The latest book review here on Richer by the Day is Thomas J. Stanley’s Stop Acting Rich … And Start Living Like a Real Millionaire. Those familiar with Stanley’s other notable books, namely The Millionaire Next Door and The Millionaire Mind will see many familiar themes in Stop Acting Rich. That’s not a criticism though, since this niche is where Stanley is at his best. The differences between the three could be summarized as follows: The Millionaire Next Door described the typical millionaire, The Millionaire Mind revealed what they believe made them a success, and Stop Acting Rich explains why so many non-rich hyperspend and fail in their rich-emulation attempts.
Stop Acting Rich begins with an overview of the phenomenon whereby people try to emulate the rich, but fail miserably. The problem, in simplified terms, is that they either emulate those with nearly limitless resources (whom they will never become) and/or the habits they believe the rich follow. Unfortunately their beliefs of the rich are incorrect and so they act in many ways that are detrimental to their wealth. The disheartening situation that many seem to find themselves in is a preference for appearing rich, rather than actually becoming rich.
Hyper-consumption and a desire to highlight our “wealth” through the showcase of status symbols takes away from our true wealth. As Stanley implies, owning these rich badges (fancy cars, premium brands, etc) doesn’t make you rich any more than a certificate proclaiming your high IQ makes you smart. The relationship is one-way; being rich may allow you to acquire such things, but having them doesn’t confer wealth upon you.
In each of the middle five chapters, a particular type of spending (Shoes, Watches, Liquor, Wine, Cars) is covered. The results are anything but what commonly held beliefs would estimate. Throughout the book, we learn why buying luxury items from these categories may make us feel like the rich, when in fact millionaires are typically not purchasing these brands themselves. As an example, in the United States, 86% of all pristine/luxury makes of motor vehicles are driven by non-millionaires. So if you want to drive like a millionaire, skip the Mercedes and opt for the Toyota. Other similar examples (more than 2/3 of country club members are non-millionaires) abound. The other side of such statistics, i.e. what percentage of millionaires do drive luxury cars, are also presented.
An interesting side effect of so many people acting rich is that marketing to those people may be successful. It may be important for luxury home builders to include wine cellars in their homes; not because millionaires are wine connoisseurs (they aren’t, but they also tend not to buy such homes) but rather because those who do buy a luxury home for the status it conveys probably also believe that they need wine cellars.
I really appreciated the author’s disclosure of worry about being an outlier, in this case a non-wine-worshiper. I have felt similar anxiety about my own lack of desire to spend on status or hyper-consume. Thankfully The Millionaire Next Door and Your Money or Your Life, among others, reassured me that I’m not alone in my choices. In Stop Acting Rich, Stanley further explains that engineers (I’m an engineer) tend to be relatively insensitive to marketing hype. I prefer to use logic to make decisions. Another influential factor in my case is that most of my friends and colleagues are also engineers. This ties in nicely with Stanley’s premise that the type of home we live in and where we choose to live often takes the greatest toll on our financial health. Neighbors and neighborhoods, much like friends and colleagues, set our expectations of ‘normal and necessary’ consumption habits. Living in an exclusive community may make you more inclined to join the country club, drive the luxury car, and serve the premium brands when entertaining.
I can imagine additional benefits to living like a true millionaire without flaunting success. It provides a form of privacy, identity theft protection, and liability insurance. Thieves or litigation-happy individuals might not waste their time pursuing a Millionaire Next Door type, who keeps a low profile and doesn’t appear rich, but may go after those who flaunt their (non-existent) wealth.
I suspect that Stop Acting Rich readers will fall into three categories: those who have read Stanley’s prior work or are already aware of the frugal nature of typical millionaires, those blown away upon learning these facts for the first time, and those who will never accept these truths despite the mountains of data proving the point. I always appreciate debate and differing views, but I have little patience for the most stubborn of this last group who would dismiss the research with a myriad of excuses like “that may be partially true on average, but here in California (The Northeast, etc)…” or “the author must not be speaking to the real millionaires because everyone knows they do drive fancy cars and live in mansions.” No amount of proof can break the myths held so dear to such people.
As with his previous books, I enjoyed and highly recommend Thomas J. Stanley’s Stop Acting Rich. It will reaffirm your good habits and highlight those areas of your financial life where aspirations are aligned with myths that lead you astray. Stop Acting Rich, published by John Wiley & Sons, is now available for your reading pleasure.
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