What’s the Difference between Millionaires and Billionaires?
The Growing 1 Percent
A report published by the Spectrem Group noted that in 2014 there were 10.1 million households in America with $1 million or more in assets, excluding the value of their primary residence, increasing from 9.6 million households in 2013, or an approximately 5% increase year over year. Generally, the increase is largely due to the rising stock market and real estate values since the 2008 financial crisis. Who are these millionaires? Their average age is 62, with most of them still working as 1 in 5 owns or started their own company, and 70 percent work more than 40 hours a week.
Forbe’s annual ranking of billionaires showed an approximately 9 percent increase in billionaires from 492 billionaires in America alone to 536 billionaires in 2014 and 2015, respectively. There were 1,645 billionaires worldwide increasing to 1,826 billionaires worldwide in 2014 and 2015, respectively, or an approximately 11 percent increase. The Economist noted that the 1 percent increasingly work in finance, marry each other contributing to dual-income households and care a lot about politics. Many of these individuals have committed to giving most of their wealth to philanthropic causes.
The Differences: Millionaires vs. Billionaires
Let's debunk a couple of myths first. Broadly speaking, the average millionaire is not the flashy Ferrari-driving individual spending thousands of dollars in one night. The average billionaire is nothing like a millionaire in terms of mindset and lifestyle.
Here are the common differences between each group:
Common Millionaire Characteristics
Common Billionaire Characteristics
Millionaires live below their means and have frugal lifestyles.(1)
Billionaires invest in ideas. There is practically no limit on what billionaires can buy. Islands and fortified mega-yachts are not out of the question.
Millionaires own their own company, are senior corporate executives and consultants.(3) They are masters of their industry.
Billionaires create new industries.
Millionaires collect wealth by earning, saving and investing.
Billionaires recognize the value of simple ideas. They discover massive holes and exploit them by developing products or services that carry high value for a lot of people.
Millionaires are self-made. They have a keen sense of self, discipline and are able to inspire others.
Billionaires have this but also a keen sense of the world. They leverage and understand the power of teamwork. They rely on a core group of people to help them through the endeavor.
Millionaires own modest homes and cars.
Billionaire’s homes are very secure and private. Many of their homes are advanced fortresses.
Millionaires solve problems for their customers.
Billionaires solve problems for humanity. They take major risks because they are very passionate and confident to the point where they seem fearless. Billionaires power through impossible obstacles that would stop most people.
Millionaires like to make their own decisions and be their own boss – sometimes forgoing help from others.
Billionaires work during lunches, dinners and the weekends. They mix friends and work. They recruit other smart people which is all part of a larger plan that they have.
Millionaires tend to preserve wealth to keep their millionaire status. Only 20% of millionaires inherited their wealth. (1)
Billionaires are completely independent thinkers. They pursue a passion and really don’t care about the money. What’s $1 million when you are worth $70 billion? A rounding error.
Around 80% of millionaires are college graduates. Only 18% of millionaires have Master’s degrees. Eight percent have law degrees, 6% have medical degrees, and 6% have PhDs.(3)
Many attended elite schools or dropped out from elite schools to pursue their passion. Overall for the global elite, the majority of each of these groups attended and graduated from college, and a very high percentage attended elite schools. Powerful men (92.4%), women (91.0%), and Davos attendees (90.5%) had higher college attendance than billionaires (71.1%).(2)
Work timing is important as Bill Gates, Carlos Slim and Amancio Ortega, all started early, small and worked hard. Certain billionaires have managed to quietly build an empire. Overall, in my experience, millionaires are inspirational while billionaires have a different internal programming entirely.
If you are interested in learning more about millionaires in America and what made them millionaires beyond the above information, I recommend reading The Millionaire Next Door: The Surprising Secrets of America's Wealthy written by Thomas J. Stanley and William D. Danko.
Interested in learning more about what a billionaire is like? Start by watching this video of Elon Musk:
1) Thomas J. Stanley and William D. Danko. 1996. The Millionaire Next Door: The Surprising Secrets of America's Wealthy. Gallery Books.
3) Ellsberg, Michael. 2011. The Education of Millionaires: Everything You Won’t Learn in College about How to Be Successful. New York, NY: Penguin.