Always live below your means!

In parts of our society, the rich do not enjoy a good reputation. In the opinion of some, they have only become wealthy because they were either lucky enough to have grown up in a wealthy family, or because they let others work for them or even exploited them. Often, millionaires are said to flaunt their expensive sports cars, lavish homes and luxury yachts, wear classy suits and spend a lot of money on restaurant visits, vacations or parties in everyday life. But this is not the correct stereotype of a millionaire.

In their book “The Millionaire Next Door,” authors Thomas J. Stanley and William D. Danko describe the behavior of average millionaires in the United States. The result is contrary to the stereotype mentioned above. The typical millionaire in the United States did not have a particularly lavish salary, but lived quite frugally and invested his money over decades – mainly in the stock market, as is more common in the U.S. than here in Germany.

Status symbols are not a good competition

So it’s actually the other way around: It’s not the image of the rich that has been painted that is the problem, but that of those who have brought it in. Excessive consumerism prevails in our society. Only those who have something are something. Status symbols count as good manners. Anyone who drives a fat car or orders several bottles of champagne at the club on the weekend has achieved something in life. The reality may actually be different.

There are the “high income, high spenders” who have still drawn the best lot for their lifestyle. This group has a high income and spends accordingly. They live in luxury, so to speak, but still have nothing at the end of the month. People in this class must always ensure a high income in order not to have to reduce their standard of living.

It is easier to increase your standard of living than to reduce it. Once you’ve gotten used to something, it’s hard to let go. Then there is the “low income, high spender” class, which has quite a low income, but in order to keep up with the positively painted image of society, they spend excessively on things they can’t actually afford.

Only those who keep money become wealthy

If you seriously want to build up wealth, you have to make sure that you can really put some of your money aside for the long term and invest it. This only works if you have your spending under control or earn enough money to be able to do both. However, most people do not fall into this range. Therefore, everyone should always keep track of their expenses and know what they are spending money on and how much. Regular tracking of one’s income and expenses creates the necessary overview and confirms one is always on the right track or keeps one aware that one has strayed from one’s original path.

“Rich will not be the one who spends a lot of money, but the one who keeps as much of his money as possible.” If you live below your means as much as possible, it is not only easier to lower your standard of living when you lose your income, but you can always put more aside, which then gives you a more carefree pension or a bit more freedom.

Those who really want to show off their happiness in life do this better with a healthy family, an intact environment and a little more freedom than everyone else. The competition for status symbols is pointless.

The Millionaire Next Door: The Surprising Secrets of America's Wealthy*
  • The Surprising Secrets of America's Wealthy
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  • Stanley, Thomas J. Ph. D. (Author)

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Andreas Stegmüller

Andreas is the founder and operator of this blog. During his more than ten-year editorial career, he has written for several major media outlets on a wide variety of topics. The stock market has been his passion since 2016.

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