When I was not a millionaire, I used to think that the rich simply spent their money on finest things. After all, we always had to compromise by opting to buy lower priced products. And in the media, we always saw the celebrities, in particular, with the most expensive cars, clothes, homes, etc.
Of course, then you read a book like The Millionaire Next Door (a book that came out in the late 1990s, and while a lot of information is outdated since the dollar amounts are less relevant today and lot has changed, it is still a great book to learn some of the principles of creating wealth), and you realize that the super-rich millionaires did not drive fancy sports cars or waste their money on handbags with logos or show off their money by having the most expensive smart phones. Instead, they lived below their means and never wasted their money to impress other people with the stuff they could buy.
That is why a story that former CEO of GE, Jack Welch, told resonated with me. He once said, "We all are products of our background. And I didn’t have two nickels to rub together, so I’m relatively cheap. And I always bought relatively cheap wine. And I always looked at the wine price in the restaurant." By the way, his net worth was hundreds of millions of dollars.
I have taken that advice to heart. I remember one of my colleague telling me at one time, "Buddy, you should buy a Rolex because that is a sign that a man has become successful." Thank God, I did not heed his advice because I was not convinced that possessing a Rolex proves anything. I do not want to impress anyone with my wealth. That is why I still keep using my cell phones till they die, we own only one car, we never spent a penny on a wedding, we try to save money by cooking nearly all our meals at home, and we do not even have Amazon Prime.
Key takeaways
- Live below your means and invest the savings.
- There is no need to impress anyone that you have money. No one cares. And if they are impressed, they would expect you to pay for them, might scam you, ask you for a handout, etc.
- Also remember that the real rich do not care much if you are carrying expensive items like handbags, shoes, watches, phones, car, etc. These can often be purchased using a credit card and most people who like to flash their money are often insecure. Have you ever seen hairdressers that literally make very little money carrying Louis Vuitton bags? Nothing wrong with being a hairdresser, but those designer purses are way too expensive for someone who cuts hair for a living. And trust me, the ladies who get their hair done by these hairdressers, couldn't care less about those handbags.