Wednesday, October 28, 2009
Don't Live Like The Rich
Tip #202 - Don’t Live Like The Rich. I just finished reading Thomas J. Stanley’s new book, Stop Acting Rich and Start Living Like A Real Millionaire. I hade been reading it over the past three weeks, squeezing in a few paragraphs here and there when I hade free time. For those who haven’t read his most famous book The Millionaire Next Door, I will give you a brief summary. Dr. Stanley is a researcher and conducted surveys on millionaires. What he found out was that most of those people who look like millionaires – the ones in the big houses, driving luxury cars, and belonging to country clubs actually aren’t. And that there are many millionaires probably living “next door” to you who don’t look like millionaires. They became millionaires by using their money wisely by doing things such as driving cars for 10 years rather than leasing. They often do not have “elite” professions such as doctors and lawyers, many of whom feel they have a certain image to uphold and spend a lot of money maintaining that image. Instead, many of the millionaires next door were small business owners who lived life like regular, ordinary people.
In his latest book, Dr. Stanley gives advice on how the average person should act if he wants to become a millionaire. His advice is to emulate the real millionaires not merely those who appear rich. For example, people who act rich buy expensive wine and top shelf liquor, while most millionaires are quite happy with less expensive brands. People who act rich but aren’t often buy status cars such as BMWs, while real millionaires often drive dependable cars that hold their value like Toyotas. People who pretend to be rich often buy million-dollar homes in luxury neighborhoods while millionaires often live in regular neighborhoods, you know, next door to you and me.
While a few of the chapters droned on a bit too much for me about liquor and wine, the overall book was confirmation from his first book of the habits of what I will call everyday millionaires – not mega millionaires. They are an ordinary group of people who spend wisely, live below their means, and aren’t out to impress others with their wealth because they don’t need to. Knowing they have money is often satisfaction enough – there is no need to flaunt it.
So, the basic moral of the story is, if you want to actually become rich, and not merely look rich, you should stop buying top-of-the-line anything. By buying products within your means, you will have a better chance to become wealthy. Buying status symbols will make you appear wealthy to others, but they will not make you wealthy. Furthermore, those who try to act rich but don’t have the money to support their habit aren’t generally happy because they are always looking for the next materialistic item that they may not be able to afford. So in order to become rich, live within your means and buy products such as a car and a watch that are suited to your income level. Live in a neighborhood that matches your wealth. Then you may become a millionaire, too. Live like real millionaires and you will likely be happy since real millionaires don’t base their happiness on status symbols.
In Real Life (IRL) – I enjoyed reading most parts of this book. It seemed, in a lot of ways, a continuation of The Millionaire Next Door. And while I, unfortunately, don’t fit Dr. Stanley’s definition of a millionaire, I do live a similar life as those he profiled. Our family has been able to build up a sizeable amount of money because we don’t live in a flashy neighborhood, we don't try to keep up with the Joneses, we don't buy brand names to impress others, and we don't live beyond our means. Just by not putting much importance on material things or brand names, we have been able to put savings away each month to build up our wealth.
I see people all around me spending way more money than we do. While I don’t know anyone’s income, I can guess that many of them are in a similar income range that we are. Yet, some of them are leasing BMWs, living in $700K to $1 million homes, going on exotic vacations, and shopping at fancy stores. I imagine they are the typical rich wannabes that Dr. Stanley is writing about. Our family tries to focus on other things to bring us happiness. Driving to Florida in a Mercedes will not make us any happier than driving in our Chrysler. Sure, we might get a few envious glances from other people, but that wouldn’t make us satisfied either. We are happy knowing that we can afford the things we buy, and that one day maybe we will have saved up enough to be profiled in Dr. Stanley’s future book as one of the real millionaires.