Stanley and Danko have been studying the affluent for decades—not for the sake of the wealthy, but for the sake of those who are not yet wealthy, but could become so. The authors maintain that the United States remains a land of opportunity, and they distill principles that can help people move beyond the fantasies of millionaire lifestyles to the practical how-to’s of getting there.

The stereotypical millionaire drives brand-new luxury vehicles, wears $5,000 watches and expensive suits, and lives in a multi-million-dollar house. There are certainly some who do this, but the much more common profile of the millionaire is a far cry from the caricature.

The average millionaire is in his mid-50s, drives a 10-year-old Honda or Toyota until it drives no more, dresses like an average citizen—forgoing the pizzazz and panache of brand names—and lives frugally and well within his means. They tend to find much greater joy in owning appreciable assets than flaunting rapidly depreciating liabilities like luxury cars. On average, millionaires live on less than 7 percent of their wealth, and live in homes worth under $400,000. Eighty percent of millionaires are first-generation wealthy. The majority invest a portion of their wealth in stocks and local business ventures, believe in the value of education and invest heavily in their kids’ education, and work between 45 and 55 hours a week.

One young Texan millionaire with a diesel engine repair company recalled a story of partners from the UK coming to the business and wondering why a casually dressed young man was showing them around. They kept looking over his shoulder for an executive in a three-piece suit. They were surprised to learn that this man whom they’d mistaken for one of the company’s truck drivers was the boss. The conception of millionaires that many people have is, as this Texan put it, “Big hat, no cattle,” but increasingly, the wealthy are more discreet—no big hat, but lots of cattle.

People tend to assess a person’s wealth based in terms of net worth. Net worth is calculated through adding up assets and subtracting debts and liabilities. A better way of assessing a person’s level of wealth is measuring net worth against an expected level of net worth. The problem with net worth is that it usually fails to account for a person’s age. The general trend should be that net worth increases as one gets older.

So how much should your net worth be? The simplest way to determine this is to take your age and multiply that by your annual income (pre-tax), and then divide by 10. So if you are 40 years old, and you make $100,000 a year that comes out to $4 million dollars. Divide that by 10 and you arrive at an expected net worth of $400,000.

Once you figure out what your net worth is compared to what your net worth should be, you can determine whether you are currently a prodigious accumulator of wealth (PAW), an average accumulator of wealth (AAW), or an under accumulator of wealth (UAW). PAWs build wealth—more wealth than the majority of others in their same income-age bracket.

You might be surprised by who is in which category. Take Miller and James as examples. Miller is 50 years old and makes about $90,000 as the owner of a used car dealership. James is 51 years old and makes $92,000 as a lawyer. They’re about the same age, making about the same amount of money, so they should be worth about $450,000. But neither of them is. One is a PAW and one is an UAW. Miller, the proprietor for a used car business is actually worth over a million dollars. He’s the PAW. Lawyer James has a net worth of $226,000, half of what his total assets should be—given his age and income. It might seem strange that a man in the used car industry with limited education would be the PAW and not the lawyer. One of the factors to consider is that the lawyer spends a lot more time, money, and energy maintaining an upper-middle-class existence than the far simpler lifestyle of the man in a blue-collar industry. Miller feels no pressure to keep up with the Joneses, wear an Italian suit to work, get a membership at an exclusive club, or buy designer dishware.

For similar reasons, most athletes are under accumulators of wealth. Their opulent lifestyles prevent it. If an athlete makes $5 million dollars a year at age 30, then his net worth should be around $15 million, but for most, that’s simply not the case.

The authors’ first glimpse into the very wealthy was a surprise. A major international trust firm had reached out to them hoping to garner information about the very wealthy and sponsored a group interview with people worth over $10 million.

To make this group feel as comfortable as possible, they rented out a ritzy space in Manhattan’s Upper East Side, ordered an expensive French wine, and arranged for a buffet spread teeming with pâté and caviar. The first arrival showed up in a worn suit. When they offered him a glass of Bordeaux, he looked uncomfortable and said he preferred one of two beers: free or Budweiser. The rest of the cohort looked like average Joes just like the first guest. As they settled in for the two-hour interview, they looked out of their element. They squirmed in their chairs and never touched the meticulously selected delicacies. The representative from the trust firm was incredulous, as were the authors. In the end, the rep from the firm and the authors—not the affluent clientele—took it upon themselves to dispatch the pâté and caviar.

Frugality is the foundation of wealth creation. What each of these decamillionaires (and the many millionaires interviewed thereafter) had in common was thrift. They had realized that allocating money and time to looking superior would come at the cost of diminished economic success. Advertising that promotes luxury goods targets the insecure who feel that it’s not enough to have money—you have to prove it with material signifiers. This is the cornerstone of the mindset held by under accumulators of wealth. The wealthy are often more modest in their appearance and realize that they are not what they drive or what they wear.

Here’s a list of questions to ponder:

1. Were your parents frugal?

2. Are you frugal?

3. Is your spouse more frugal than you?

The wealthy almost invariably respond with “yes” to all three questions. The third question is no small factor, either. If the millionaire is frugal, the spouse is often ultra frugal. If the spouse is wasteful, the chances of becoming wealthy in one generation are slim.  

One of the most striking contrasts that emerges from the study of wealth is between the prodigious accumulators of wealth and the under accumulators of wealth. Overall, PAWs use their time, energy, and money very differently than UAWs.

For example, PAWs spend almost twice the time planning and managing their investments every month than UAWs. UAWs usually spend less time doing their homework of finding quality accountants and financial advisors. They spend less time thinking constructively about their economic situation. They do spend more time worrying about retirement, that they will never have a lot of money, that their standard of living will suddenly drop, and so on. That’s a lot of time and energy that could be channeled toward mitigating the chances of those things ever happening. The prodigious accumulators of wealth do just that, rather than entertain nebulous hypotheticals.

PAWs are also much more mindful of their spending habits and where their money is going.

Ask yourself the following questions:

1. Do you know how much you or your household spend on clothing and food?

2. Do you spend a significant amount of time doing financial planning?

3. Are you careful with how you spend your money?

Most UAWs will respond with, “no, no, no,” but you’ll be hard pressed to find a PAW who doesn’t answer “yes, yes, yes.” Remember, it’s likely that a PAW and a UAW will both verbally assent to the same goals, but only the PAW will put his money where his mouth is.

It’s easy to be cynical about millionaires and let fly the cliché that millionaires come from wealth themselves, but this overlooks two important facts: one, that only a small portion of millionaires come from wealth, and two, that gifting wealth to the next generation can hinder their becoming prodigious accumulators of wealth.

To the first point, most of today’s millionaires are first-generation millionaires. Only a small minority of millionaires received money from an estate or trust. A small minority received an inheritance that came out to even a tenth of their accumulated wealth, and half of today’s millionaires didn’t even get a dime’s worth of inheritance. Only one in 10 millionaires anticipates receiving any kind of inheritance someday.

To the second point, research suggests that having wealthy parents is no guarantor of wealthy, prodigiously accumulating kids. In fact, cash gifts can be an impediment. The children of millionaires often go on to hold powerful positions in law, academia, politics, and business, but there’s no question that those who received gifts from well-meaning parents are different than those who did not.

We can call these regularly given gifts “Economic Outpatient Care” or EOC. Sometimes parents give to their adult children and grandchildren out of a sense of duty or obligation, but generally speaking, the outcome is reduced fortunes for the parents and for their adult children. And the opposite is generally true as well: The less parents give to their adult kids, the more those kids will make. The simple fact of the matter is that it is far easier to spend other people’s money than your own.

EOC is widespread across America. Almost half of the United States’ wealthy give substantial contributions to their adult children and grandchildren, and the trend shows no signs of decelerating. Helping pay for your child’s education is not necessarily damaging, probably more akin to teaching your child how to fish. But continuing to give  gifts into adulthood conditions them to hold out their hands below a fish vending machine. It creates a different set of habits, retards the proactive, creative impulse, and will likely damage their ability (as well as the parents’) to build wealth effectively.

So if the millionaires next door hope their kids will become millionaires as well, the best thing they can do is avoid creating cycles of dependency, and encourage their kids to take initiative themselves.