Tuesday, April 6, 2010

"Stop Acting Rich..." Part 2

A couple of weeks ago, I posted a blog on the excellent book, "Stop Acting Rich... and Start Living Like a Real Millionaire" by Thomas J. Stanley. Now that a few weeks have passed, a little more reflection is in order.

For starters, Stanley emphasizes some very basic points - most of which I agree. As a Financial Advisor, I'll comment on two of the more relevant:
  1. People are very self conscious and care how they are viewed by others.
  2. People don't like to compromise.
I'm fond of saying, "Perception is reality." Driving around in a fancy sports car doesn't make you rich. However, today's younger generation(s) will see this as a sign of affluence. "He must be rich... look @ that car!" Unfortunately, a great deal of these people fall into the category of "Big hat, no cattle." The author is quick to point out the individual may not have $100 to his/her name, but they look good!

Statistics show the typical millionaire drives a Toyota or Ford. Pretty shocking to some, but not to the wealthy who drive these reliable cars. My dad use to tell me cars get you from point A to point B. That's it. And, as a bonus, give the car enough time and the value goes to zero!

The affluent tend to invest in assets that appreciate over time. Boats, cars & toys are generally NOT in this category. They're certainly fun to have, but not good investments. If you're trying to build wealth, these items are a disaster to your financial health.

We live in an instant gratification society... "I want it now." Gone are the days of saving up for a big purchase. "Consumption Nation" is an expression that has reflected the purchasing behavior of Americans for several decades. It is reported, most people now carry average credit card balances of $7,500. My radio friend Dave Ramsey is mortified by this statistic. The added expense of living beyond your means is devastating.

I'll be the first to admit, there's nothing wrong with spending money. If you've covered your financial obligations (retirement, children's college expenses, etc.), you deserve to enjoy your hard work. Live large! If you haven't, find the discipline to do the right thing for your financial future.

1 comment:

Doug said...

Hey Mark - good post. My Pastor said in a sermon not too long ago that you hardly ever hear anymore "this is going to take a lot of hard work, but in the end it will be worth it." I.e. learning a language, playing an instrument, mastering golf, etc. Instead we get marketed to that it will be easy, fun, quick, etc. We're being lied to all the time, and it underminds our ability to be disciplined.