During a short car ride to a lunch meeting with a client today, Austin and I (Mike) were listening to the audio version of the classic book The Millionaire Next Door: The Surprising Secrets of America's Wealthy. Okay, it's only considered a classic by nerdy financial planners like us.
The book was originally published in 2000 by two authors whom had researched America's wealthy (net worth greater than $1,000,000) during the prior two decades.
As we drove to our meeting, the authors were explaining the car buying habits of America's wealthy:
- On average, wealthy Americans spend 7.6% of their annual income on each car purchase.
- For a family with a household income of $100,000, that translates to a $7,600 car.
- For a family with a household income of $200,000, that translates to a $15,200 car.
- On average, wealthy Americans spend less than 1% of their net worth for each car purchase.
- For a family with a $1,000,000 net worth, that translates to a $10,000 car.
- For a family with a $2,000,000 net worth, that translates to a $20,000 car.
Needless to say, the car buying habits of America's wealthy are radically different than the ordinary American. Based on our experience in working with our wealthiest clients, their car purchasing decisions most often fall right in line with the metrics outlined above.
Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Past performance may not be indicative of future results. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.