of debt. The key variables are LBYM and TIME. Nobody talks about it just taking time. My impression is that they seem to think they should be wealthy in their 20’s and 30’s. Wealth takes time.

 

[big-papa]

I know the Millionaire Next Door is not a myth, because I read it shortly after retiring, and it described us very well.

We were late baby boomers. I’m sure it’s a lot tougher for younger folks. The US economy was roaring during my working years, and state university with top education was very cheap, so I never had to deal with loans.

So I do see a point of how the world has changed.

We were naturally reasonably frugal, but it was a business windfall that let us retire early, so I never kid myself that we saved our way to early retirement.

As they say, there are many roads to Dublin. While I'm not yet retired, I can count on one hand the number of years till I am. We weren't super frugal, but we paid attention to our spending. We always maxed out our 401Ks and saved as much in our taxable accounts as we could. When my wife was still a working engineer, we saved 100% of her salary. Some well timed bonuses, stock options, RSU's and even several(!) very nice severance packages, along with decent gains in the market have all made this possible!

 

[ziggy29]

The key variables are LBYM and TIME. Nobody talks about it just taking time. My impression is that they seem to think they should be wealthy in their 20’s and 30’s. Wealth takes time.

Agreed. This much, I think, is timeless -- what we would call "get rich slowly". If you don't start until your late 40s or 50s, there's a good chance you won't make it by (say) 65.

 

[Amethyst]

That's got to be situational. My govt and military millennial co-workers would snort. Some of the young women even told their fiances they do not want diamond rings; let's save/invest the money. Even I wasn't that frugal, lol

EDIT: One even had a blog on the "company" Intranet about frugality and saving for retirement! She was under 30; really smart and fun to work with.

An interesting twist we've seen, as a barrier to RE, at least on the successful millennial side of our family is incredible spending peer pressure; more than we ever had as kids.

Our niece and her husband travel to about 10 destination weddings a year, each more extravagant the the previous one, the latest in India.

They must post photos of: "Here we are in Rio having fun!", Jamaica, African Safaris, Bali, Maldives etc etc.

Her own wedding cost about $200K (including an after party where they rented an entire bowling alley for the night). All because their friends had similar events.

You dont want to be branded a loser if you dont post photos of yourself at the Pyramids

As a result, not a lot of saving or LBYM going on for investments.

 

[Dtail]

I am on the older side for a millennial, but from talking with parents and others in the older generations, we have it pretty good compared to the older generations. Sure, some things are maybe more expensive (housing and college), but many other daily essentials are much more reasonable/reliable.

These types of articles seem like cop outs or excuses for people that are struggling to get ahead. Sure, everyone has their own unique challenges, but we have so many opportunities nowadays that people couldn't even dream of 20 or 30 years ago. I feel like many of my peers have been raised on the silver spoon so to speak and expect the same lifestyle that their parents took 20 years of working to achieve. And, are making poor/sub-optimal financial decisions to meet that unrealistic standard straight off the bat once they get out of school.

It's probably very similar to back in the day (in generalities, not the specifics) where hard work, entrepreneurial tendencies, and fiscal discipline (frugality) are rewarded and allow people to get ahead.

I sure see it as pretty straightforward to get to be a "Millionaire Next Door" with my family. Both my wife and I chose schools that gave us free rides even though we both got into ivies, and both chose careers that were not only interesting, but had reasonable career/income potential. The rest is simple math. Spend less than you earn and invest the difference. Too many of my friends make a ton and spend even more, hard to have too much sympathy when they complain they cant get ahead.

Good 1st post.That's a winner.

Wish I had your thoughts way back when, but still always LBYM but not to the level of some folks here.

 

[24601NoMore]

Skimmed the article. Seemed like a bunch of whining (oh, it's just SO. UNFAIR!! that the mean, nasty older generations have things and we don't!) and refusing to accept LBYM to me.

I grew up the son of a frequently out of work electrician, and a homemaker that didn't make ANY salary. At one point, could not attend an event that literally cost ONE WHOLE DOLLAR because Mom said we "could not afford it". (Her exact words, which I'll remember to my death bed were.."I'm sorry, honey..that costs a dollar, and we don't HAVE a dollar"). Got a paper route at 12 and got up at 4 (yes, 4) AM to deliver said papers for ~5 years of peddling my little rusty bike through the snows and rains of SE Michigan. Never whined or cried about how "unfair" it all was. And guess what? I figured out at the ripe old age of 12 that if I wanted things, I'd have to WORK for them.

Worked my tail off. Paid for MY OWN college (no handouts, or parents giving me tens of thousands of dollars so they could pay for my college while I bought the latest XBox, iPhone and Nike sneakers or trotted off to some exotic, foreign location to spend a semester or two abroad).

Today's millenials wouldn't know difficulty and sacrifice if it smacked them hard in the head. They seem to want EVERYTHING handed to them, because they "deserve" it.