Ask most people what it takes to become wealthy and they will say "a high salary." Ask a researcher who has actually studied millionaires and you will get a very different answer: discipline.
Nearly a century ago, The Richest Man in Babylon taught that wealth is not about how much you earn — it is about how much you keep. Decades of modern data have proven Clason right. Let us look at the numbers.
What the Data Actually Shows
Thomas J. Stanley and William D. Danko spent 20 years studying American millionaires for their landmark book The Millionaire Next Door. Their findings surprised almost everyone:
< $200k
Median annual income of US millionaires
Source: The Millionaire Next Door
80%
of millionaires are first-generation rich
Source: The Millionaire Next Door
~15–20%
average savings rate of wealth builders
Source: Fidelity Millionaire Study
Read that again: the typical millionaire does not earn a surgeon's salary. They earn a solid but unremarkable income — and they save aggressively, consistently, for decades. Meanwhile, plenty of people earning $200k+ live paycheck to paycheck. The difference is not on the income line. It is on the savings line.
The Silent Killer: Lifestyle Inflation
Lifestyle inflation — also called "lifestyle creep" — is the tendency to increase spending as income rises. You get a $500 raise and somehow your expenses grow by $500 too. A new car, a nicer apartment, better restaurants. Each upgrade feels small and justified. But compounded over a career, the effect is devastating.
Here is a typical trajectory. Someone starts at $3,000/month, saving 10%. Over 10 years their salary grows to $5,000/month — a 67% increase. But spending grew even faster:
Lifestyle Inflation in Action
Despite earning $2,000 more per month than when they started, this person is saving less in absolute terms. Their savings rate collapsed from 10% to 2%. This is not a budgeting failure — it is a behavioral one. And it is extremely common.
The Math: Person A vs Person B
Let us put this into a concrete head-to-head comparison that engineers and spreadsheet lovers will appreciate. Two people, same country, same access to investment products, same 7% annual return:
Person A — The Disciplined Saver
$5,000/month
Saves 20% → $1,000/month
Person B — The High Earner
$10,000/month
Saves 5% → $500/month
Person B earns double what Person A earns. But Person A saves four times as much as a percentage and twice as much in absolute dollars. After 20 years at 7% compounded monthly:
| Metric | Person A ($5k, 20%) | Person B ($10k, 5%) |
|---|---|---|
| Monthly contribution | $1,000 | $500 |
| Total invested (20 yrs) | $240,000 | $120,000 |
| Interest earned | $281,000 | $140,500 |
| Final portfolio | $521,000 | $260,500 |
| Lifetime income (20 yrs) | $1,200,000 | $2,400,000 |
Person A ends up with twice the wealth despite earning half the income. Person B earned $2.4 million over 20 years — and has just $260k to show for it. Person A earned $1.2 million and kept $521k. That is the power of savings rate over salary.
Growth Over Time: A vs B
The chart below makes it visceral. Person A pulls ahead of Person B almost immediately, and the gap only widens with time. The green line is not a higher earner — it is a better saver.
Savings Rate Matters More Than Salary
To drive this home further, look at how different savings rates perform across various income levels after 20 years at 7%. The message is clear: a higher savings rate at a lower income beats a lower savings rate at a higher income, every time.
20-Year Portfolio by Income & Savings Rate (7% return)
Someone earning $3,000/month who saves 20% ends up with more than someone earning $10,000/month who saves 5%. Stare at that for a moment. It is the entire thesis of this article in one chart.
Interactive Wealth Duel Calculator
Do not take our word for it — run the numbers yourself. Adjust the incomes, savings rates, return, and time horizon below. Try to find a scenario where a low saver beats a high saver at the same return rate. (Spoiler: you cannot.)
7%
20 years
Person A WINS
Person B
Person A
Person B
Why This Happens: The Behavioral Gap
If the math is so simple, why do high earners still go broke? Because wealth-building is a behavioral problem, not an arithmetic one.
Social comparison
High earners socialize with other high earners. A $10k/month engineer feels "poor" next to colleagues driving BMWs and vacationing in the Maldives. Spending rises to match the peer group, not the budget.
Hedonic adaptation
Humans quickly adapt to improved circumstances. The new car thrills for two months, then becomes the baseline. Each upgrade buys only temporary happiness but permanently higher expenses.
Complexity bias
High earners often look for sophisticated strategies — crypto, options, leveraged real estate — when the simplest strategy (save more, invest in index funds, wait) outperforms nearly everything over 20+ years.
The Babylon antidote
Clason's ancient prescription — pay yourself first, live below your means, make your gold multiply — requires no special knowledge or high income. It only requires the one thing money cannot buy: discipline.
The Bottom Line
Your savings rate is the single most important variable in building wealth. Not your salary, not your investment returns, not your side hustle — your rate of saving. A person earning $5,000 who saves 20% will build more wealth than a person earning $10,000 who saves 5%. The math is unambiguous.
- Track your savings rate — not just your income. It is the metric that actually predicts wealth.
- Automate before you see it — pay yourself first, literally, via standing order on payday.
- When you get a raise, save half of it — enjoy some lifestyle improvement, but bank at least 50% of every increase.
- Ignore what others spend — you are building wealth in private. They may be building debt in public.
The richest man in Babylon was not the highest earner. He was the most disciplined saver. Nearly 100 years later, nothing has changed.