What Is a Millionaire?

Millionaires Explained

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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.

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.

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.

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:

  • House: $350,000
  • Car: $10,000
  • Retirement fund: $600,000
  • Stocks: $80,000
  • Mutual funds: $100,000
  • Resale value of other non-liquid assets: $20,000
  • Cash: $10,000
  • Total assets: $1,170,000

Also suppose that John Doe has these liabilities:

  • Mortgage: $120,000
  • Car loan: $5,000
  • Total liabilities: $125,000

According to the formula for calculating net worth—what you own minus what you owe—John Doe is a millionaire. The value of John's assets equals $1.17 million, and his liabilities total $125,000. That means his total net worth (assets minus liabilities) is $1,045,000. Thus, John is a millionaire.

An Alternative Definition of Millionaire: Liquid Assets

Despite these numbers, some people may reject John's classification as a millionaire. Using an alternative approach to wealth classification and analysis, they argue that liquid assets (such as his cash, stocks, and mutual funds) are the one true qualification for millionaire status. According to this definition, the value of John's home, car, and personal belongings (such as antiques) should not count toward his millionaire status because John would be unlikely or unable to liquidate, or sell, all his assets for cash, even if he wanted to do so.

Even if they were to go to market, John's antiques may fetch unpredictable resale prices, and valuable artwork and collectibles are difficult to sell quickly. Of course, John can have these assets appraised and can use them to finance a big purchase, but he doesn't have the liquid assets necessary to be called a millionaire by this definition.

Some people would also exclude the value of John's retirement account from consideration. That's because those assets are protected from bankruptcy filings. If his retirement savings are left out of the equation, John would not be considered a millionaire.

Multi-Millionaire vs. Millionaire

The difference between a multi-millionaire and a millionaire comes down to the numbers.

A multi-millionaire would be someone who has several million USD when their net worth is considered. A decamillionaire, more specifically, is someone who has between $10 million and $99.99 million.

The Bottom Line

John Doe may or may not be a millionaire, depending on which definition you use to evaluate his financial situation. However, no matter how you consider his net worth, it's significantly higher than that of the median American family.

Key Takeaways

  • A millionaire is someone whose net worth is equal to one million (or more) units of currency, usually the U.S. dollar.
  • To know whether a person is a millionaire, you typically consider their net worth, or the total value of their assets minus liabilities.
  • Some people argue that millionaires should be defined by only liquid assets, not the value of their real estate, vehicles, and personal belongings.

Frequently Asked Questions (FAQs)

Who is considered a millionaire?

Someone is considered a millionaire when their net worth, or their assets minus their liabilities, totals $1 million or more. Another school of thought argues that only liquid assets like cash and securities should count toward status as a millionaire because assets like real estate, vehicles, and antiques are more difficult to sell for cash if needed.

Is a millionaire considered rich?

For most people, the answer is probably yes, a millionaire is considered rich. The median net worth of U.S. families in 2019 was $121,700, according to the most recent data available from the Federal Reserve Board Survey of Consumer Finances. That’s significantly less than a net worth of $1 million.

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Updated by
Heather van der Hoop
An editor smiles at the camera while sun peeks through the trees behind her
Heather van der Hoop (she/her) has been editing since 2010. She has edited thousands of personal finance articles on everything from what happens to debt when you die to the intricacies of down-payment assistance programs. Her work has appeared on The Penny Hoarder, NerdWallet, and more.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Spectrem Group. "Spectrem Group’s 2019 Market Insights Report Reveals 10th Consecutive Annual Increase in Wealthy American Households."

  2. Merriam-Webster. "Word of the Day: Zillionaire."

  3. Inflation Calculator. "Value of $1,000,000 From 1900 to 2022."

  4. Federal Reserve. “Changes in U.S. Family Finances From 2016 to 2019: Evidence From the Survey of Consumer Finances,” Page 10.

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