Do as the Wealthy Do

What drives people to desire wealth?  Is it to have nicer cars, bigger houses, bigger diamonds, exotic vacations, and fancier dinners?  Can it be blamed on advertising—you know those ads that show a perfectly tanned and slim model floating on a raft by the precipice of an infinity pool overlooking the deep blue Caribbean Sea.  Maybe it’s your own desire to possess something so rare that no one in your circle of friends could possibly have the same one.  If you find yourself striving to achieve that million dollar pay day for these reasons, you’d better think twice.

A basic tenet of (Western) society leads us to believe that having all the worldly ‘wants,’ will make your life much better.  But when looking beneath the superficial surface of this “perceived” wealth that you see, there may be many multiples of problems to go with it.  So, what exactly do the wealthy do?

A few years back, my wife I both read “The Millionaire Mind” by Thomas J. Stanley PhD.   The book summarized a study on what millionaires (people with a net worth of at least $1MM) buy, where they live, why they picked their spouse, how they made their wealth, where they vacation, how many children they have, what type of furniture and cars to they buy, and so on.  Basically, you were enlightened to a whole bunch of surveys taken across the United States of millionaires.  What I found most fascinating (and still do to this day) is how many people think they are living the lifestyle of a millionaire, when in fact, they are doing quite the opposite!

I’ve seen people with brand new $70,000 cars that have a “negative” net worth.  Yet I’ve seen couples that have 10-year old “comfort wagons” (worth about $5,000 each), and have more than $1,000,000 of net worth.  But to the average person passing by, the perceived notion is that the guy with the $70,000 car is doing better—when in fact, his personal financial balance sheet is in shambles.

I believe the point I’m trying to make (from my perspective as a Financial Advisor) is simply to put things in their proper perspective.  My primary objective is to provide the (sobering and realistic) guidance my clients can use to pursue their goals—most commonly being able to retire with a comfortable income, pay for some college expenses for their children, buy a home, not have to live paycheck to paycheck, etc.  That can also be translated into “living within your means.”  Through my own experience, I’ve noticed that some cultures and groups of people are more pretentious and very conscious of monetary wealth displayed in public.  This same group will rack up credit card debt, take a loan, and borrow every last cent just to show their friends and family that “they’ve made it.”  Doesn’t that sound counterintuitive?  That’s because it is counterintuitive to growing and preserving your wealth.

Of course, there could also be an unfortunate and necessary medical expense to help preserve the quality of one’s life (or literally save it) where the return is priceless.  However, even medical expenses can wipe out your chance of successfully becoming financially independent.  So how can you protect yourself from falling into this trap?

If you are single, you may want to sit down with an advisor, a friend, a parent, or anyone whom you trust, and lay out your game plan for accumulating and preserving your wealth.  If you are married, you’ll need to be on the same page with your spouse first, and then seek one of the aforementioned confidants.

The wealthy didn’t earn their money by spending more than they make.  The wealthy are concerned about retaining their wealth, and so they make plans to do this.   The wealthy can afford a Ferrari, Mercedes Benz S-class, and/or a Bentley, but possibly drive a Buick because they like the way it looks and know the extreme depreciation inherent to a luxury car purchase.  So next time you’re out in public and see a woman pull up in a common metallic tan Toyota Camry, watch out…she may be the millionaire that could become your next employer!

Side Note: There are also Millionaires (the wealthy) that spend more than they make, are extremely pretentious about their image, and value monetary wealth above all else.  However, they are only millionaires for a short while.  The purpose of this article is to encourage people to create and stick to a plan on how to attain their wealth, and then have a plan for managing, preserving, and growing it.