What is a millionaire?

Definition:

We hear of "millionaires" constantly. The term often conjures up images of celebrities, athletes and business leaders: Kim Kardashian, Dennis Rodman and CEO of Pepsi, it is assumed, are all millionaires.

But what exactly defines a millionaire? The answer is not as easy as you think.

The technical definition of "millionaire" is a person (or couple) with a net worth of over $ 1 million USD. "Net worth" is that of the people, the less their debts property. Equity is a "what you own less what you owe."

Pronunciation mill-yon-air

Fault current spelling: Millionaire, millionair

Examples:

Let us assume that John Doe has the following advantages:

• House: $ 350,000
• Car: $ 10,000
• Bond funds: $ 600,000
• Income Fund: $ 80,000
• Investment funds: $ 100,000
• Resale value of the items in your house (washing machine, TV, furniture): $ 20,000
• Cash: $ 10,000
• Total assets: $ 1,170,000

Consider also the following obligations:

• Mortgage: $ 120,000
• Car Loan: $ 5,000
• Liabilities: $ 125,000

John is a millionaire? One school of thought argues yes. Another said no.

The site supports the "yes" is emphasized that the asset is $ 1,170,000 corresponds John, and total liabilities $ 125,000. This means that the total net worth (assets minus liabilities) is $ 1,045,000. By definition, makes him a millionaire, let's say that your net worth of more than $ 1,000,000.

The page that "no" is supported, that the value of your home, your car and personal belongings not (such as clothing, furniture and television) are counted. Finally, it is more likely than not to liquidate these assets or sell them for money. He has to live somewhere. He has to drive a car. He has to wear clothes, eat at a table, and sitting on a couch.

The "no" is that only cash consideration. These include mutual funds, equity funds and money. Some people may also add value to your retirement account; others do not, as these assets against bankruptcy filings protected. Anyway, is not a millionaire, once these things are left out of the equation.

Another school of thought would be to adjust the value of the house, John car and personal belongings. Yes, you have to live somewhere, but I did not need $ 350,000. They would "loan" him with a housing allowance, and you have excess capital.

In short, there is no agreement on whether a millionaire. But one thing is certain: John does not have much money in the bank. Bound most of his money in housing and investment. Just because it's (possibly) a millionaire does not mean you can spend rich as Kim Kardashian and other celebrities.

In other words, a million is not what it was.

Read more: How to Become a Millionaire

Read more: Most millionaires budget