Part Five on Money and Marriage: Marriage, Wealth And Discipline
A fat kitchen, a lean will.
Benjamin Franklin (Poor Richard’s Almanac)
The one who chases fantasies will have his fill of poverty.
Accountability (last blog) and now discipline?Come on, Dr. Wall, lighten up, already.
The last few blogs we’ve been looking at millionaires and building wealth and what works. I’ve enjoyed reading Dr. Stanley (I’ve been looking at his books The Millionaire Next Door and The Millionaire Mind and for this blog, I’m introducing his latest book, Stop Acting Rich. See also his blog) and sharing his insights on this blog, because he’s looking at the positive. Turns out the characteristics that make for wealth building are the same characteristics that work for successful marriages.
Weren’t you amazed at the quote from out last blog that he found 92% of millionaires were married and only 2% were divorced and only 2% were single and the rest were widowed! I mean, that’s just nuts! Cooler than all get out, but just nuts!
Now lets be clear about this: Not everyone who’s married becomes a millionaire. Only about 3.5% of American households will become millionaires (for a summary of Dr. Stanley’s findings see here.) But you don’t have to have a large salary to get there. The basic principle of Dr. Stanley’s work is this:
If you want to become wealthy someday, spend less than you make.
That’s it.Simple.Or to say it another way: Delay pleasure.Or to say it another way: Grow up.Or to say it another way:Be mature.
Marriage is a great place to learn these things.Most of us aren’t there yet when we get married.Putting all our money together for the first time after you marry takes a certain amount of faith and servitude, features that kick growing up into gear.There’s nothing like a few hormones and a child kicking in your stomach to wake you out of youthful fantasies.Seeing little Jr. or Sally for the first time often has the same effect on dad.A kid screaming in the middle of the night with a big project the next day for you will give you a dose of patience.Either that or it will drive you crazy.I guess a lot of us go crazy.
Three and a half percent is not a very high figure. You remember he divided the affluent into two categories (I discuss these two types here and here): Those with high salaries and not much to show for it (IAs or Income Statement Affluent) and those with modest or higher salaries who became wealthy (Balanced Sheet Affluent). The BAs had something to show for it: Millions of dollars. The IAs had only things to show for it: Lots and lots of stuff. It turns out that not all millionaires have high salaries. In his study sample, at the time when his BAs became millionaires, they were 45 years of age and earned $89K. The way they became millionaires on a salary that low, is that they had to live frugally, living well below their means. Take this typical quote from Dr. Stanley’s blog:
(This couple) achieved millionaire status at age 45 with a combined income (between he and his wife) of $103K per year. Ten years later they were worth 2.3 million.
In 1999, I crossed the million dollar net worth threshhold with an income of “only” $78,000. My wife made about $25K that year…. During all our employed years, we have always contributed the maximum to our 401K plans, IRA’s, and any Roth plans (in the years we were eligible), always saving 20-30% per year. All our wealth was acquired by saving, dollar-cost averaging, and slow and steady investing mainly in mutual funds.
Here’s another example from his blog:
I am not a millionaire. At the age of 38 I am about 1/2 way there on a household income that has never exceeded $85000. I’ve done this via the usual: saving at least 15% each year, modest home (still in my first house), used cars and furniture, shopping wisely, etc. I still drive my first car, a 1976 Monte Carlo and just bought a “new” truck for working around the house. The “new” truck is a 1993 Ford.
These people ended up with fat kitchens. To get there they had to live frugally, reign in their wills, or as Benjamin Franklin wrote above, “lean will.” Don’t tell your will that you can do whatever you want and it’ll be Okay. It won’t be Okay. You have to tell your will to just chill. Stuff won’t make you happy anyway. Consider this next quote by Dr. Stanley:
Happiness in life has little to do with what you wear, drive, eat or drink. The people with the greatest satisfaction are those who live below their means.
Dr. Stanley writes that in order to reach this kind of financial success people need a good offense AND a good defense. A good offense is our earning power. Many of us have spent years in college preparing for our careers and do a fairly good job with our salaries. The problem, then, in accumulating wealth, is NOT OUR INCOME. For most of us the problem lies is lacking a good defense: Using the income we have wisely.
Most of us are only good on the offensive side: We’re really good at earning money. But we didn’t learn how to USE the money we earned. Where do you learn that? For most of us it’s the school of hard knocks.
If you are like most couples (the 96.5 percenters?), you argue about money and got sick of arguing about it, so you quit talking about it. You end up with two people, supposedly married, who are living as if they are single, each doing their own thing. In extreme examples (too many of us, I’m afraid) you even keep your money separate, totally different accounts and have NO idea what your spouse is doing with his or her money. Then, your spouse buys something you think is over the top. You don’t say anything, but you are madder than a pistol. I’ll show you, you think, and go out and buy something else that is over the top. If you can spend money so can I.
Great. Revenge spending. That’ll work.
In marriage, if we’re going to use our income wisely, we’re going to have to talk about it. We’re going to have to work together. We’re going to have to delay pleasure. We’re going to have to be disciplined. We’re going to share the same goals. We’re going to have to keep impulses at bay. We’re going to need to be self-disciplined and not be selfish.
Turns out these are all characteristics that make for a good marriage, too.
Turns out that discipline in one area affects discipline in another. Dr. Stanley found that millionaires were rarely overweight and that they exercised regularly! Crap! Discipline begats discipline.
But what about most of us? The other 96.5%? We love our beer and pop. And sitting around. And munching. And gorging. And gaining weight. And getting soft and pudgy. And drinking more beer. And living together without getting married. And having sex whenever we want it on the internet, sans spouse. And buying all the latest toys. Spending all our money. Spending money we haven’t even earned yet, squandering our future. I just wanna be happy, we tell ourselves. And we fill our houses with stuff. And do what we want when we want it. Over and over and over and over.
And then, one day, we wake up broke. Too many of us wake up divorced, too. And very, very sad. And lonely.
Hey, people! It’s time to get some discipline in your life.
Start somewhere. Harness some self-control, already.
Quit eating all that crap. Quit spending every spare cent to buy all that crap. Work together with your spouse to develop discipline in your lives. Accountability. Teamwork. You can do it.
Dr. Stanley writes, if you are married, there are three options:
-Both spouses are spendy.
-One spouse is spendy. And one is frugal.
Both spouses are frugal.
It’s only the third group that end up wealthy in the end.
So, if you are going to make it financially someday, you will both have to work together.
Enough of this living singlely ‘til divorce us do part.
Ask each other. Consult with each other.
That would be good! It’s time to have a little chat. It’s time to put our wasteful living in the past. It’s time to put our selfishness on permanent leave. By-by.
To quote Dr. Stanley, again:
It usually takes a certain degree of discipline, proactive planning, prioritizing, and investing to become a true millionaire.
So we consult with each other. We encourage each other. We motivate each other. We strengthen each other. When one is down the other picks the one down up. We’re in this together.
For the rest of our lives.
 Stanley, Thomas J. and Danko, William D. (1996) The Millionaire Next Door. New York: Pocket Books. p. 37-39.
 Stanley and Danko. (1996).
 Stanley, Thomas J. (2009). Stop Acting Rich. Hoboken, New Jersey: John Wiley & Sons, Inc. p. 9.