What does the data say? Reading The National Study of Millionaires

I review the National Study of Millionaires, the largest study of millionaires ever undertaken, by Chris Hogan and the Dave Ramsey team.

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Not too long ago, I reviewed the book “Everyday Millionaires: How Ordinary People Built Extraordinary Wealth—and How You Can Too“.

You can read my full review, but to summarize, I found the arguments compelling and in agreement with my own beliefs, but I objected very passionately to the lack of concrete data presented in the book.

The data, based on what was known as the “National Study of Millionaires”, was discussed in detail, but there wasn’t anything in the way of raw data presented there. So one needed to take 100% of the results on faith.

That isn’t okay.

If I were to tell you that all of the people I’ve coached are immensely good-looking, this would of course be true, but naturally, you’d also want to know how this was determined. Also, was this a cause or an effect? Did I only work with good-looking people, or are the type of people who are interested in digging deep to learn and change their money story just really good-looking?

Claims aren’t enough. You have to back up the claims with data.

And there was nothing in Everyday Millionaires that backed up their claims.

Months later, that changed. The Dave Ramsey team, who undertook the study, released the full study to the public.

It was $10 and available as a PDF, and I was happy to buy it and see all that detailed data contained inside.

Read on to see what I found.

The study

First of all, the study didn’t skimp on content. The PDF is 71 pages long, more than a quarter the length of the entire book on which it was based, and full of charts and graphs.

Sample chart from the book

The case study is divided, roughly and in my own words, into the following sections:

  • Research methodology
  • Demographics of participants
  • Behaviors of participants
  • Beliefs of participants

As for what is meant by “participants”, this included:

  • 2,000 net-worth millionaires drawn at random (as in, not from the Dave Ramsey orbit)
  • 8,000 net-worth millionaires from the Dave Ramsey orbit

This sampling is important, because it meant that there was at least an attempt to see if the responses from “Dave Ramsey millionaires” were different from the general population of millionaires.

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There was a fair amount of attempt to bring this kind of minimization of bias into the study, and this was my favorite part of it. Because the results of this study directly affect the fundamentals of the Dave Ramsey programs, if the study contradicted them, that would affect the bottom line for the company. So there is definitely some self-interest in the study confirming their hypotheses, and therefore, that they were even concerned with a semblance of independent investigation and lack of bias, gave me a lot more confidence in the study.

And what was the hypothesis?

Millionaires gain wealth through specific choices, such as working hard, demonstrating financial discipline, and investing consistently and wisely over time.

From page 1 of the study

Moreover, the hypothesis was that millionaires rely on what is in their control, and not aspects of life such as inheritances, socioeconomic status, or good old-fashioned luck.

How millionaires are (and are not) different

The study contrasted questions answered by the millionaires with a “general population” sampling. This was done, presumably, to see how millionaires’ attitudes and lifestyle choices set them apart from the general population, most of whom are not millionaires.

For example , when asked to rank the behaviors that people believe to be most important in building wealth, two charts were presented:

How millionaires and non-millionaires believe that wealth is built

The pedagogical device here, used throughout the study, is to show how millionaires are different from the general population, through behaviors as well as beliefs.

The problem, as I see it, is that there is a logical leap that is implied here but never quite actively addressed, which is: Because millionaires possess these particular traits, then if you are to possess these traits, you can more easily become a millionaire.

Now, this may or may not be true, but it’s an incorrect logical statement.

If A implies B, as we all know from our logic classes (you all took them, right?) does not follow that B implies A.

Or, if I’m remembering my syntax correctly:

I still remember LaTeX from writing lab reports in college

Monty Python said this perfectly in a surprisingly funny skit about logic: “Universal affirmatives can only be partially converted. All of Alma Cogan is dead, but only some of the class of dead people are Alma Cogan.

So it follows that some of the class of people who employ these particular traits will be millionaires, not all of them.

That doesn’t mean that these aren’t good traits. A lack of dependence on debt, a focus on discipline and hard work, and a growth mindset aren’t bad traits to have, of course, and they will surely help you on your journey, but I just can’t go as far as to say that these traits will lead you to become a millionaire.

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Understanding the average millionaire

With that in mind, reading the study can be a pleasurable exercise in understanding a subset of people in the United States who have achieved a certain level of financial success that many of us covet.

As I’ve said before, becoming a millionaire isn’t what it used to be. Correspondingly, it’s more achievable than ever, and also more vital than ever. Unless you are going to rely on some sort of passive income, if you ever want to stop working for money and have money work for you, you will eventually need to have enough saved to accomplish this.

I recommend you purchasing the National Study of Millionaires if you’re a numbers nerd, or if the argumentation in the book Everyday Millionaires isn’t convincing enough for you.

I applaud the Ramsey Solutions team for not only being rigorous in their research, but also publishing the research for all to see. Yes, it’s behind a paywall, but I found the $10 well worth it.

For those who just want the high-level results, the abstract is available for free.

Still keeping a critical eye

Now, technically, even with a published study, there are certain facets that we need to take on faith. There is no way to independently verify any of these claims, even with detailed case notes, including 11 (!) appendices of information.

They could have made it all up. They certainly have the financial incentive to make this study support the findings that benefit the organization.

But at the end of the day, is it really so hard to believe that with consistent, patient, hard work and focus, and a lack of reliance on debt, extreme wealth is possible? Even for you?

I don’t think that’s so hard to believe. And this study can give you a blueprint for moving forward.

And if you want some help, I will be able to assure you that you are immensely good-looking.

Do you disagree? I’d love to hear about it in the comments below.

Also, I received no compensation for this review. I bought the study with my own money. I don’t do affiliate marketing. Please see my Disclosure Policy for details.

Everyone struggles with money, but most will try to muddle through on their own. Will you be different? I help people from all over the world reach their financial goals. Let’s talk.

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