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Editorial Reviews

About the Author

JEAN CHATZKY, award-winning journalist, bestselling author, and sought-after motivational speaker, has created a global platform that is making significant strides in helping millions of men and women battle an epidemic with devastating impact–debt. Jean is the financial editor for NBC’s Today show, a contributing editor for More Magazine, a columnist for the New York Daily News, and a contributor to The Oprah Winfrey Show. She also hosts a daily show on the Oprah & Friends channel, exclusively on Sirius XM Radio.

She is the author of numerous books, including Pay It Down!: From Debt to Wealth on $10 a Day, a New York Times and BusinessWeek bestseller. Her previous book, Make Money, Not Excuses, was a Wall Street Journal and New York Times bestseller.

From the Hardcover edition.

Excerpt. © Reprinted by permission. All rights reserved.

Chapter one

Meet the Neighbors

The New Rich List

Back in the early 1990s, I was—for a short while—a reporter/ researcher for Forbes magazine. During my tenure there, I got a few plum assignments, including spending one weekend fact-checking the first interview Michael Milken had granted from prison and fact-checking another on the businessman who would eventually become New York’s mayor, Michael Bloomberg. I suppose I did well enough because I was soon tapped to do a little legwork on Forbes’s lists of billionaires and richest celebrities.

The preeminent Forbes rich list, of course, is the Forbes 400: the list of the country’s four hundred wealthiest Americans. It has been around since 1982, when just three families made up 13 percent of the list. There were eleven members of the Hunt family, fourteen Rockefellers, and twenty-eight du Ponts. In 2007, on the list’s twenty-fifth anniversary, these dynastic numbers had dwindled to almost nothing. There was one Rockefeller (David Rockefeller, Sr.), one Hunt (Ray Hunt), and no du Ponts. Fifty people fell off the list completely. Forty-five were newcomers—nearly half of whom had made their money in hedge funds and private equity (like Pete Peterson of Blackstone and David Rubenstein of the Carlyle Group); the others were a mixed bag, including Frank and Lorenzo Fertitta of the Ultimate Fighting Championship, a pay-per-view fight fest.

The point, notes Columbia University researcher Wojciech Kopczuk, is not just that wealth is less concentrated (the share of wealth in the hands of the top 1 percent of Americans has fallen by half over the last eighty years). The real point is that it has moved into a whole new set of hands. Over the past twenty-five years, as these families have lost their historical positions, a whole new set of people has gotten rich. Some are entrepreneurs that have made a splash. Others are high earners on Wall Street, in corporate America, at law firms or consulting companies. Still others bought the right stocks (or were handed the right stock options) at particularly opportune times.

This is an incredibly optimistic sign—and it’s not just coming from the pages of Forbes. According to the Harrison Group, a research firm in Connecticut, three-quarters of the wealthy families in this country—and nearly all of those who qualify as upper middle class—didn’t start out wealthy. Eighty-three percent came from the middle class. They’ve accumulated wealth over fifteen years on average, which means that some of them got there in significantly less time than that. And here’s a bonus: When you look at the wealth of the pentamillionaires (the folks with $5 million or more), only one-tenth of their money came from passive investments. They made the rest of it themselves. Survey after survey I pored over while researching this book shows that a shrinking percentage of today’s wealth came through a bequest. Research from the Spectrem Group, based in Chicago, found that only 2 to 4 percent of today’s millionaires became rich that most old-fashioned way. This means you no longer have to be born into wealth. Despite the hurdles presentd by the markets in 2008, the American dream is alive and thriving—and you have the ability to achieve it.

Where Are Women in This Mix?

The tide for women is turning a bit more slowly—but it is turning, nonetheless. Remember, there are two ways for people to become wealthy: They can inherit money or they can earn it. (Some people might argue that marriage is a third proven way to get wealthy. I don’t put it on the list because it can also take your financial life in the opposite direction. Nine percent of our survey respondents blamed divorce for a negative turn in their fortunes; 8 percent blamed marriage itself.)

Interestingly, the fact that the ranks of the wealthy are more dominated these days by earned wealth rather than inherited wealth works against women. How? Think about the wealthy American families of yesteryear, the Rockefellers, Vanderbilts, Hearsts, and so on. They had children and their children had children and—on average—those children were likely to be 50 percent male and 50 percent female. So as the money passed from generation to generation, it created as many female millionaires as male ones.

When it comes to earning money, however, men still hold the advantage. Women are making strides. Some 30 to 40 percent of women outearn their spouses. More women than men are entering college and graduate-degree programs. Some researchers predict that the average woman will outearn the average man by the year 2030. But for now, women still lag. In 2007, the number of cents a woman earned for each dollar a man earned jumped from 77—where it had been stuck for as long as I can remember—to 81. Progress, yes, but still not an even playing field.

In terms of wealth and who has it, the number of women inheritors falling out of the ranks of the über-wealthy is—for now—greater than the number of women earners climbing into them. As Columbia’s Kopczuk puts it: “Old wealth is split equally. New wealth is not. But as time goes on, we expect to see a more equal split in wealth as well as in income. The tremendous strides women have made in income already indicates we will.”

How Do You Get There?

This all brings up the questions that are at the heart of this book: Where do you fit in now? And how do you rise to the top?

I suppose that’s fitting, as this entire book unfolded as the result of asking—and attempting to answer—one very large question: Why do some people seem to move relatively easily from a paycheck-to- paycheck existence into comfort or wealth, while others get stuck or—worse—fall back?

I set out to answer that question by reading volumes of research—academic and otherwise—on the subject. Or I should say subjects: wealth, education, success, entrepreneurship, risk taking, and the bigger worlds of behavioral finance and positive psychology, which danced in, out, and around the question I was trying to frame. Many professors walked me through their work, explaining their theories and answering my questions.

In the end, though, it wasn’t enough. I wanted specifics of which behaviors, attitudes, goals, and personality traits mattered most. I needed to know how these elements combined to make The Difference. How many of these behaviors, attitudes, goals, and traits did you need to boost you from one category to another? What, if anything, held you back?

That was when I joined forces with Merrill Lynch and Harris Interactive to develop our own survey instrument that would look—specifically—at these questions. For months, a team of eight to ten of us met regularly. We used the preexisting research as the foundation for our a twenty-minute questionnaire. Then we rewrote those questions, and rewrote them again. Finally, several months later, we administered the poll to more than five thousand individuals.

The Research

The study, formally known as the 2008 Merrill Lynch New Retirement Study, delved specifically into four loosely constructed categories: nonfinancial behaviors, financial attitudes and behaviors, goals (both financial and life), and personality. We asked hundreds of questions about topics including—but not limited to—the following:

financial attitudes and behaviors: Are you where you want to be financially? Why or why not? What has been the most important factor in reaching your financial status? Under what circumstances were you able to establish financial comfort? How do you handle your credit cards? Do you or do you not budget? Do you look up to people with more money than you have? Have you worked with a financial adviser? How do you feel about stocks? Bonds? Do you feel entitled to a good standard of living?

goals: What financial goals have been absolutely essential for you as an adult? Save more? Reduce debt? Which goals have you been able to accomplish as an adult? Can you envision a day where you won’t have to work to meet your financial needs? Do you envision a retirement where you will work part-time? Start your own business?

personality: Are you satisfied with your family life? Religious life? Sex life? Financial life? Are you driven to make a lot of money? Are you hardworking? A multitasker? Grateful? Confident? Happy? Optimistic? Stubborn? Creative? Street smart? Outgoing? Competitive? A leader? Ambitious? Popular? A risk taker? Do you have the ability to overcome a bad situation? Are you passionate about your work? Do you finish what you start? Can you easily read other people? Do you feel it is okay to break some rules? Have you compromised your personal principles to succeed professionally?

nonfinancial behaviors: How many times have you changed occupations as an adult? Do you work more than others? From home? On vacation? How often do you vote? How much television do you watch? How much time do you spend online? How often do you exercise? How often do you read books? Newspapers? Do you participate in extreme sports? Or meditate? How much sleep do you need? How often do you socialize and with whom—friends, family, neighbors, colleagues? People you enjoy? People who could advance your career? Have you made personal sacrifices to climb the ladder of success? Do you give back to your community? Often? As often as you can?

It was a huge undertaking. And that was not all. We asked about political affiliation, left and right handedness, birth order, and whether participants were the children of parents who read to them at night. If we had an inkling that something might be important, we tried to find some way to add it to the soup. And as you’d expect, some of the issues raised by these questions turned out to matter a lot, others not so much, some not at all.

We got the results back in early 2008. But anyone who has ever conducted a large-scale survey knows that the initial data run was just the beginning. For the next half year, the data was processed, cut, interpreted, and reinterpreted. I continued to ask questions. Harris continued to look for the answers. Along the way, David Robinson, associate professor of finance at Duke University—an expert in the field of behavioral finance—volunteered to weigh in. He was insight- ful and tireless, and with his help, the story in the data revealed itself even more.

The Top Twenty

As noted in the introduction, the research revealed four distinct groups of people: the wealthy, the financially comfortable, the paycheck-to-paychecks, and the further-in-debtors. Unfortunately, the breakdown below reveals that most Americans are still struggling.

The Difference In America

Percentage of Population

The wealthy (W):3 percent

The financially comfortable (FC):27 percent

The paycheck-to-paychecks (PTPs):54 percent

The further-in-debtors (FIDs):15 percent

What Makes The Difference?

The individuals that fall into these groups vary, of course, in terms of their income and their assets. But these discrepancies in income and assets aren’t driving the bus. They’re not leading the charge. The individuals in these groups are fundamentally different.

As I said, we tested for hundreds of factors. Yet in the end there were twenty factors that rose to the top as key elements. These twenty—literally—make The Difference. Those who “have it” share the following:

Financial Attitudes and Behaviors

•They feel stocks are worth the risk.

•They devote money to personal savings or a 401(k) each month.

•They save regularly for emergencies.

•They have invested for retirement.

•They have reduced outstanding debt.


•They want to be financially comfortable during their working years.

•They aim to retire comfortably.

•They always knew what they wanted to do (for a career).

•They made it a goal to accumulate $1 million.

•They want to own a home.


•They are confident.

•They are happy.

•They are optimistic.

•They are competitive.

•They are leaders.

Nonfinancial Behaviors

•They have a college degree.

•They socialize with friends at least once a week.

•They exercise at least two to three times a week.

•They read newspapers regularly.

•They are married.

The good news is that you don’t need to have all of these factors. The Ws have more of these factors than the FC, who have more than the PTPs, who have more than the FIDs. It’s a continuum. But you do need, on average, ten factors (your choice) to make your way into financial comfort—and twelve to make your way to wealth. In contrast, only half of the PTPs and FIDs have more than three of these factors.

The Movers

Finally, working with Duke’s David Robinson, I analyzed the data in another way.

Of the five thousand individuals in the sample, there was a signi- ficant group who were at one time falling deeper into debt but who have since climbed up into the top two categories. I call these 620 individuals the “movers.”

From this analysis, we were able to confirm the importance of the Top Twenty. For example, we saw that individuals who said the word “confident” described them at least “slightly” were significantly more likely to move into comfort or wealth than those who said it did not describe them at all. But we also saw, using this analysis, the emergence of several other important characteristics: gratitude, popularity (connectedness), and the willingness to work hard and take appropriate risks.

We also—quite importantly—learned that several things can hold you back. You won’t be surprised to hear that stubbornness is on this list. But how about creativity? Robinson and I spent many hours mulling that one and came away believing it’s a particular type of creativity that is the problem. It is not conceiving ideas and following through. People who can do that are likely to have said the word “creative” described them “slightly” or “well,” and you’ll see it helps rather than hurts them. But believing oneself too creative to play in the world of the mundane—these are the people likely to have said “creative” describes them “very well” or “completely”—that is problematic. “If your stubbornness or creativity consumes you,” Robinson noted, “those traits become a detriment.” Which leads me to a word on moderation.

As you read through these facts and figures, you will no doubt notice that whether we’re talking about being happy, hardworking, grateful, or creative, their presence in your makeup is beneficial . . . to a point. If they describe you “slightly,” you get a small bump. “Well,” a bigger bump. “Very well,” the biggest bump. But “completely”? You fall back a bit.

In moderation, all of these attributes are positive and lead to wealth. In full, perhaps not so much. Consider happiness. You’ll read more about this in chapter 5, but research has shown that the most blissful individuals don’t have enough drive to go for the big job, the big paycheck, the brass ring. They’re too satiated, too complacent. That same pattern is mirrored throughout.

As you read through The Difference, in particular the profiles of individuals who embody The Difference traits, you’ll see that they are—by and large—a balanced group. They are not consumed by one attribute or another but pay attention to many aspects of their lives. They are happy. They are socially connected. They vote. They exercise. They are glowing examples of moderation. I enjoyed spending time with them—and hope you will as well.

From the Hardcover edition.

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Product Details

  • Paperback: 288 pages
  • Publisher: Crown Business; 1 edition (March 2, 2010)
  • Language: English
  • ISBN-10: 0307407144
  • ISBN-13: 978-0307407146
  • Product Dimensions: 5.2 x 0.6 x 8 inches
  • Shipping Weight: 7 ounces (View shipping rates and policies)
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (14 customer reviews)
  • Amazon Best Sellers Rank: #751,846 in Books (See Top 100 in Books)

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Customer Reviews

Excellent book to get inspired to get our finances together.
A Reader with Gratitude and Appreciation
When discussing finances with her I realized she had a fairly good sense of how to handle money but could use some guidance.
I give this book as a gift to all graduating high school seniors who send me an invitation (I'm a teacher).
Simply Luxurious

Most Helpful Customer Reviews

36 of 37 people found the following review helpful By A Reader with Gratitude and Appreciation on March 27, 2009
Format: Hardcover
I found this author from Oprah's web site and read this book. What I love about Jean Chatzky's book The Difference is that she gets to the point in a very calming way.

Money is often times linked to survival and fear in the modern society. I know many of us are raised to have this love-hate relationship with money. For instance, we love to have more money (e.g. one way to get there is to save and invest) but then we spend them instead of keeping them. In Jean's book, she started off describing the research she has done on the individuals who are classified in the following categories:
1. Wealthy
2. Financially Comfortable
3. Paycheck to Paycheck
4. Further In Debtors
Instead of being judgmental to any group of individuals, she simply pointed out "The Difference" wealthy people & financially comfortable people have (traits, the things they do, their beliefs, etc) versus individuals who are in the paycheck to paycheck & further in-debtors categories. Jean never for once went down the path to portray the "wealthy greedy" nor did she judge the "further-in-debtors" as financially irresponsible in her book. Instead, she mentioned many things wealthy and financially comfortable do are things paycheck to paycheck & further in debtors can learn to do to improve financially and our overall happiness (you can find her detailed suggestions in this book). She inspired all of us that to become financially comfortable and/or wealthy is not unrealistic goal in this life time through the research, her findings in the research and her interviews

I love these interviews. I used to have a gut feeling the not all wealthy and/or financially comfortable people are evil/greedy but I had no solid proof of such.
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17 of 17 people found the following review helpful By Mariusz Skonieczny on August 14, 2009
Format: Hardcover
I really enjoyed reading this book. At first I was skeptical about the content, but after I started I got hooked. The author analyzes different habits, thoughts, and traits that the wealthy and financially comfortable possess in comparison to those who are not financially well off. But what I really liked about this is that the author helps readers develop these characteristics so that they can become more successful financially. I also liked how she points out that failure is necessary to success. Many times, as adults, we are punished for mistakes. Few books mention failure, but I believe it very much. If you don't know how to survive failure, you will not know how to succeed.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
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14 of 14 people found the following review helpful By Abigail B. Murray on June 9, 2009
Format: Hardcover
I couldn't put this book down. Not certain which group I belong to put definitely was able to identify characteristics that I have, tactics that I could employ and new strategies for looking at and responding to the world. The values exercise was especially useful for me as well as using Plan A to get to Plan B.

In many instances, the author reminded me of Suze Orman and that's a shame because it is 100% better than any of Orman's works.
Well written. A professional and comprehensive book.
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7 of 7 people found the following review helpful By Vivienne on July 9, 2009
Format: Hardcover
I bought this book for my 25 year old niece. When discussing finances with her I realized she had a fairly good sense of how to handle money but could use some guidance. She loves the book and has says it has helped her think realistically about money.
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8 of 9 people found the following review helpful By T. Cash on May 7, 2010
Format: Paperback Verified Purchase
Have you ever wondered how some folks have "IT" and others don't? If you fall into this category, I highly recommend selecting this book. It's an easy read and maybe commonplace for some but if you are a bootstrapper wondering how to push yourself forward, then pick up this book, read and apply.
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7 of 8 people found the following review helpful By mysticaltyger on June 8, 2009
Format: Hardcover
This book reminds me of a better, more focused, less judgemental version of The Millionaire Next Door. Chatzky really hones in on the most essential habits and personality characteristics that work to create wealth for people. And she shows you how to develop those traits and habits that you may be lacking if you so desire. Not surprisingly, readers will find that many of the habits and traits that lead to financial success lead to satisfaction in other areas of life as well.
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3 of 3 people found the following review helpful By Ada on April 18, 2010
Format: Paperback Verified Purchase
This book helped me organize my financial data and set me on the right track for financial success!
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