BiggerPockets

There have been some threads recently talking about working hard, spending less than you earn, etc. so I thought that there would be a thread on the subject book. I couldn't find one so I thought it would be a good idea to start a thread about the book and the subject of the habits of the wealthy. For those that haven't read the book there is a decent synopsis here:

The Millionaire Next Door

To my surprise there was some healthy critisim of the book I dug up too. What was your perception of the book? Are these the habits of the wealthy folks you know? If not, what other traits do you find common across people you know that are wealthy?

I have not read the book, so can't comment on it. Are you seeking differences in attitudes and underlying habits or traits between those who are financially secure and those who are not? Do you seek comparisons habbits of old money and new money attitudes?

Age has alot to do with these issues as well. Aspects will be influenced greatly by how quickly money was attained and the age of the person.

I grew up and attended school with a number of kids from the wealthiest families.

It has been very interesting seeing what happened to them over the next several decades.

The profile was usually a very successful business started by mom and dad. Then one day the keys were handed over to the kids.

Probably 75% of those kids subsquently dwindled those inherited fortunes, often to zero. Drug abuse played a part in some of that, but there was something else, too, some sort of inability to fully understand the nature of entrepreneurship. I believe it's probably genetic.

But basically I think the vast majority of people need and want to be led by the hand, to be told what to do, how to do it, when to do it, and limited to a finite amount of disposable funds.

Creating, managing and growing a business is really just a lot of hard donkey-work and most people just aren't interested in working that hard.

And I don't believe anyone has ever truly succeeded at doing something they didn't enjoy doing.

I would tend to agree with much of what is in the book.

How people spend there money today can make a huge difference in what is possible for tomorrow. I have seen families with very modest salaries accumulate a nice retirement nest egg. I have also seen doctors in trouble with taxes because they have nothing left over to pay them though making 10K/week.

Keeping up with the Jones' in the world will not make you wealthy.

I agree. Basically, the person who makes $50k/year, but lives contently on $30k is "wealthier" than the one who earns $250k/year but spends $300k to feel good.

OTOH, I haven't read the book either, but did read enough synopsis' to get the gist. I don't believe in scrimping away every single penny and not enjoying life until you're too old to do the things you want to do (like my parents did). There should be a balance. Put most of it away for the future, i.e., save and invest, but enjoy a little of it now while you're still young enough to do all the wild and crazy things that you'll enjoy reminiscing about while sitting in that ol' rocking chair later in life.

And on that note, time to take my daughter to Disneyland! The smile on her face when we go is worth much more than any return I could get on the money spent. :wink:

One other item that I use. I have a card in my money clip with my credit cards etc. I took the time to handwrite out the #'s starting with a SINGLE penney and doubling it every day for one month. It is amazing the way it grows during that month. Try it on paper for 30- 31 days. You'll be surprised.
It reminds me that if I let it continue doubling, it will grow unbelievably. However, If I drain it after a few days of growth, I have to start ALL over at ZERO again. It is like dieting , needing to lose 50 pounds and losing 25. Then gaining it back and having to lose the SAME 25 pounds again. Over and over again!
My card is pretty dogeared and bent, but it reminds me often how I arrived where I am. Rich

It has been raining here in Kauai and the waterfalls are flowing off the mtns. Really pretty.

Most of my friends are millionaires. I see only two things in the synopsis of the book that are valid for all of them:

1. The spend less than they earn.
2. They take risks when they feel the odds are worth it.

They have one other thing in common, which NC Mark pointed out earlier:
3. They are extremely hard-working and passionate about their businesses. They really enjoy their work.

One other thing that they all have:
4. They are all smart. Not necessarily in an academic sense, but you can see their intelligence when you chat with them. Some of them were also excellent academically while a few have extraordinary streetsmarts.

They do not have anything in common with respect to lifestyle, ostentatiousness, etc. I frankly don't think you are going to become poor if you know how to earn $10 million per year while spending $1 million. You are going to become wealthier that way than if you earn $100K and spend only $50K.

The key to become wealthy is to learn skills related to acquiring wealth. Not wasting money is also important, but the definition of "waste" is really quite subjective. I would say that if you can acquire great amounts of wealth and if you save a good chunk of it, you should be able to become quite wealthy unless your investing skills are terrible.

It is been a while since I read the book but one of the most interesting facts was the discussion of wealthy parent financially supporting their adult children.

The author did a comparison of the financial status of professional adult children that were still receiving support from their parents. They compared the income, net worth, and debt levels for Doctors, lawyers, accountants, etc.

The bottom line was those that were still receiving help from their parents, made less, had less net worth, and had more debt than their counterparts.

I found that to be very revealing in terms of the old adage of giving a man a fish instead of teaching him to fish.

The main premise of the book from my understanding, is spend less than you earn. This should be a simple equation that even the most uneducated and unintelligent individual could understand. The problem is that it's easier said than done, social influences weigh heavily and people are always trying to flaunt and out-do their neighbors and friends.

I think work ethic and passion is by far the most important factor that differentiates the wealthy from the others. you don't really ahve to be that "smart" IMO.

I think the recipe for success and wealth is this:
If you are passionate and determined and thus work hard towards your goals, and are financially responsible (spending less than you earn) wealth can be achieved by almost anyone.

the two opposite ends of the spectrum are the individual who labors at a meanial job just enough to pay his rent, cable bill, and a case of beer and box of cigarettes so he can sit around his house watching tv. The other are individuals who inheret wealth and don't respect what it takes to make it yourself. Neither have a tremendous work ethic and neither understand you must spend less than you earn.

I was raised in a similar environment to NC Mark, and although my friends and I are only in our mid 20's I can already see many of them heading down the wrong path and squandering their trust funds on expensive cars and at the bars. There are a few though, like myself, who are already working good jobs, have master's degrees etc. and know it will be hard work to give our kids the lifestyle and opportunities that we were afforded. Only time will tell.

Work hard, spend less than you earn - and it helps alot if you can find a job that you truly love and are passionate about, it will make doing both a lot easier and life more enjoyable overall IMO

Chris, that's not the only reason.

Wealthy professionals typically have more income seucurity and can afford to take a big loan (or save less) knowing that they will continue to have high (and higher) earnings in the future.

Business owners have less income security so they have to be more careful with their money.