Today’s guest post is written by Preston from TheDrunkMillionaire.com. His site is focused on dumping debt and building wealth while stumbling towards financial independence by age 35. Follow him on Twitter.
I hope you enjoy reading this guest post as much as I did:
“I am not impressed with what people own. But I’m impressed with what they achieve. I’m proud to be a physician. Always strive to be the best in your field…. Don’t chase money. If you are the best in your field, money will find you.” – Thomas Stanley, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy continues to be one of my favorite explorations into the habits of the average Millionaire.
I firmly believe that now, more than ever, our society is burdened with the pressures of conforming to consumerism at the expense of our net worth.
The internet has affected our generation much like the Industrial Revolution changed the generations of the past.
An individual’s creative or business expression is limited only by his or her self-determination. Literally every day, someone comes up with an idea, starts an online business, and is able to market and sell that idea to the entire world!
With the extreme potential of the internet, along with all of the devices that make connecting to it effortless, comes the result of elevated consumerism. The days of shopping for limited items in a Sears Catalog are gone. With resources like Amazon, where cheaply priced products dovetail with social media marketing, “keeping up with the Joneses” has been elevated to the next level.
Gone are the days when you compare your lifestyle and status to a limited number of neighbors and colleagues. People in today’s society endure the competition of thousands via social media posts which only highlight the materialism and stimulate competition.
To sum this thought up, Americans today (especially Millennials) face even more pressure to spend more than they make in order to impress people they don’t really care about. The ease of marketing combined with a “keeping up with the Joneses” mentality has resulted in a drastic increase in consumer debt and reduction in net worth.
A study by researchers at the University of Michigan found that the median wealth of a U.S. household (in inflation-adjusted dollars) dropped 36% from 2003 to 2013. Additionally, student loans have more than doubled in the past 10 years to over $1 trillion!
So what does a Millionaire look like today?
“Many people who live in expensive homes and drive luxury cars do not actually have much wealth. Then, we discovered something even odder: Many people who have a great deal of wealth do not even live in upscale neighborhoods.” – Thomas Stanley, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
Some things have changed drastically and some remain the same since Thomas Stanley and William Danko wrote The Millionaire Next Door in 1996. As mentioned above, the internet revolution has resulted in an increase in both consumerism and debt, while the appearance of the average Millionaire remains much the same.
A few years back, Lending Tree came out with a commercial in which a middle class father flaunts his four-bedroom upscale house, his brand new car, and all of his other “stuff” with a suspicious smile on his face. At the end of the commercial he asks, “How do I do it? I’m in debt up to my eyeballs.”
This comedic man unfortunately represents what the average Millionaire today does NOT look like. Most people who have built up a net worth greater than a million dollars are likely not showy with material possessions. They probably drive a used, older model car, have a reasonably-sized and affordable house, and simply spend less than they make in order to save the rest.
That’s right people, a middle-class person can build a net worth of a million dollars by simply spending less and consistently saving over a period of time. As Thomas Stanley says in his book, don’t spend to create the illusion of wealth; rather, spend less than you earn.
To follow the basic precepts of Stanley, some simple steps would include: buying a reasonable house, and buy vehicles that get you from point A to point B rather than one that makes a statement.
Now that you know what the millionaire next door looks like you’re ready to venture out into the digital world and face the powerful forces of marketing/social media straining to keep you from building wealth.
I’d like to sign out with my favorite quote from the book. I’d recommend committing these words to memory to use as ammunition when the call to keep up with the Joneses sounds!
“Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and most of all, self-discipline.” – Thomas Stanley, The Millionaire Next Door