The true millionaires don’t live like true millionaires

04-12-2012 | Dojo |

I started working when I was almost 20, so it’s more than a decade since then (14 years exactly). I have made ALL the mistakes one can make when getting to earn a salary. I am still making mistakes, but I am more aware of them and was also able to start doing something right.

This is why I am an avid reader of anything that’s related to money, personal finances, savings and small business. One of the books I really enjoyed reading in the past 2 years was The Millionaire Next Door, by Thomas J. Stanley and William D. Danko.

What’s so special about this book?

The two organized a meeting with some of the millionaires of the moment. And asked them a lot of questions that were then put all together to some pretty shocking conclusions, if we compare the answers they received and what we think a millionaire live should be like.

The book was published more than a decade ago, but some of its conclusions are timeless and good to have in mind.

The initial shock

If we ask anyone ‘how do you think a millionaire lives’ we’d surely get this answer: ‘they live in luxury’. We all know the people who spend fortunes on a diamond ring, who buy the most expensive cars, phones and splash millions on a party. The media do their best to convey this image of the rich people who live like rich people. And we wonder why we, the medium-class or the poor, are making all these financial mistakes just to ‘show’ we have money?

So, as you’d expect, the authors prepared well for the meeting. Knowing they interview some of the richest people in the country, they rented a luxurious space in Manhattan, hired some expensive chefs that would cook some of the most expensive food possible. They also prepared bottles of the most costly beverage, because they assumed a millionaire won’t drink the regular off-the-shelf beer.

And the millionaires arrived.

Dressed in regular costumes (not the custom made types that cost as much as a car), not really looking like they have this much wealth. They didn’t eat the fancy food and couldn’t enjoy the half-century old wines, since these were new to them.


So this is the entire premise for the book. You’ll have some lists and charts with in-detail information gathered from all these interviews. I won’t go into too much detail, in the end it’s your pleasure to read the book, but here are some general ideas we can surely learn from:

  • many of the millionaires interviewed were ‘self-made’ millionaires, first generation. Usually the kids who have millionaire parents don’t have the drive to earn money like their parents, unless they are raised to save and work a lot.
  • most of them were business owners. Whether they had a small or a bigger business, this is how they were able to earn more money. Working for others doesn’t usually make you rich.
  • almost all sent their kids to very good schools and insisted on them getting the best education possible, even if they were college dropouts. Having a degree doesn’t necessarily mean you’ll be a good business man, but it can’t hurt.
  • a significant percentage of them didn’t get a huge income. We’d expect people to become rich because they earn a lot of money, but many of them worked for small wages or had small business profits. What made them rich was the CONSTANT drive to save money.
  • most of them don’t drive expensive cars, have never bought an expensive suit, don’t even shop at the big retail shops (on 5th Avenue for instance). They buy regular clothes, even on sale, wear regular costumes and don’t splash on jewelry, even if they could afford it. When buying a car, they don’t get a new one, a 3-4 year pre-owned care is great for their needs and they usually drive it until it needs to be changed with another one.
  • a huge percentage of these millionaires don’t have any debt, don’t lease or buy on credit. The first step they did to get wealthy was to CLEAR all their debt, stop spending like crazy and start saving a lot.
  • most of them don’t live in luxurious homes, not even ‘high-brow’ neighbourhoods. This would mean big taxes and they don’t like to waste money. A decent community is great for them and a normal house does the job.
  • the majority of the millionaires are careful with their spending: they have monthly/annual budgets and spend hours planning their expenses.
  • it’s not unusual for their wives to be clipping coupons or shop ‘at sale’. By living UNDER their means (or what the society considers their ‘means’ are), they were able to SAVE and INVEST a lot of money. All these, in time, consolidate their wealth. Their dream is to retire and be able to live off their savings.

I think the most important aspect to be emphasized in this book is that these people don’t care about how others see them. They don’t try to impress anyone with expensive objects, they don’t waste money on things they don’t need.

Compared to them, most of us feel the need to be appreciated for what we’ve accomplished/have and this leads to messing up our finances, getting into huge debt and endangering our retirement.

The media keeps on showing us the ‘flamboyant’ millionaires who spend money on yachts and jewelry and we all dream of become them one day. Since we’re far from their financial gains we squander our hard-earned money to buy cars we don’t really need (or could afford), huge houses for which we pay a mortgage for decades, expensive watches and jewelry etc. And then we see others who have more than we have and feel bad.

This needs to stop.

It’s irrelevant that our neighbour has a better car. It’s irrelevant that our schoolmates spend a fortune on clothing or gadgets. It’s irrelevant we’re seen as ‘weird’ for dressing with clothes we like to wear, for trying to save money and be more reponsible.

I have made all the mistakes in the book. I earned a small wage, I earned a big wage, I even had 2 jobs for a year. And I wasted all my money on frivolous things. I never got more respect for having a ‘foreign’ car or for spending hundreds of bucks for a jacket. But I put my future and my family’s future in danger with all this reckless spending. I was in debt for a car I could have waited to get in 3-4 years (but, at the rate I was spending back then, it was impossible to save all this money).

Getting kicked off my job 14 months after getting in debt, with a lot of money to spend monthly (car payments, company taxes etc.) and NO savings, really opened my eyes. It’s been 3 years since I am a small business owner and I have to work to feed me and my family.

This was my wake up call. I am not cool, most people probably think I’m a loser for not dressing ‘the part’. I was able to make my business run smoothly, I am SAVING more money and was able to even travel a lot, if we did get the chance. Right now my main concern is to keep my business running and save money for our future. We’re planning on getting a family, this will ‘cost’ us. We’re not willing to get into debt (again) so we’ll need to be prepared for anything live throws at us.

I’m sure we won’t become millionaires, but we can at least learn from their success. Stop acting like we’re rich and make sure we have something to live off, when we’re 70.


Recent Comments

  • http://jocelynverna

    December 7, 2012 at 8:16 am

    Absolutely true, My friends father who owns a row of apartments and commercial building does not act like a millionaire who shows off what he got. He was just a simple man. We all have a wrong notion of what millionaires act since media sensationalized it by giving a wrong character of what a real millionaire is.

  • September 26, 2013 at 1:13 am

    I really enjoyed reading your post, Ramona. You have an engaging writing style.

    You don’t get rich by spending, you get rich by saving. When I see people living lavish lifestyles I actually think about how stressful it must be to always need more and ‘better’ stuff. I also think about how much debt they must have. I wouldn’t live like that, even if I could afford to.

    • http://dojo

      September 26, 2013 at 6:04 am

      Welcome to dojoblog, Jason and thank you for your kind words.

      We do try to have what’s needed for a modern pleasant life, but, as you said, always trying to get the best/latest stuff does put a strain on your finances and even happiness. We like saving money, since it gives us some financial security and it can be done without living very limited. We just need to find the balance and not just waste money to feel rich.

Leave a Reply

Your email address will not be published. Required fields are marked *

©2019 Personal Finance Blog. All Rights Reserved.