I read a great article in the Washington Post today, that I highly recommend to all of our readers, To truly become rich, you need to start acting like it.
This article is fascinating and about a new book by Thomas J Stanley called "Stop acting rich...and start living like a millionaire." The idea is that most actual millionaires "those with assets of 1 million or more" are spending a lot less and differently than those who are deemed "pretenders." Here are some fun facts.
-86 percent of prestigious or luxury vehicles are not driven by millionaires
-$16 (including tip) is the average cost of a millionaire's haircut
-Number one shoe brand worn by women millionaires is Nine West
Well clearly, they are putting it all in their house then right? Nope, three times as many millionaires are living in houses valued at $300,000 or less than in homes more than $1 million.
I suddenly feel a lot better about my paid-off non luxury cars, beauty school haircuts and very modest home.
The whole idea is that the "pretenders" are consumed with consuming, instead of investing their money wisely. And as the author points out, don't put most of your wealth into your house, as we've seen that when home prices fall, you're wealth is no longer there. Instead, diversify among cash, stocks, bonds, mutual funds and even shares in private businesses. This what he says most millionaires do.
This article has truly inspired me and I'm going to feel just fine about my older reliable cars, small home and lack of the latest "it" handbag. Because I know that I'm working toward money in the bank, which is where I'd rather have than on my feet. Afterall, I'd much rather be a millionaire than a pretender. How about you?
Thanks for this, Frugal Femme. Very interested article in the Post. I've definitely had a change in my spending habits the last few years, and while most of that was due to my husband being laid off for 6 months, I also think I came to terms that getting more than I need now would definitely leave me with less later - when I don't have an income and am retired.
ReplyDeleteI have never felt bad about my Target handbags or my H&M jackets, and now when I can retire early and have peace of mind, I'll definitely feel good about my decisions!
funny timing, i was just talking about this with a friend. great post.
ReplyDelete"And as the author points out, don't put most of your wealth into your house, as we've seen that when home prices fall, you're wealth is no longer there."
ReplyDeleteThis isn't true. Once you own the home, you're on the hook for any losses regardless of your equity. Buying a smaller home helps if you're afraid of losses but limits your upside (it's okay to think about upside as long as you're not planning to sell for 20+ years - probably our next home but not the current one).
If you haven't already check out the book "The Millionaire Next Door", it's full of stats and points like these. Great fact: Warren Buffet until recently drove a 20-year-old Lincoln Town Car with the license plate "THRIFTY".