Part Eight on Money and Marriage: The Nine Keys to Wealth Building
We’ve been looking at succeeding with money and your marriage these last few blogs and explaining a few insights from Dr. Stanley’s three books on the subject: The Millionaire Next Door, The Millionaire Mind and Stop Acting Rich. Now that I’ve read all three of these I’d like to summarize the key factors for wealth building. Keep in mind Dr. Stanley explains that it’s different to have a high income than having high wealth. If you have a high income and spend it all you aren’t wealthy! You just look wealthy.
You can have a low to moderate income and end up wealthy if you keep some of these principles in mind:
–People who end up wealthy are usually married and married for a LONG time. Four out of 5 millionaires were NOT millionaires when they married! They became millionaires LATER after a life of living BELOW their means. The husband and wife shared their frugal lifestyle and they talked and worked together on their money and their investments. Talking about their money situation was one of their common activities that they enjoyed together! Contrast so many couples who fight about money. Money fights and money issues lead to divorce in droves. If you want to have a successful marriage, if you want to have a successful financial life, this is one of the keys you, as a couple, will need to figure out.
–They spend less than they make. He writes that there are only 80,000 “Glittering Rich” in the USA. He defines glittering rich as those who earn $2 million or more a year and have $20 million in net worth. They can AFFORD lots of crap. They don’t have one luxury car. They have 10 or 20. And it’s no big deal. These are the wealthy that are touted in the media and these are the people that too many of us emulate. Stop it already. You can’t keep up. The rest of us will never get anywhere financially if we spend all or more than we make.
–They live in houses that are 80% of what they can afford verses many of us live in houses that are 100% of what we can afford. Prior to the housing crash of 2007 many of us were living in houses that were MORE than 100% of what we could afford. The extra 20% that eventual millionaires have left in their budget enables them to save and to live within their means. Their lifestyle can comfortably emulate their neighbors without they or their children feeling slighted. He believes that our neighborhood is the greatest single deterrent for accumulating wealth. We’re so busy keeping up with the Jones that we aren’t able to keep what we make.
–They don’t buy fancy cars. They don’t buy many new cars. They don’t lease cars. Cars eat money. Cars depreciate. They buy cars after they’ve depreciated a few years. Most of them pay cash. You don’t become wealthy making car payments. You might look like you are doing fine, but that doesn’t mean you are.
–They don’t give their money away to their kids. Children can eat money if you will let them. But if you give them everything they want to the point that you cannot save, you are giving away your future. Besides, children don’t learn the value of money if they have whatever they want whenever they want it. As Dave Ramsey (here and here) says you have to teach them to work and save and spend and give. Work hard. Save. Live frugally. Spend and give wisely. Nearly all millionaires EARNED their wealth. It wasn’t handed to them. Parents who give their wealth to their children will find that their children mostly don’t learn to work. Any fortune can be spent. There isn’t enough money to overcome stupidity.
–They save. A ton. Stanley writes that millionaires save 15 percent of their income. Most of this is put into investments that are protected from taxes, like retirement programs. Over time these amounts add up. A lot. People that don’t save anything end up spending all they make PLUS paying more taxes because they pay taxes on ALL their income. If you spend all you make, plus go into debt spending more money than you make, plus spending all this money on taxes, you will be perpetually broke.
–They budget and are frugal in their lifestyles. Benjamin Franklin wrote
Beware of little Expenses. A little Leak will sink a Great ship.
The convenience store coffee, cigarettes and smoking and lottery tickets, beer, eating out, shopping for a hobby, all this stuff adds up to you spending your money and not having anything to show for it except a house full of crap.Millionaires learn to have self-control in all areas of their life.They aren’t fat and overweight, either or drunkards.This gives them self-control to watch what they buy.They have money because they budget and don’t spend their money foolishly.Once they become wealthy, they maintain their wealth by continuing to budget and being wise.
–They stay out of debt. This is not an emphasis of Dr. Stanley’s research. I thought he would have more to say about it. It is certainly an emphasis of Dave Ramsey’s approach. But Dr. Stanley writes that millionaires save 15 % of their income. You can’t do that if you are paying off student loans, car payments, credit cards and mortgages in too nice of neighborhoods. Instead of debt, Dr. Stanley writes about “future income.” Millionaires do not spend now in anticipation of future income. This is what debt is: The idea that I will have income in the future to pay off what I bought today. Well, ah, what if something happens, like you get a horrific illness or your spouse does or you or your spouse loses his or her job or becomes disabled? Boom, just like that, you’re broke. You can’t save any money if you are spending more than you make.
Think about this.If millionaires became millionaires because they save 15 percent and you don’t save anything and instead you are spending 15 to 40% of your income on debt (house included), AND paying taxes on all this money you spend (on debt and crap), you can see that people who become wealthy someday, do so, because, instead of giving their money to somebody else, they are keeping a consistent amount for their own futures.
If you are in debt, you need to get out of debt.ASAP.And stay out.This could take you several years of considerable effort, cutting expenses and working extra jobs and being very conscientious.But the only other option is not doing anything and then in several years you’ll still be in debt and nothing will have changed, because your debt has imprisoned you.Only you can harness your financial future.Please don’t wait for mommy and daddy or the government to sweep in and save you from your stupidity.This is your job.Get on it.Both of you!Today.
-They give. Dr. Stanley does not emphasize this much, but both Dave Ramsey and Rabbi Daniel Lapin discuss this in their work. Giving creates a generous spirit which makes a person easier to get along with and more approachable. This generosity leads to open doors in a person’s life. If you would be a blessing to others you will, indeed, receive a blessing. You cannot give unless you have something to give and this means that you will need to spend less than you make. These all go hand in hand.
So, looking at these nine things, how did you do? It’s time for you and your spouse to sit down with this list and discuss how you are going to face your future together. This needs to be a team effort. It takes time, patience, hard work and discipline. Over time it pays off.
 Quotes from: Franklin, Ben. (2005). The Autobiography of Ben Franklin: America’s Original Entrepreneur: Franklin’s Autobiography for Modern Times. Adapted by Blaire McCormick. Canada: The Entrepreneur Press, p. 62.