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- Lie #1: Rich People Inherited Their Money
- Lie #2: Rich People Don’t Have to Work Hard
- Lie #3: Rich People Pay Less in Income Tax than Everyone Else
- Lie #4: The Rich Are Rich Because They Just Got Lucky
- Lie #5: The Rich Are Better Educated
- Lie #6: Rich People Are Not Charitable and Hate Poor People
- Lie #7: Money Does Not Buy Happiness
- Lie #8: Rich People Live Extravagant Lifestyles
Back in 2004, I began to research why the rich were rich and why the poor were poor.
When I began my Rich Habits research, I hated rich people.
I had some entrenched negative beliefs about the wealthy that I inherited from my upbringing.
As I learned more about the drivers behind wealth and poverty, however, my perception flipped 180 degrees.
Instead of hating the rich, I grew to admire them.
The self-made rich became real-life heroes to me.
Here are 8 lies I was taught to believe about the rich:
Lie #1: Rich People Inherited Their Money
That’s what I used to hear growing up.
The rich were rich because of old money.
Boy, is that a myth.
In my study, 76% of the wealthy in my study did not inherit anything.
Nada, zip, zero.
Of this 76%, 31% came from poor households and 45% came from middle class households.
The annual Wealth X survey seems to peg the self-made percentage at anywhere from 75% – 84%, depending on the year of the survey.
Only 24% of the rich in my study, were raised in wealthy households and inherited their wealth.
So, no – the overwhelming majority of the rich are self-made.
Which, by the way, is a very good thing because it means most of the wealthy come from poverty or the middle-class.
Lie #2: Rich People Don’t Have to Work Hard
According to my Rich Habits study, one of the reasons the wealthy accumulated so much wealth was due to the fact that they worked more hours than those who were not rich.
Here’s some of the data:
- 44% of the wealthy worked 11 hours more each week than the poor.
- 86% of the wealthy who had full time jobs, worked 50 hours or more each week, whereas 57% of the poor who had full-time jobs, worked less than 50 hours each week.
- 88% of the wealthy took fewer sick days than the poor.
- 79% of the wealthy, on top of their extended work hours, networked 5 or more hours each month. 55% of this networking was done during their lunch hour.
- 65% of the wealthy were working so many hours, in part, because they had 3 sources of income to manage. 45% had 4 sources of income. Only 6% of the poor had more than one source of income.
- 67% of the wealthy watched less than an hour of T.V. a day, whereas 77% of the poor watched more than an hour of T.V. a day.
- 63% of the wealthy spent less than an hour a day on the Internet. 74% of the poor spent more than an hour a day on the Internet.
I initially thought this disparity in work hours, between the rich and the poor, was due to the fact that 91% of the wealthy in my study were decision makers, which carries with it more responsibility and, thus, more work hours.
But that’s not the case.
According to the Census Bureau, the average wealthy household (defined by the IRS as the top 20% of income earners in the U.S.) worked five times as many hours as the average poor household.
Single-parent households and high unemployment among poor households.
Lie #3: Rich People Pay Less in Income Tax than Everyone Else
According to the IRS, the income tax rate for the top 1% of earners in the U.S. is 22.83% whereas, the top 50% of income earners in the U.S. pay 14.33%.
The bottom 50% of income earners in the U.S. pay just 3%.
The top 1% of income earners in the U.S. pay 45.7% of the entire 100% of income tax collected by the IRS.
1% are carrying nearly 46% of the tax bucket for the other 99%.
If anyone can make a case about the unfairness of our tax system, it’s the rich.
They carry far too much of the tax burden, in America at least.
Lie #4: The Rich Are Rich Because They Just Got Lucky
Only 8% of the self-made millionaires in my study said they accumulated their wealth because of dumb luck.
But, interestingly, the remaining 92% did acknowledge that luck was critical to the accumulation of wealth.
However, it was a different type of luck that I gave a name to – “Opportunity Luck”.
Opportunity Luck is a special, unique type of luck that is the byproduct of hard work, persistence, Rich Relationships and habits.
This 92% in my Rich Habits Study simply never quit on themselves, their goals and their dreams.
They persevered through enormous adversity and, sometimes great risk.
They danced on a razor blade that separated success from bankruptcy. They refused to surrender.
They survived until they could thrive.
And even for those who did fail (27% of the self-made millionaires in my study failed at least once in business), they picked themselves up, figured out what went wrong and tried again.
Lie #5: The Rich Are Better Educated
Thirty-six percent of the self-made millionaires in my study never obtained a college degree.
Of those who got a college degree, 46% of them paid their own way through college and 23% of them went to college part-time, while they worked.
Lie #6: Rich People Are Not Charitable and Hate Poor People
I was raised to believe that the wealthy were selfish and greedy with their money.
I was raised to believe that the rich despised poor people.
Wrong on both counts.
Sixty-two percent of the wealthy in my Rich Habits Study said they contributed 10% or more of their net income to charity.
Many of the charities they supported included local, community food banks, homeless shelters, means-based scholarship programs and organizations that benefited poor children.
And they didn’t stop there.
Seventy-two percent volunteered five hours or more a month for some charity.
Their volunteer work included helping to run the charities, either through board membership, or as part of the various committees.
Lie #7: Money Does Not Buy Happiness
I must have heard my mom say this a thousand times growing up.
I just assumed that rich people were miserable people.
Eighty-two percent of the wealthy in my study said they were happy.
Ninety-four percent of those who were happy, said they were happy because they liked or loved what they did for a living.
Lie #8: Rich People Live Extravagant Lifestyles
Whenever I thought about the extravagant lifestyles of the wealthy, I envisioned private jets, yachts, luxurious vacations, expensive cars, etc.
Fortunately, I gathered a great deal of data on the spending habits of the rich.
Here’s some of that data:
- 67% said they were frugal with their money.
- 8% still shopped at goodwill stores.
- 30% clipped coupons.
- 92% never vacationed on a yacht.
- 55% of the wealthy spent less than $6,000 a year on their vacations. Only 23% admitted to spending $10,000 or more on their annual vacations. Most of those 23% were those who inherited their wealth.
- 87% said they never purchased a new luxury car in their lives.
- 44% said they purchase a used car every five years.
It’s easy to hate the wealthy.
Most in our country grew up poor or middle class and far too many were indoctrinated with the belief that the wealthy are corrupt, evil people.
And the media, for some reason, loves to pile on the rich whenever one of its members, like Bernie Madoff, does something despicable.
But the real problem is with parents, the public school system and politicians who bash the rich as corrupt and greedy.
Parents do this out of ignorance, which I’m trying to correct through my research, my books, my blog and my media interviews.
But the public school system and politicians bash the rich because they have their own separate agendas.
The public school agenda is to raise children to be working class employees – worker bees.
The politicians agenda is to soak the rich through higher taxes and then to use the money they collect from the rich in order to wield power over the poor through paltry, ineffective entitlement programs.
Politicians need poor people.
The more poor people they can make dependent on government, the more power they have over them.
What kind of a message do you think bashing the rich sends to the next generation?
It is teaching them that the pursuit of financial success is a bad thing.
The fact is, the rich are rich for a lot of reasons.
And most of those reasons have to do with hard work, persistence, taking educated risks, good habits, good decision-making, being frugal with their money, living below their means and building strong, powerful relationships with decision-makers who can open doors with a phone call.
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