Like millions of people, I read Thomas Stanley, Ph.D.’s fascinating book The Millionaire Next Door when it first came out in 1996. So when I noticed recently that he’d written a new book called Stop Acting Rich…And Start Living Like A Real Millionaire, I wondered if it contained anything new. As it turns out, it does contain some new insights.
My biggest take-away: The greatest impediment to becoming wealthy is all the spending people do in order to make themselves appear wealthier than they really are. Marketing professionals understand this and exploit it to the max.
Stanley gives some great data on why having a high income doesn’t necessarily translate into having a high net worth. He refers to people with fat incomes and thin balance sheets as the “big hat, no cattle” group.
A few interesting tidbits about wealthy Americans:
- Boats: Fewer than 7% own one.
- Vacation homes: Less than half own one.
- Luxury watches: Half of wealthy Americans who wear a Rolex received it as a gift and would not have purchased one otherwise. The preferred watch brand of millionaires? Seiko!
- Reading: What do they spend the most time reading? If you said magazines about wine, luxury products, or travel, you guessed wrong. Answer: Trade journals that will deepen their knowledge of their chosen profession.
- Leisure time: Favorite way they spend their free time? If you said shopping or traveling, sorry…you’re wrong again! Answer: Low cost social interactions with family and friends.
- Wine: Average price paid for a bottle of wine? $12.95. Further, most don’t have homes with wine cellars, own expensive wine collections, or spend much or any time learning about wine.
A few things marketing professionals don’t want you to know but they’re helpful to know if you’re trying to build wealth:
- In many blind taste tests, people cannot distinguish the difference between expensive and inexpensive brands of liquor and wine.
- The “aspiring to be rich” crowd, as opposed to the “already wealthy” crowd, by far, consumes the greatest amount of high priced brands of everything including liquor, wine, automobiles, and luxury merchandise.
The book also contains some interesting occupational data. For example, a surprisingly small percentage of highly paid physicians are wealthy. Why? For them, there can be a tremendous amount of pressure to spend in order to keep up with their colleagues and neighbors.
Because of that pressure, Stanley says the nicer the neighborhood you live in, the harder it is to attain wealth. Reason: People follow the consumption cues of their neighbors including country club memberships, luxury cars, etc.
For me, the book is a great reminder that spending to feel better about ourselves or to increase the level of satisfaction with our lives is a losing proposition. If you want better self-esteem, building wealth is a better path than buying expensive stuff.
Happy fall reading!