Wednesday, January 21, 1998

Why Not Become a Millionaire?
By [email protected] ([email protected])

In The Millionaire Next Door, Stanley and Danko discuss millionaires and their spending (and saving) habits. They have studied the rich in this country for over twenty years and have discovered, among other things, that high income does not necessarily guarantee wealth.

In fact, many people who have gloriously high incomes worry just as much about paying the monthly bills as average-income folks do. Sure, they may be worried about affording a Porsche 911 Turbo rather than a Honda Civic, but they manage to find ways to get in the same financial jams that the average person does. You may think, "I'd like to have worries like that," but that's not how the average millionaire thinks.

Stanley and Danko make the point that the average "millionaire next door" is just that -- someone who doesn't spend outrageously to impress the neighbors, and someone who (Foolishly) knows how to save, invest, and accumulate wealth. High income isn't necessary to become wealthy. According to Stanley and Danko, the most critical characteristic of wealthy people is FRUGALITY!

Now, if you're like me, when you gain insight like this into next-door millionaires, you begin to think about who might fit into this category. And you find that the answer is "not many." To most people, frugality is the financial equivalent of "eating your vegetables." It's not fun, and it's a chore to think about. And mom can't help you out with the frugality habit either, since she's probably a spender (and not a millionaire), too.

As Stanley and Danko point out, Webster's defines frugality as "behavior characterized by or reflecting economy in the use of resources." And the opposite of frugal is wasteful. But in talking to people I know, it's interesting to hear their definition of frugality. For some people it seems to mean, "only what I need to maintain my lifestyle," which translates into "all I can afford and more."

What's interesting is that everyone I talk to seems to think that they're living as frugally as possible. Some people think they really need that great new designer cookware. Some people think they needed to spend $1,000 apiece to see Barbra Streisand in Las Vegas, or need to spend $20,000 on a purple suede love-seat. People seem to have a tendency to think they need to spend every dollar they make or deserve to have the best of every possession, but no savings.

What's the resolution? It's nearly impossible to convince people that they're being wasteful. It's something that they need to wake up and realize themselves. Unfortunately, it's often easy to deny until you're in so much debt that it's almost impossible to get out. Fortunately, you don't have to convince others of anything. The only person you're ultimately responsible for is yourself.

So start now, and look at what you buy that's not necessary. Instead of buying both the BMW M3 and the purple suede love-seat, choose one and save the rest of your money! And you better realize that a BMW is not a necessity! And sadly, neither is the suede couch -- in any color.

In the real world, there are expensive necessities, but there are a lot of ways to look as if you spend a lot of money but really don't. Buy that $1,500 Armani suit secondhand for $150. It's possible; I've done it. Investigate options like this, save and invest intelligently, live frugally, and someday you could be a millionaire. Some people might laugh at this thought, or give you a "get serious" look. Face it, there's plenty of (self-fulfilling) reasons about why it's impossible for the average (Wise) person to become a millionaire. Conventional Wisdom scoffs at the idea.

But for you -- Why not?

Have a similar tale?
Talk about it in the Fribble Message Folder!

[Did you know that you can pen a Fribble, yourself? We welcome submissions from readers. Just click here and read "What's a Fribble?".]

Submit a Fribble!