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Why is The Millionaire Next Door‘s most popular car not a flashy, high-status vehicle? What car do millionaires drive the most?
In The Millionaire Next Door, the most popular car is not a high-status vehicle because millionaires understand that flashy cars are overpriced, they prefer to buy quality, used cars. Millionaires prefer full-sized American-made vehicles like Ford, Cadillac, Lincoln, and Jeep.
Read on to discover why The Millionaire Next Door‘s most popular car is a regular, affordable vehicle.
Most Popular Car Is Not Luxury in The Millionaire Next Door
Millionaires believe financial independence is more important than displaying social status. Consequently, millionaires don’t drive high-status vehicles. Millionaires drive used cars that are several years old, and they never lease or finance them.
- Fewer than 25% drive a current year model.
- Only 23% of millionaires own new cars.
- A quarter haven’t bought a car in four or more years.
- 37% buy used vehicles.
- 80% purchase rather than lease.
Millionaires understand that new cars are overpriced. Buying a two- or three-year-old car is a bargain because the original owner has paid for the steepest depreciation. Many millionaires sell these vehicles in a few years and get nearly what they paid for them.
In the 1990s, when this book was written, the Millionaire Next Door’s most popular car was a full-sized American-made vehicle, which was less expensive and less trendy. In order, the most popular brands among millionaires were: Ford, Cadillac, Lincoln, Jeep/Lexus/Mercedes (a three-way tie), Oldsmobile, Chevrolet, Nissan/Volvo, and Chrysler/Jaguar.
Most car buyers spend 30% of their net worth on a vehicle, while millionaires spend only 1%. In contrast, high-income under-accumulators Ws spend many times more on cars than prodigious accumulators do. They own multiple vehicles, usually the latest luxury models, and often lease them. Because they’re so status-conscious, high-income under-accumulators erroneously believe people always drive the most expensive car they can afford.
Part of Being Frugal
Millionaires drive used cars because it is part of the frugal lifestyle that enables many millionaires to build wealth. They’re also bargain-conscious in other ways: they buy items on sale or at discount or factory outlets. One frugal habit leads to another: spending less on cars gives them money to invest; they invest a larger proportion of their income than extravagant high-income owners of flashy cars.
One millionaire who always bought used cars claimed he saved enough by doing this over the years to fund his child’s college and graduate school education.
The key to becoming wealthy is acting defensively to protect and grow your money. That means rejecting a high-consumption lifestyle. A used-car-buying millionaire’s high-income neighbors live paycheck to paycheck to maintain this kind of lifestyle.
The problem is that once you buy one status object, you feel compelled to buy more—one thing always leads to another. Fancy homes require decorators and housekeepers, amenities for entertaining, and expensive cars in the driveway. In contrast, building wealth doesn’t require constantly upgrading your lifestyle.
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- How and where most millionaires live
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