Everything You’ve Been Led to Believe About the Rich is a Myth

Tom Corley boats - cropBack in 2004, when I began my research to find out why the rich were rich and why the poor were poor, I’ll confess, I hated rich people. I had some entrenched negative beliefs about the wealthy that I inherited from my upbringing. As I uncovered more and more about the causes of wealth and poverty, however, my hatred of rich people began to fade. When I finally completed my research in 2009, this hatred had transformed into admiration. Almost everything I had been led to believe about the wealthy was a myth. I thought I’d share some of those revelations with you and dispel the myths I embraced for much of my adult life. Let’s begin.

Myth #1: Rich People Inherited Their Money

“Old 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, 82% of the wealthy did not inherit anything. Nada, zip, zero. In fact, 76%, or 177 of the wealthy in my study, were self-made millionaires. 31% came from poor households and 45% came from middle class households. Only 24% of the rich in my study were raised in wealthy households.

Myth #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 in large part 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. The cause? Single-parent households and high unemployment among poor households.

Myth #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.

Myth #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 random good luck. 92% said random good luck had nothing at all to do with their wealth. While this 92% acknowledged that luck was a factor in the accumulation of their wealth it was a different type of luck that they called “Opportunity Good Luck”. This is a unique type of luck that is the byproduct of their hard work, persistence and habits. This 92% never quit. They never gave up. Even when they failed, and 27% failed at least once in business, they picked themselves up, figured out what went wrong and tried again.

Myth #5: The Rich Are Better Educated

While 68% of the rich in my study obtained a college degree, 110, or 69%, went to a public institution. 32% of the wealthy did not even obtain a college degree. And 36% of the self-made millionaires (57 of the 177 self-made millionaires) never obtained a college degree. Of those 158 of the wealthy who got a college degree, 73, or 46%, paid their own way through college and 23% of them went to college part-time, while they worked.

Myth #6: Rich People Are Not Charitable and Hate Poor People

I really struggled with this one because I believed from my upbringing that the wealthy were selfish and greedy with their money and despised poor people. Boy was I wrong. 62% of the wealthy said they contributed 5-10% of their net income to charity. Many of the charities they supported included the community food bank, homeless shelters, means-based scholarship programs and organizations that benefited poor children. But they didn’t stop there. 72% 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.

Myth #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 saps. Another erroneous belief. 82% of the wealthy in my study said they were happy. 94% of those who were happy, said they were happy because they liked or loved what they did for a living.

Myth #8: Rich People Live Extravagant Lifestyles

When I thought about the extravagant lifestyles of the wealthy I envisioned private jets, yachts, luxurious vacations, expensive cars, etc. Wrong again. 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 many of the poor and middle class were indoctrinated with beliefs that the wealthy are not good people. Parents, the public school system and many politicians teach our children that the wealthy are corrupt, greedy, have too much wealth and that, for the good of society, this wealth should be redistributed. What kind of a message do you think that sends to America’s future generation? It is teaching them that seeking financial success is a bad thing. The Occupy Wall Street movement was a manifestation of this “pursuing wealth is bad and wealth needs to be redistributed “mindset. The fact is, the rich are rich for a lot of reasons. And most of those reasons are hard work, persistence, good habits, good decision making, frugal living, living below their means and building strong, powerful relationships with other success-minded people. We need to view self-made millionaires for what they are – American Dream achievers who should be honored and not reviled.

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Thomas C. Corley About Thomas C. Corley

Tom Corley is a bestselling author, speaker, and media contributor for Business Insider, CNBC and a few other national media outlets.

His Rich Habits research has been read, viewed or heard by over 50 million people in 25 countries around the world.

Besides being an author, Tom is also a CPA, CFP, holds a master’s degree in taxation and is President of Cerefice and Company, a CPA firm in New Jersey.
 
Phone Number: 732-382-3800 Ext. 103.
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Comments

  1. Jerry Tausend says:

    Great summary by Tom of the mindset and work ethic needed to reach your financial goals in America.
    Also, a great lesson for young people who have been brainwashed by public officials and educators…..go to work and work harder and longer than any of your peers….then teach your children to do the same….Win at life by following Tom’s simple principles……Share this article with everyone you know…spread the truth..

  2. Kathy from CT says:

    Great article. Though I am sure naysayers will insist the interview group was too small a sampling to get an accurate reading.

    • I can’t argue with those naysayers as there is some truth to the smallness of the sample size. But, there are many studies and many samples performed within the range of my sample. Election exit polls, for example, often have sample sizes that are not very large but, yet, are accepted as credible by the media. What I think separates my research from some others out there re: wealth and poverty, is the intimacy in which I gathered the information. I did not send out checklists or a questionnaire. I engaged each participant, asking them 144 questions. Oftentimes, this method provided me with more information than I anticipated. Having a dialogue with an individual can take you in many directions. As a result, my research enabled me to gather more quality data.

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