The Millionaire Next Door

Why do I continue to write about rich people? It is not for the benefit of rich people! What I write is designed to enlighten those who are confused and misinformed about what it means to be rich. Most Americans have no idea about the true inner workings of a wealthy household.

what is the effect of cash gifts that are knowingly earmarked for consumption and the propping up of a certain lifestyle? We find that the giving of such gifts is the single most significant factor that explains lack of productivity among the adult children of the affluent. All too often such “temporary” gifts affect the recipient’s psyche. Cash gi

Remember, expensive homes are typically located in what we call high-consumption neighborhoods. Living in such neighborhoods requires more than just being able to pay the mortgage. To fit in, one needs to “look the part” in terms of one’s clothing, landscaping, home maintenance, automobiles, furnishings, and so on.

If your goal is to become financially secure, you’ll likely attain it…. But if your motive is to make money to spend money on the good life,… you’re never gonna make it.

Wealth is rarely gained through the lottery, with a home run, or in quiz show fashion. But these are the rare jackpots that the press sensationalizes.

All too often financial advisors have a narrow focus. They sell investments and investment advice. They don’t teach thrift and budgeting. Many find it embarrassing, even degrading, to suggest to clients that their lifestyle is too high.

Gift receivers… the adult children of the affluent feel that their parents’ wealth/capital is their income… income to be spent.

Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend.

It’s important to note that the children of affluent parents have (in today’s dollars) about a one-in-five chance of accumulating wealth in the seven figures during their lifetimes, while the average child in this country whose parents are not millionaires has about a one-in-thirty chance.