The Millionaire Next Door

Millionaire U.

What did I discover from my first national survey of millionaires in 1980? Just over one-half (53%) of these wealthy respondents graduated from college. What about 30 years later? The large majority (90%) of millionaires today are college graduates holding at least a bachelor’s degree. The same proportion applies to those with multimillions including decamillionaires. 

It is very clear that a college degree and wealth are complements. But note that one’s grade point average is not a substantial predictor of wealth. Income is also a correlate of wealth and accordingly college graduates earn substantially more than those without a degree.

Generally, it is easier to save and invest more of your income if your income is above the norm. The median annual income generated by a male [female] worker with a bachelor’s degree is $60,910 [$45,410]. For those who hold a master’s degree it is $75,430 [$52,442]. These incomes figures are substantially higher than for those workers who are in the high school graduate category, i.e. $37,030 [$26,740].

What typically happens in a household where both the husband and wife are college graduates and both are employed full time? More often than not, such households have incomes in excess of $100,000. Over a 40-year working career, this couple should earn approximately $4.3 million. What if such a couple saved $12,000 a year? According to a recent article by Vanguard, (The boring way to become a millionaire) “at that rate, you would be a millionaire in 31 years providing you earned a 6% average annual investment return.  And if you earned 8% annually, you’d make it in just 27 years.”  This is not rocket science.  Yet only 3 1/2 % of American households have an investment portfolio of $1 million or more.  Yet, more than 14% of the approximately 115,000,000 households in this country generate an annual realized income of $100,000 or more. The good news is that there is still time for these high income producers to hit the million dollar mark before reaching retirement age. 

In more than 80% of the households in the $100,000 or more income category at least one income earner is a college graduate. Obviously many of these people are not fully utilizing the same high intellect and discipline required to graduate from college in their effort to build wealth. Most people learn how to multiply $100,000 by 40 years when they are in elementary school. And computing the compound growth of investments is a topic covered in middle school. Learning is much more valuable when applied to enhancing one’s well being. 

And certainly a college degree is more than just an issue of economics. It is about pride of achievement, developing discipline and time management, enhancing one’s socialization processes, and finding a vocation that gives great satisfaction even beyond money.

I have often found in interviewing millionaires that even a major league net worth cannot replace the satisfaction and esteem of having a college degree. Along these lines consider the comments from a self-made, 50 year old woman with a net worth in excess of $15 million:

I am a college dropout-in spite of this I have been fortunate enough to do well in business-however, my greatest regret in life is that I did not complete my study to [receive] a degree-it will always be an ache in my bones-I have continued to study and learn but my advice to everyone is stay in for the long haul-you are-not as smart as you think!! Attain the highest degree possible then make your fortune-no one has any sense until they are 35 years old anyway-might as well spend those formative years learning-listening instead of talking!!

Yes, you can still become a millionaire without earning a college degree. But I’ll wager that in most cases all of those dollars will not fully replace the satisfaction of having a college diploma on your wall.

4 thoughts on “Millionaire U.”

  1. I wish I had completed my college education when I was younger. And now with young children, I have fears of raising my children as a widow with only a high school education, and some college courses.

    What is your opinion of older adults (~40ish) returning to college, and going into debt via loans to obtain a degree for a brighter financial future (as long as one lives beneath one’s means)? I believe I already know what Dave would say – what is your opinion?

  2. A college education is always a good thing to have, but unfortunately it has become a “status symbol” as well as a vehicle for success…there is a lot of pressure for people to get college degree’s, and yet not everyone is cut out for academia – some folks are just naturally talented and can make it in the world on grit, talent, and common sense. I do not think people should be categorized as social misfits for not having a higher degree. Also, the cost of getting a college education now runs in the tens if not hundreds of thousands, which keeps people stuck in a cycle of debt that only Americans can know. If someone has the wits and wherewithall to make it on their own, independent of an education, I think they deserve extra credit for it, as they are going against the tide (and perhaps an honorary degree from the school of hard knocks!).

    On the other hand, if you are not an entrenpreneur, and you are stuck in low paying jobs, then a college education can be nothing but an asset. Go for it!

  3. I disagree that a college diploma is important to find success and satisfaction in life.I found that the whole buisness of school was a one-size- fits-all circus. I came from two, well educated parents and was expected to do well in school. It didn’t work out that way, and the resulting battles over grades and performance damaged my relationship with my parents for several years between the age of 13-30. One of the best things I ever did was drop out of high school and join the U.S. Coast Guard. It was there I learned good work habits and how to excell during my four year enlistment. I also got my GED while in the Coast Guard. It took me until my late thirties to get my financial world on track, but thanks to my love of reading and using books to educate myself instead of school/colege I eventually became a millionaire before the age of 50. I believe an education is extremely important, but it must be delivered correctly. Our one-size-fits-all school system does help many become educated/succesful, but it hurts many kids who just can’t seem to do well in our school systems. I’ve mentored five boys over the course of the last 15 years in the Big Brothers organization and have seen that the education system is more out of touch than ever. Wouldn’t it be great if every kid could get the education they need even if it meant something other than graduating from high school or college?

  4. The fact of the matter is that a degree is statistically valuable. Dr. Stanley pretty well nailed the reasons why it is preferrable to get degreed.

    I wasn’t scholastically capable as high school material, much less college material. It took me an extra year to get my HS diploma.

    I am now 59 years old with a net worth of $850,000.00 with no debt. Car paid for, $100K home paid for. I’ve never earned over $71K gross a year.

    I’ve been saving and investing since age 22 years old. It’s been a struggle growing my net worth, but I have accepted it as something I wanted to do. No pension, just savings here. I hope to make it to $1,000,000.00 net worth by age 65.

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