So, a few months back I was turned onto a book called The Millionaire Next Door. It’s all about how the country’s millionaire’s aren’t the cliche stiff-jawed, haute-couture-wearing depiction we all conjure in our heads, but rather the canned-bean-eating, Oldsmobile-driving, humble-living guy next door. Well, that’s a bit of an exaggeration. But basically these guys hosted a focus group for millionaires and they expected a snooty crowd dripping with wealth, and what they got was much different: Just your average Joes.
The Better Man
Turns out there was a reason for that. Because the average joes didn’t overspend and overextend their budget to reflect their wealth. They didn’t “reward” themselves for having money by buying more things — a habit I think we’ve embraced in our culture far too much over the past decade or two.
I had put the book down about half way through and haven’t thought about it much since. That is, until last night.
Financial Advice from Memory Lane
My cousin and I were chatting over wine, wistfully reminiscing about our grandparents and their two houses we remember growing up in. How we loved both of the houses so much. The yard seemed so big in their first home, and the bedrooms seemed huge. There were always great nooks and crannies for hide-and-go-seek in what seemed like an enormous and daunting basement. From what I remember (and these memories are vague), they had a dining room, living room, three bedrooms and maybe 2 baths. And the yard at a young age seemed to go on for miles–I used to think it was the size of an apple orchard–but it was actually about an acre from front to back (it was a corner lot).
The second house was much humbler than the first but still cozy and wonderful. A ranch with two bedrooms, 2.5 baths, and a smaller fenced-in yard big enough for a vegetable garden.
Did they know more than they let on?
So here’s where the book and my Grandparents come together. One of the biggest financial problems we’re suffering as Americans is living beyond our means. Now, maybe we don’t realize it until we’re unemployed and we can’t make ends meet, but nonetheless it’s what’s caused the rate of foreclosures to skyrocket. We live in a neighborhood of McMansions, drive new cars off the lot, we go to restaurants, order in, update and redecorate…
But hmmm… Not my grandparents. Not great aunts or uncles. And not my husband’s grandparents either. In fact, THEY still live in the same 3 bedroom ranch they’ve lived in for decades in the same small town, with a car they’ll drive into the ground and they’ve only made necessary updates to the house. I believe the house is paid off. Same with his great aunt. They ARE the “millionaires next door”.
My question is: When did things change? When did we collectively decide that the cozy ranch we loved and admired when we were younger wasn’t going to cut it for us? When did we begin gravitating to this hand-to-mouth, bigger-is-better mentality? And most of all, did my grandparents know more about The Millionaire Next Door theory than I thought?
Getting Back to the Ranch
All State Insurance has a great spot out right now about “getting back to basics”, and you know, not only is the writing excellent, but the whole idea is actually a very insightful one. And honestly, it got me thinking. I think this is exactly the mentality that we need to embrace as we go into our next decade of financial decisions.
As we go into this new year, maybe it’s time to think about how the generations before us embraced the basics. The simple life. What if we veered away from the McMansions and get back to the 2-3 bedroom ranch. Your average family in the 50s and 60s didn’t move half as often as our current culture does, getting a new car held an eerily similar weight of importance to coming home with a newborn, you bought what you needed, and amazingly the kids knew they couldn’t have everything they wanted. Most importantly, you lived in a home that reflected your most comfortable price point.
And of course, as I begin my quest to become my own millionaire next door, I’ll keep you posted.