We non-millionaires (last I checked, we’re still in the majority), may or may not find the prospect of such wealth alluring. Those of us swayed by the sirens’ song of riches may work hard to increase our income, invest wisely, and set a course to get rich slowly; others may fall for get-rich-quick schemes or play the lottery.
Many of us, however, do not really care if we join some club delineated by an arbitrary number with lots of zeros. Instead, we focus on building true wealth in every moment of our lives.
And true wealth, dare I say, is not number; it’s a state of mind. True wealth is the feeling of having enough—whether that’s money, fulfillment, family, or love—and being grateful for all you have.
There is a myth about millionaires that blogs, books, and the mainstream media perpetuate. The myth is that millionaires have it better.
Mo’ Money, Mo’ Problems
Although few would dispute that having enough money makes certain aspects of life more comfortable and makes certain problems easier to solve; there is a limit to how much money can improve you life. According to Harvard University psychologist Daniel Gilbert in his best-selling book Stumbling on Happiness:
“…wealth increases human happiness when it lifts people out of abject poverty and into the middle class but…it does little to increase happiness thereafter.”
So if you earn a degree and get a decent-paying job; chances are you’ll be happier than when you earned minimum wage. But, believe it or not, you may not be that much happier earning $200k a year than earning $40k a year.
And then there are the sad cases of absolutely miserable lottery winners, like this winner whose $16.2 million jackpot brought only “debt, despair, and heartache”. (And there are plenty more; just search for “unhappy lottery winners“).
Overnight millionaires undoubtedly face unique problems that individuals who accumulate riches over a lifetime of hard work do not. But these stories remind us that more money may actually create more problems than it solves.
Get Rich or Die Trying
This begs the question, then: Why are we always trying to get rich?
Even those of us earning $40,000 a year give or take are angling to “build wealth” faster with second jobs, savvy investments, or really frugal lifestyles.
Last week Free Money Finance published What Real Millionaires Do featuring a set of observations from the book Stop Acting Rich: …And Start Living Like A Real Millionaire by Dr. Thomas J. Stanley. For example:
- The most popular make of car among millionaires is Toyota—not BMW or Mercedes
- There are currently more than 350,000 millionaire educators (working or retired teachers or professors)—a profession that is far better at transforming income into true wealth than doctors or lawyers
- In the U.S., there are nearly three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more
- The number one preferred brand of shoes worn by millionaire women is Nine West and their favorite clothing store is Ann Taylor—with the Gap and Costco not far behind
I find these observations interesting; but they don’t surprise me, and after chewing on them a while, I have to ask: Who cares?
Of course, the point of these observations is to prove that most millionaires are not high-rolling celebs but ordinary people who save a lot more than they spend. It illustrates the importance of living within your means and that these everyday millionaires actually live far, far below their means.
These people follow the common precepts of getting rich slowly:
- Live well below your means
- Avoid debt
- Invest early and invest often, for the long run
These are good rules; the problem is many people follow them to such an extreme that they literally end up with no disposable income and no joy in their lives. If you’re trying to get out of debt, skipping dinners out and a vacation is probably a good idea. But to people who never eat out and never take a vacation because they’re trying to save every single extra penny, I have to ask: What are you living for?
Live for Today, Too
Any of us could be hit by a truck tomorrow. Assuming you don’t get hit by a truck and live to a ripe old age, that IRA will be important, so by all means save for retirement. Just don’t scrimp to the exclusion of having a little fun today.
Take that Toyota example. I drive a Toyota and, until recently, so did my wife. At first, reading that statement, I want to yell: “Yeah, we’re smart! We drive Toyotas just like all those millionaires.”
But, really, how crazy is that thinking? Choosing a Toyota over a BMW is not, by itself, going to make you any closer to millionaire; other than the difference in price between the two cars (though not insignificant).
If you can afford a BMW—even if you’re not a millionaire—and buying an “ultimate driving machine” is desirable, then perhaps you should just do it.
I’m not disregarding the fundamental personal finance rules—live within your means and avoid debt. But if you can pay cash for a BMW and that’s how you choose to spend your money, more power to you; you’re going to enjoy driving around more than most of us, and you’ll probably enjoy a Bimmer more at 35 than at 75 when, just maybe, you might be a millionaire.
It’s Your Money
I publish this Website to encourage financial literacy because I’ve realized that getting out of debt, learning to live within my means, and appreciating the importance of saving for the future has made my life better. But the attitudes I see from some readers, financial gurus, and even some other bloggers is that: “We’re better than you because we have less debt, save more, and spend less.”
For anybody just trying to manage your money in a way that balances enjoying today and providing tomorrow, that attitude probably turns you off. Your money is your money. And nobody’s better than you because they never splurge and put a bit more into their IRAs.
Maybe you’ll grow your money into millions; maybe not. Having a positive net worth yields benefits, sure. And although focusing too much on your net worth and too little on enjoying life may be the ticket to becoming a millionaire; it may not be the ticket to true wealth and the happiness such wealth provides.