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I wanted to write a quick post about the recent book I read. I just finished reading Stop Acting Rich And Start Living Like A Real Millionaire by Thomas Stanley (also the author of The Millionaire Next Door). This type of book might not be something you’ve had on your reading list to get to, but it should be! I think this book is for EVERYONE. I’d especially say this is for middle/high class income earners, but literally everyone can learn from this.
The bottom line of this book reveals how many of us are actually “acting rich” instead of being rich. And you’d be shocked to see who those people really are.
I’ll give you a little insight about this book and then a few key things I learned. There are basically 3 types of people talked about in this book (I made up some of these names):
- Glittering rich – people who make so much money they could blow their nose with it. Think Bill Gates or Hollywood.
- “Thousandaires” – People acting rich. These people earn a very good income (most over $200,000). They indeed are rich, but spend like the glittering rich because they think that’s what rich really is. These people have a low net worth.
- Truly Wealthy – These people have a high net worth. They don’t have to make over $200,000, but some do. Income level is not as relevant as how they spend their money. Did you know two of the higher wealthy occupational groups are engineers and educators, such as teachers and professors…”often the lowest income generating professions” (quoted by Stanley)? You know why? Because they’re frugal with their money. To sum up, you don’t have to be super rich to have a high net worth…or be a millionaire.
I really enjoyed the beginning third of this book and the last third of this book. The middle was good, but not specifically relevant to me. It talked about the truly rich vs. those acting rich and how they spend money on shoes/clothing, watches, and alcohol. I could care less about high end clothing; I hate wearing things on my wrist; and I couldn’t tell you brand names for alcohol if I tried. Just give me a beerita. The bottom line was that more people who are acting rich will buy those high end brands than the truly rich. We just think that’s what rich people do.
There are a lot of statistics in this book, which I love, and some of the language was way over my head, but I got the gist
A few things I took away from this book:
YOUR HOUSE PLAYS A HUGE ROLE IN YOUR FINANCIAL SUCCESS – The kind of house you’re living in greatly effects your lifestyle. It’s not just the house your keeping up with financially, it’s the neighborhood and the people who live in it. “Keeping up with the Joneses”
YOUR CHILDREN ARE GREATLY IMPACTED BY YOUR FINANCIAL HABITS – Are you showing them that there is great value in things/consumption? Do your kids know how to budget through disciplined spending and frugal living? This is the hardest one for me as I want to give my kids everything that will make them happy (or at least they think makes them happy, often times temporary things) , including toys, electronic devices, a big house with their own room, a pool, a playroom, etc., a nice car, a cell phone when “everyone else is getting one,” and on and on. I want them to have it all, but if we do, they will assume that is how it is when they’re an adult, managing their own money.
INCOME IS NOT THE SAME AS WEALTH – Stanley says, “If you do not have investments (of which your home can be no more than 25%) valued at $1 million (at least), you are not wealthy.” I might have mentioned this before, but our wealth advisor once told us about a man he was advising that was about to retire. He made over $200,000 a year and had $40,000 in investments to retire. Yikes. I encourage you to see what your wealth is.
Some of my favorite quotes from the book include:
Budgeting is made easier if one keeps detailed records of one’s expenses, no matter how small the expenditure.
I can vouch for this statement (read post here). Ryan did this before we were even married and I’ve now been doing this for a few years once I started doing the budget.
Those with the highest GPA’s tend to spend less on cars.
People, particularly younger people, have come to focus on the trappings of wealth over everything else – including the work or savings to accumulate the wealth to be able to reasonably afford luxury brands. When we think about “rich” we think about acting rich over being rich.
This last quote really stood out to me. I am easily sucked in to the trappings of everyone else’s “wealth.” BUT, you truly do not know the “behind the scenes” of that family or lifestyle. This actually just happened to me recently…someone’s financial situation was revealed to me and I would have never thought they were struggling by the outward appearance of how they spent money. This page really struck a cord with me too…
I read financial books for a couple of reasons. One is to understand money of course and how to manage it. My husband is extremely good at managing money and is not phased by what others have. I, on the other hand, have to frequently remind myself that what we’re doing with our money IS the right thing…and it’s the right thing for us. Which leads me to the other reason I read these types of books. It gives me encouragement. How we manage our money is important to God, whether we make millions or simply dollars.
Before I end this, I want to say that having nice things is not bad and does not show that you’re spending your money unwisely. I believe money can provide some amazing experiences in life. The main take away I got from this book was to live within your means and don’t compare yourself to others. Easier said than done, am I right?
Hope you enjoyed the review and I highly recommend checking out this book. Back tomorrow for Friday Favorites!