Dave Ramsey gets real and shares that there is a vast difference between a billionaire and millionaire

Key Points

• Dave Ramsey believes there’s a huge difference between millionaires and billionaires.

• Billionaires can buy a Lamborghini while millionaires typically live a middle-class lifestyle.

• It’s important to be realistic about what your money can do for you.

• The best high-yield savings accounts are paying way more than most Americans realize, with some offering cash bonuses for new accounts. Click here to see our top pick today. (Sponsored)

Becoming a millionaire is something many people aspire to, but it doesn't necessarily make you super rich. As finance expert Dave Ramsey recently explained, the specifics of how much money you have can make a big difference.

"A billionaire is 1,000 million," Ramsey said in a video. "There's a lot of difference in Elon or some of the other guys out there that we talk about, the Warren Buffetts of the world. There's a lot of difference between those guys and a millionaire. A millionaire's living in a middle-class house, got two cars, got a nice Ford pickup most of the time."

So, why does this difference matter -- and should regular people who don't have a seven-figure nest egg or more, really care about the vast gap between millionaire and billionaire status?

Becoming a millionaire doesn't necessarily mean you are "rich"

Ramsey's words matter because many people still think becoming a millionaire can afford them a lavish lifestyle -- or at least give them a strong sense of financial security. And, the sad reality is, $1 million does not go as far as it used to, and it's not going to enable you to live the Lifestyles of the Rich and Famous in today's day and age.

Of course, if you have a million in the bank, you're in a better financial position than most people. That goes without saying. But misconceptions of millionaire status can become dangerous in two situations: When your income starts expanding, and when you are planning for retirement.

If you're lucky enough to see your net worth cross that seven-figure threshold, the reality is that you most probably can't go buy that Lamborghini or big mansion -- at least not if you want to maintain your millionaire status. When you let your lifestyle expand too much because you have money, and you make lots of big commitments like ongoing big mortgage bills, expensive insurance for a luxury car, or other luxury purchases with ongoing costs like a boat, you can drain your funds more quickly than you expect -- and find your millions don't provide the security you expect.

Misconceptions about becoming a millionaire are even worse in retirement planning. While you may think you've assured security in your later years if your account shows you'll have a million or more saved, a $1 million nest egg actually only gives you around $37,000 of income a year at a safe 3.7% withdrawal rate. If you're a few years away from retiring, the impact of inflation will further reduce the borrowing power of this meager sum, and you could find yourself struggling.

As Ramsey said, a million dollars provides a mostly middle-class lifestyle right now -- especially in expensive parts of the country -- and you can't expect to live the billionaire lifestyle with only a million unless you want to be left with regrets.

How much do you need for true financial freedom?

Becoming a billionaire like Buffett or Musk is, realistically, not going to happen for most people. In fact, it's not even a pipe dream -- it's probably not a dream that most people have at all since acquiring so much money requires doing something truly extraordinary.

The good news is, that you don't need to be one of the world's few billionaires to be a financial success. What you do need to do is estimate your budget number, think about the lifestyle you want to live and work to make enough money -- and save enough money -- that you can enjoy that lifestyle without struggle.

If you can do that, you should feel rich even without being a billionaire -- as long as you keep in mind that millionaire status can make you comfortable but only if you don't go overboard with luxury buys. So, say goodbye to the Lambo and be happy with the trusty Ford instead.