Despite not being wealthy, I completely agree with the conclusion to this otherwise fluffy Readers' Digest article about growing wealthy:
Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”It’s not a fluke: According to the 2007 Annual Survey of Affluence & Wealth in America, some of the richest people “spend their money with a middle-class mind-set.” They clip coupons, wait for sales and buy luxury items at a discount.
No kidding! Talk show host Tyra Banks calls herself the Queen of Cheap and keeps perfume samples from magazine ads in her purse for quick touch-ups.
Sara Blakely, founder of the $100 million shapewear company Spanx, gets her hair trimmed at Supercuts.
And Warren Buffett, the third richest person in the world, according to Forbes, lives in the same Omaha, Nebraska, home he bought four decades ago for $31,500.
Some people see every bit of additional income as an opportunity to spend more money on nonsense, but you'll be much better off investing that money in your own future. You may not "get rich quick", but anyone can get rick slowly.
(HT: My Money Blog.)
For more detail on that point about the demography of millionaires, I recommend The Millionaire Next Door. The author there did an extensive study on them. The other big variable, even more than frugality, was marriage stability.
But if you're thinking seriously about becoming wealthy, rather than merely studying them, then first read Rich Dad, Poor Dad. It changed my life.
For more detail on that point about the demography of millionaires, I recommend The Millionaire Next Door by Thomas Stanley. The author there did an extensive study on millionaires. The other big variable he found, even more than frugality, was marriage stability. Divorce impoverishes everyone but the lawyers.
But if you're thinking about becoming wealthy, rather than merely studying them, then first read Rich Dad, Poor Dad by Robert Kiyosaki. It changed my life. There are lots of good books I've read on how to become wealthy, but this one was the best. It focuses on the very difficult move from thinking of yourself as a wage earner to thinking of yourself as a property owner.
BB: Wasn't there some controversy over "Rich Dad, Poor Dad" because it was presented as real-life experience but was mostly fabricated?
Whoops, sorry for the double post. I assumed that the spam filter had eaten the first for too many links.
I hadn't heard the criticisms about Kiyosaki. And after poking around the web a bit, I'm not impressed with the critics. I read this this short hit piece on the Motley Fool and skimmed through this froth-at-the-mouth attack from John T. Reed, the main guy who really, really hates Kiyosaki. And I found this response to the criticism to be far more reasonable. The Motley Fool piece is merely vague, but Reed's long polemic is often dishonest and downright illogical.
For example, Reed writes: "A reader recently suggested that Rich Dad Poor Dad is nothing but a collection of cliches about money. Old cliches. Cliches that have been around since way before Kiyosaki claims “rich dad” originated them."
First, Kiyosaki doesn't claim that his rich dad invented these principles. That would be silly. Reed just throws that in to make Kiyosaki look dishonest. Second, if the whole book is nothing but old cliches, then you might expect the book to be dull but accurate. But later Reed declares Kiyosaki to be a total charlatan whose advice is erroneous and dangerous. So which is it?
And if that doesn't make your head explode, then try this bit of implied logic towards the end of his tirade:
1) Kiyosaki appeared on Oprah's show.
2) Fraudulent author Jim Frey also appeared on Oprah.
3) So Reed wants us to infer that Kiyosaki must also be a fraud.
4) Oprah apologized for recommending Frey's book.
5) So Oprah has an obligation to apologize for recommending Kiyosaki, because he's just as much of a fraud as Frey.
One of Kiyosaki's big themes is that wealth isn't the result of intelligence or education. Instead, wealth comes from intense mental focus and emotional fortitude. Kiyosaki's poor dad was an intellectual while his rich dad was an entrepreneur, and the book tries to convey the differences in thought process that he saw between the two men.
So it's ironic that these attacks on Kiyosaki should amount to so much pessimistic intellectual nitpicking. They're attacking the book from precisely the mind-set that Kiyosaki urges his readers not to have.
And maybe that's why the critics hate the book: They identify with the poor dad. After reading Reed's long tirade I kinda feel sorry for him, despite the mild headache I now have from reading him. He desperately wants to be the smartest guy in the room, and he keeps piling innuendo atop invective atop wild inference to prove it. But it's apparently impossible for him to step back and view the book from outside his own very narrow perspective.
BB: Sounds like I should pick up a copy of the book, even if "Rich Dad" is mythical.