I happened to find a book named Millionaire Next Door. At first glance, the subject does not seem to fit into my comfort zone at all. The lifestyle of an American millionaire!?! Well that is as far as can ever be from a frugal lifestyle. The authors had also started their research with this assumption. And failed.
The book is a study of the lifestyles of the American millionaires. How did they end up being millionaires, and how did it affect their and their family members´ lives? And of course the most important question was, how to enter this fabulous secret society?
The millionaires were considered as households or families, except of course the singles were seen as individual persons. Most of these people were however with families, middle-aged or older and still married to their first spouse. No trendy butterflies at all! Typically there had been two sides in gathering wealth, comparable to a game. Offense, meaning outward action, gaining substansial or huge income. Well-paying job or a succesfull business was an asset here. The other, no less important part, was defence, meaning the incoming streams of money were not let to leak out. Most families had a strict budget for their everyday lives. Typically the husband was a breadwinner and the wife was a homemaker or otherwise more in charge of family matters. A common response from the husbands was "Yes, my wife is even more frugal than I am." The wives were very strict with the family money and clipped those "coupons" that Americans are so attracted to.
So it is not only how much you yourself make and save, but also who you marry, that will determine where you end up in the moneygame. I it sad to see couples that have fallen in love and committed to a relationship with oneanother, but not discussed these topics and eventually someone ends up suffering :/ I am lucky to have a frugal husband. I wouldn´t have married otherwise! :D We still have some finetuning in the emphasis though. Like which is more important an investment - a car magazine or a new bracelet?? Well, we are reaching a consesus. These costs will be allocated to our cigar-, barhopping- and nighttime cab budget (in which areas we "underachieve", lol)
To accumulate significant wealth in one generation, a third piece of strategy is needed: investing the money you save to receive more income. Millionaire families found the time to research investing or at least search quality investment advisor services.
Typical for millionaires was to appreciate quality in their purchases. They did not buy overpriced status items, nor the cheapest options. The setting of their everyday life was comfortable. They tend to buy classic items that endure time and use. This kind of purchasing strategy ends up being economical in the long run. Have you read Alexander von Schonburg´s book The Art of Stylish Poverty- How to Become Rich Without Earning Money? I think Millionaire Next Door approaches that book´s philosophy. American new millionare class and European impoverished nobelmen - (and me and you, who are here to read this post) - we all together as one global frugal community :D
Authors have a word of advice to parents: do not support your adult children too much financially! It eliminates their hunger to succeed and support themselves. They easily turn to dependents, who consider the parents as their primary source of income even in their middle ages. Actually it is better not to tell the children about the millions at all..
Eventually there will come a time to leave inheritance. The authors noted that many millionaires where practically with no means at the end of their lives. They had transfered their wealth little by little to their relatives or to other persons or organizations, by tax-free gifts or by whatever means. There appeared to be not much taxes paid from these estates. I dont know how that would be possible in Finland. Here the annual amount of tax-free gifts is so low, that it would take more than a lifetime to transfer a millionaire estate via that method.
All in all, The Millionaire Next Door was an entertaining read. It didn´t shake my world, but offered a solid reminder to stay on the frugal path. Now I should just find a way to generate massive income and invest it in some ingenious way. Easy peasy, lol ;)
Best wishes from the dusk and dim of the library,
Nina
