The Affluentialist

77% of Middle Class Millionaires Say Recession is Here

NOW is the Right Time To Ask Successful People for Advice on Dealing With Economic Uncertainty

According to our recent survey, just over 77 % of America's MIDDLE CLASS MILLIONAIRES, those with a net worth between $1 million and $10 million dollars that they have earned, rather than inherited, say that a recession is imminent.  Further, an overwhelming number of them, 93%, do not believe the government will offer relief or a significant bail out plan.

Between February 11 and 16, Russ Prince and I conducted a new study about how Middle-Class Millionaires feel about the current economic climate. We surveyed a random sample of 206 household decision-makers with a net worth between $1 million and $10 million, all self-made. We learned that that, in the face of expected economic adversity, Middle-Class Millionaires are increasing their reliance on the very behaviors that differentiate them from the middle-class (based on past survey responses).  Seventy-nine percent told us they will leverage their personal and professional networks more than ever in order to persevere in the face of economic adversity. Further, seventy six percent told us they will be even more aggressive in their financial dealings (76%), negotiating harder than ever with vendors, customers, employees and business partners.  Together these characteristics, along with working harder than their middle class counterparts, make up the core of what we call Millionaire Intelligence, as described in our book, The Middle-Class Millionaire (www.middle-class-millionaire.com).   

Interestingly, Middle Class Millionaires don't intend to work more hours in this  economic downturn because they are already “maxed out.” According to earlier studies, conducted in 2006, the Middle-Class Millionaire works 70 hours per week, compared to 41 hours by the rest of the middle-class. Instead, Middle-Class Millionaires plan to make their work time more effective by increasing their use of external resources, such as executive coaches.  57% of those surveyed said they would increase the amount of time they spent with a coach to maximize their effectiveness at work.  Of the 55% percent who currently don't use a coach, 68% intend to hire one in order to work through tough times that are likely ahead.

We are at a moment in time when we should turn to this group of successful individuals for advice.  We should be asking how they would respond in a recession because they have been successful in overcoming difficulty to create their own wealth.

Questions for you:

Do you want to cut back and wait until the bad times pass? Or do you sense this is a time of opportunity, a chance to take advantage of fear in the marketplace?

76% of MCMs Concerned About Economic Climate

Most will Slow Luxury Spending, but Hold Steady on
‘Middle-Class’ Values-Based Spending Such as Charitable Giving

Russ Prince and I recently conducted a new study about how households with a net worth between $1 million and $10 million, who we call "Middle-Class-Millionaires" feel about the economic climate and offer some insight into the impact it will have on their spending habits.

Between January 10 and January 18, 2008, we surveyed a random sample of 338 Middle-Class Millionaires throughout the nation and here's a summary of what we found:

Affluent are Concerned about the Economy:
About three quarters of those surveyed (more than 76%) report being “concerned about the current economic climate” and believe that “the economy will worsen in 2008”.

Here's how it will affect their spending on luxury goods and services.

• Almost 25% will decrease their luxury spending
• More than 67% will “stay the same”
• And around 7% will “increase” their luxury spending
• More than half (55%) of these survey respondents said they would focus more on cost when purchasing luxury items.

The survey addressed several areas of luxury spending, including watches, jewelry, electronics, fashion and accessories, spa services, and luxury travel.

Area of Middle-Class “Values-Based” Spending—Charitable Giving—Bucks the Luxury Spending Contraction Trend
Charitable Giving, an area of core middle-class “values-based” spending, is projected to increase or “stay the same” at a much higher rate than overall luxury spending.
Just 10.5% anticipate “decreasing charitable spending” in 2008

• 76.7% anticipate “staying the same”—No change in spending expected.
• 12.8% anticipate “increasing charitable giving” in 2008

We are not seeing spending cut-backs in those areas that relate to the Middle-Class Millionaire’s core middle-class values. No one is selling vacation homes or planning on spending less on their children’s educations. Where we see spending decreases are in those areas where they perceive their purchases as ‘wants,’ not ‘needs.’” 

How are you faring in this environment? How are your spending habits taking shape in terms of value-based spending versus luxury discretionary spending?