What Is a Millionaire?
What Is a Millionaire?
Millionaires Explained By Paula Pant
Definition: In the U.S., a millionaire is someone whose wealth (or net worth) is valued at $1 million or more.
Definition and Examples of Millionaires
Today, the most common definition of a millionaire is a person or a married couple whose net worth is greater than $1 million. Under this classification, the number of millionaires around the world has multiplied over the past century.
Note: Despite inflation and subsequently weaker buying power, the U.S. dollar is the international measure for qualifying millionaires.
For example, suppose you have assets totaling $1,400,000 ($1.4 million) and liabilities totaling $200,000. In that case, your net worth would be $1.2 million, meaning that you fit the definition of a millionaire.
How Being a Millionaire Works
When considering whether someone is a millionaire, in most cases, you consider their net worth. According to a Spectrem Group Market Insights Report, there were 11.8 million Americans with a net worth of at least $1 million in 2019.1
A person's net worth is like a summary of the total financial value of their balance sheet. This concept represents a person's financial assets minus their liabilities. In other words, net worth is what they own minus what they owe.
However, net worth includes the appraised value of all non-liquid assets, which are harder to liquidate (or sell) if needed. For this reason, there is some debate about whether the term "millionaire" should apply to people with total assets over $1 million or only to those with liquid assets in excess of $1 million.
Note: Categorizing millionaires is not straightforward when factoring in non-liquid assets. The price of consumer goods rises and falls; in an economic slump, it's unrealistic for assets like real estate and antiques to fetch full price on the market.
Where the Term "Millionaire" Originates
The term "millionaire" comes from French and was first used in 1786. It was used to describe the men who became rich off of speculative investments in North America. By the standards of the 18th century, a millionaire was someone who had amassed an unimaginable amount of wealth.2
In the wake of more than a century of inflation, $1 million hasn't retained the exceptional buying power it had in 1900. In 2022 dollars, it would be equivalent to about $34.8 million.3
A Millionaire's Profile
By looking at a person's balance sheet and considering their assets and debts, we can figure out whether they have a net worth of at least $1 million. Suppose that John Doe has the following assets:
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