To truly become rich, you need to stop acting like it

Few people just want to <i>have</i> money for no reason. Most people want to have money because of what they want to spend it on; their outrageous expenses are their passion in life and their reason for wanting money. It isn't helpful advice to say, "Don't spend money on Manolo Blahniks, and then you'll have plenty of money," if your whole reason for wanting money is so you can wear Monolo Blahniks.<p>In other words, it sounds like a sermon on loving money for itself instead of loving it for what it can buy you. Or, if you read it charitably, it's a sermon on loving security more and short-term pleasures less. As much as I sneer at expensive fashion and gravitate toward the &#60;$10 wine bin at the grocery store, this article strikes me as nothing but unhelpful moralizing. Yeah. I get it. If I don't spend money, I'll have more. Yeah, I really, <i>really</i> get that looking good and living it up is a vacuous pastime -- I'm totally with you on this one -- but it's the most common passion on the planet, and it's a cop out to tell people to stop enjoying the one aspect of life that gives them the most pleasure and call it financial advice.

I buy the general principle that living a high-income/high-expense lifestyle isn't the path to accumulating wealth, but you can rephrase the stats to get different results as well.<p>For example,<p><i>86% of all luxury vehicles are driven by people who are not millionaires</i><p>can be rephrased in a way that makes it seem like driving luxury vehicles <i>is</i> a trait of rich:<p><i>millionaires are 3x as likely to drive a luxury vehicle as non-millionaires</i><p>I wonder if this is also skewed by the "millionaire" cutoff not being as high as popular culture thinks of it being; the millionaires of 1970s films correspond to $5m+ today, and the millionaires of the roaring 20s correspond to $12m+ today. A huge proportion of people with net worths in the low single digits of millions have almost all their money in their retirement plan plus house, and not a particularly large disposable income. Sure, in theory they could get money out of the 401(k) and blow it, but the fact that it's semi-locked-up and a hassle to get out makes it easier to preserve it.<p>It's possible it generalizes to higher tiers of the rich, but I'm not that sure. Do people with net worths of $10m+ have similarly frugal lifestyles? Or is this mainly a feature of people with net worths in the $1m-3m range?

"86% of all luxury vehicles are driven by people who are not millionaires."<p>This is a good example of one of those stats designed to fool people who don't understand statistics.<p>According to wikipedia there are ~9.3 million millionaire households in the US representing ~7% of US households. [1] Meaning that millionaire households purchase luxury cars at a far higher rate than non-millionaire households which is the opposite of what this article implies.<p>[1] <a href="http://en.m.wikipedia.org/wiki/Millionaire" rel="nofollow">http://en.m.wikipedia.org/wiki/Millionaire</a>

In a recent TED Talk, Tim Jackson talked about conspicuous consumption. I really liked this quote:<p>"This is a story about us, people, being persuaded to spend money we don't have, on things we don't need, to create impressions that won't last, on people we don't care about."

If like me, you consider that "wealth = how long you could sustain your current lifestyle (same expenses) if your income stopped, today.", then it becomes clear that learning not to show off is really a key to becoming wealthier.

<p><pre><code> What do we often tell a child who expresses an interest in teaching? "You won't get rich as a teacher." Yet, there are more than 350,000 millionaire educators, working or retired teachers or professors, according to Stanley's research. </code></pre> I think it's a little misleading to include college professors in the same group as public school teachers here.

What a world we live in, where 86% of the non-millionaires are apparently able to afford a luxury vehicle. That's fantastic news, that means that money is no longer as important as it used to be for simple stuff like that. Either luxury vehicles have gotten cheaper (what's a luxury vehicle anyway) or banks are stupid enough to give lots of money to people that can't afford to pay the interest (forget about the principal) when it's due.<p>Any statistic like that can be bent to make it say whatever it is that you want to say.<p>Before Henry Ford made the first production automobile even the millionaires couldn't drive them and now such luxury items are within reach of most of the gainfully employed people in large parts of the world. That doesn't mean they should stop doing it, what point is there in having money if you can't enjoy it, whatever floats your boat I'm fine with you having it, but there is a catch.<p>Here in the EU there used to be a save first, spend later mentality. The only thing people would think of borrowing money for were houses, and if you couldn't afford to buy a house then you would be renting one (or if you didn't want to own a house).<p>Over the years that has changed, with people spending first their own money, and then their banks money on 'conspicuous consumption'. Cars, boats, furniture, package holidays and so on. Little by little the save-first, spend later mentality has been replaced by spend as much as the bank will let you borrow, worry about the consequences later.<p>Those people that are buying those automobiles they can not afford are being allowed to do so by lending institutions that are pushing cheap credit, no make that ramming, down peoples throats. That's where the real problem lies, given the opportunity to borrow money at initial rates that are designed to lure people in with the nasty consequences written in very small print in gray on slightly-less-gray backgrounds people will fall for it every time.<p>Banks are the problem, not the people that think they in fact <i>can</i> afford this stuff.

But... why bother being a millionaire if you can just pretend?<p>The author of this article seems to assume that it's better to actually <i>be</i> a millionaire, even if it means living like the poor. I would think it's better to drive a luxury car (whatever that is) and drink expensive wine, even if you can't afford it, than the other way around.<p>It's "bad" to pretend, only if it doesn't end well: if you have to repay what you borrowed, and can't -- but if you die before you're bankrupt you win!<p>Now, none of this means much; it doesn't matter to live like a millionaire, or to be or not to be a millionaire, etc. What matters is peace of mind, happiness, fulfillment.<p>A subject for another article maybe? Although probably not in the "Color of Money" column.

There is a large gap between being a millionaire, net worth of 1 million dollars or more, a being a billionaire but there is a point in between when you make enough money to be rich and act like it too. Is there a word for that point that everyone can agree on. The millionaire people want to be is the one that makes enough money to be able to spend it without worry, not the millionaire that is still making a $50k yearly salary with a nice house.

I realized something this morning: when I spend almost all of my life doing something I don't want to do (working a full-time job... Leave the house at 7 am and get home around 6:30 pm) recreational consumption is almost completely full-filling. When I have as much time as I want to work on stuff I like and am passionate about recreational consumption does almost nothing for me.

The whole point of accumulating money is to spend it. Sure, you can accumulate more if you don't spend (I actually sorta doubt it, but let's assume it for argument's sake).<p>Then, if you live by "the less you spend, the more money you'll have" you'll basically end up having a "big number" on your bank account, but nothing of what you really want.<p>I'd rather have a super fast laptop and a nice clean apartment, and only $8000 in my account[1], than a crappy laptop and a crappy apartment and $50,000 in my bank account.<p>[1] assuming I have a steady income, and/or can generate enough revenue so that I can keep getting nice things without draining my bank account.<p>I said that I doubt the correctness of the logic behind "the less you spend the more you'll have".<p>I think that to generate wealth, you need to spend some amount of investment upfront, and if you're afraid to "pay" for things, (because it reduces the "number" in your account) then it follows that you don't have the courage to invest in anything, and therefore you are not likely to become rich.

What's the point of having it if you don't enjoy it? This article doesn't seem to do justice to those who:<p>- have enough savings on hand to cover a few months' living expenses - have a sensibly invested pension plan - spend their surplus cash on things they enjoy<p>I'm sure the book is simply using the popular, but arbitrary and out-dated 'millionaire' tag as a hook for sound financial advice. But if your goal in life is just to be a 'millionaire', you're missing the point.

The gist of this article is a paradox. Rich people don't act like rich people? Surely, then, you <i>should</i> act like rich people if rich people are spending less, etc.

Money is a commodity like anything else. Talking about wealth in the context of consumption means you've already lost. Better to think about how to produce the most than how to consume the least.

My parents are fiscally conservative "millionaires". They are 70 and 71 and may never need to tap their investments for operating cash (they can live off of pension + social security + misc income). My pet peeve is that I hope they spend a bit of money on themselves before it is too late.<p>I used to think their "conservative" consumption habits were a generational thing. However, they recently had a college friend who sold their paid off house, bought a very expensive townhouse in DC with their equity plus a giant mortgage (why does a bank give a 30 year mortgage to someone who is 70?), and then proceeded to loose the new house plus all of their equity because they had unexpected medical bills for one of their adult children.

Being rich is an enticing prospect. When I consider it, I often imagine it as "the freedom to do/buy/go what/where you want, without delay".<p>But then the following warning comes to mind and I'm reminded to carefully scope the bounds and purposes of my worldly ambitions:<p>"Blessed are you poor, for yours is the kingdom of God. Blessed are you that hunger now, for you shall be satisfied ... But woe to you that are rich, for you have received your consolation. Woe to you that are full now, for you shall hunger." (cf. Luke 6:20,21,24,25)

It's not about spending less, it's about spending your money on the correct things.<p>People need to spend less on status/signaling goods, and more on creating real value. Spend less on investing/speculating on things you have no control over.<p>To paraphrase Tim Ferriss: Wealth is what is left over when all of your money and material goods are taken away from you.

I wonder what people will do with their money when they die? Spend all that money in after life?<p>As my father says: money is irrelevant - think about what you are going to think about your life on dead bed. And the other important saying is: don't think too much about how you spend your money think about how to create wealth.

I'm surprised that no one has cited that there was already a book just like this called "The Millionaire Next Door" which was all about pointing out how the millionaires don't act like we expect "rich" people to. It originally came out in 1998. This seems like a rehash.

The whole "Millionaire Next Door" franchise is a massive example of selection bias. Frugality is not causality for millionaire status. There are plenty of valid reasons to be anti-consumer and frugal, but it might be a less then ideal path to riches.

&#62; $16: what most millionaires pay for a haircut (including tip)<p>I wish I knew where to find a decent haircut for $16, including tip. Or are they just so rich and powerful they don't have a use for a decent haircut, and elect for the bargain-sub-basement chop?<p>-<p>EDIT: I should characterize this statement a bit. My hair is very thick, and has a mind of it's own. It has been my experience, over many many years, that stylists at low-end shops repeatedly<p>1) fail to blend my hair well, making it look so ragged it looks like a 5yo cut it with craft safety scissors.<p>2) fail to understand my hair. It won't go the way you want it to go without GLUE, so the stylist has to work WITH my hair.<p>Mid-range shops usually have barbers who are up to snuff. Costs me $20-25 usually.

It doesn't have to be very expensive to drive a luxury car. Buy a used one for under $10k. You don't have to be a millionaire to do that.<p>Here's a BMW 5 series for less than $6k. <a href="http://sfbay.craigslist.org/eby/ctd/1997867593.html" rel="nofollow">http://sfbay.craigslist.org/eby/ctd/1997867593.html</a> Or an S class Mercedes for under $10k. <a href="http://sfbay.craigslist.org/nby/cto/1994579346.html" rel="nofollow">http://sfbay.craigslist.org/nby/cto/1994579346.html</a>

I think the biggest trouble with this kind of idea is to think that you can get rich just by saving. It is true that you need to save in order to have lots of money, but producing value is what makes you rich.<p>If you save money during your whole life you will be millionaire when you're 60. By then, 1 million will be more like 100k, and you be still unsure about your future.<p>It is far better to think about creating value using equity on your own business or real estate, for example.

There's a lot of causal ambiguity in this article, particularly due to the fact that no small percent of millionaires likely come into wealth by way of inheritance or marriage. For example, the author cites the presence of 350k millionaire teachers as contradicting the statement "you won't get rich as a teacher." "get rich" implies causality, but "are rich" (the cited fact) does not.<p>But yeah, conspicuous consumption is tacky.

I find it interesting there's no mention of luxuries such as freedom and travel. IE: Paying more to rent things than own them, touring various cities, flying out to see friends for a week. Things that aren't easily placed into rampant consumerism, yet still require something of a luxury budget, and can enrich our lives to no end. (Also food, for that matter)<p>Hm.

What is a "luxury" vehicle? A certified used Mercedes-Benz C-class can be had for $20K. A new Chevrolet Tahoe lists at $37K.

reminds me of one of my favorite messages from guy kawasaki: if you make meaning, you'll often make money.<p>the ones who end up the wealthiest often don't consider money as their driving factor...so are they that likely to drastically change their habits that got them there?

idk, I think this article just makes me realize how little a million dollars buys now-a-days.<p>I think the author is setting the bar way too low; There's certainly a psychological appeal to having a specific amount of money with 6 zeros at the end, but let's face it, to live out our collective cultural conception of what it means to be wealthy takes a lot more than just 1 million dollars- I can't really say how much it is today. Probably even more than tens of millions, more like reaching towards 9 figures, if not mid 8 figures. I think that really invalidates the author's point about supposedly wealthy people being frugal, buying habits of non-millionaires aside....

I believe millionaires constantly think in terms of <a href="http://en.wikipedia.org/wiki/Opportunity_cost" rel="nofollow">http://en.wikipedia.org/wiki/Opportunity_cost</a> while spending a dollar.

Life passes by us faster than I care to acknowledge, and while saving your money is important you also need to live. The key, I feel, is finding a happy balance.

It's articles like these and the responses they engender that I'm very glad I grew up working class, and lived my 20's punk rock. I can appreciate the finer things in life, but I've also got the skills to survive a near-apocalypse.<p>Getting rich has never been my motivator for being involved in technology, and to be honest, I'd probably be happier if the industry were de-funded (hopefully in favor of something like biotech or alternative energies, instead of url shorteners like bit.ly), and it cut the fat out, of all the people who prefer schmoozing to hacking.

I don't believe that "Nearly four in 10 millionaires buy wine that costs about $10". That does not look how our world works...

This attitude is prevalent among white collar workers. And almost nil among farming community.

Real millionaires prefer to <i>invest</i> rather than <i>spend</i> their money.

A penny saved is a penny earned - ted turner

BREAKING: People don't actually want to be rich, they want to live like they are "rich" people. Film at 11.