A majority of the wealthy class actually believe they are middle or upper-middle class, not rich and wealthy.
While there are many contributing factors as to why so many millionaires feel this way, there are three main reasons. (See also: A Look at How the Ultra-Wealthy Invest.)
Thomas Stanley, author of The Millionaire Next Door, has also found that about 80% of his subjects were first-generation millionaires. They did not inherit their money; they worked hard and saved what they earned to accumulate the mound of cash. (See also: 6 Millionaire Traits that You Can Adopt.)
After years of saving, you don't instantly start spending like crazy and automatically consider yourself wealthy when you first cross that millionaire threshold. For most millionaires, they maintain the lifestyle and beliefs that they grew up with and that enabled them to become wealthy. Unless someone instantly comes into money, he or she is likely to be established in his/her ways. (See also: $1 Million: Does it Still Mean You're Rich?)
The Inflation Factor
An often overlooked factor when talking about millionaires is inflation. When inflation rises, you are not able to purchase as many goods and services with your money. So a millionaire today is not able to buy as much as a millionaire from five years ago. The inflation factor is so big that if you had a million dollars in 1980, that equates to about $3 million in today's dollars. A million dollars equaling "rich" is slowly losing the significance that it used to have. As inflation grows, we will see more millionaires. (See also: 9 Top Assets for Protection Against Inflation.)
Inflation will also continue to erode your purchasing power. So if you have a million dollars today set aside for retirement, the amount it can purchase will decrease with time. This alone can make someone with a net worth in the low millions feel like they are middle class or upper middle class. Using our example from above, someone who retired in 1980 can only buy today about a third of what they could back then.
Keeping Up with the Joneses
We are a consumption-oriented society. We are also very competitive. These two factors give you what most people call "keeping up with the Joneses." This cultural tendency doesn't stop when your financial worth hits a million dollars. Millionaires are comparing themselves to those with more money and are continually trying to do better, pull more in.
If you have $5 million and are comparing yourself to someone with $100 million, you probably don't feel super wealthy. You're still striving to make it. This mindset rarely goes away as you continue to reassess yourself and compare yourself to those ahead of you. (See also: What's Your Net Worth Telling You?)
The Bottom Line
It's hard to believe that someone with more than $1 million in the bank considers himself to be merely middle class. Yet when you look at the value of a million dollars today and what it will be worth tomorrow, it's easier to understand why millionaires may not believe they've entered the wealthy class. (See also: 5 Assets Only the Ultra Rich Can Afford.)