WASHINGTON — In F. Scott Fitzgerald’s story “The Rich Boy,” he writes: “Let me tell you about the very rich. They are different from you and me.”
Fitzgerald’s literary characterization of the rich has defined for many what it means to be wealthy. People envision lives full of extravagant things. But two academics in an extraordinary book published 19 years ago surprised us with findings about regular rich people.
“We have discovered who the wealthy really are and who they are not,” Thomas J. Stanley and William D. Danko wrote in “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy.”
The rich are different — but not in the way you might think.
“Most people have it all wrong about wealth in America,” Danko and Stanley wrote. “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.”
On Feb. 28, Stanley died in a car crash near Atlanta where he lived. He was 71. This month, instead of a new pick for the Color of Money Book Club, it just seems more fitting to talk about “The Millionaire Next Door” and why it remains one of my favorite financial books. The best tribute I could give Stanley is to remind people of his work and his message.
Stanley contributed so much to the field of personal finance by showing us that the frugal folks who live next door to you may be extraordinarily wealthy.
When I think of Stanley’s work, I think of Ronald Read, a Vermont gas station attendant and janitor, who was in the news recently when people in his community found out — after his death at 92 — he was a multimillionaire. Read was known for his modest lifestyle. Recently his estate made its first distributions to the Brattleboro Memorial Hospital and the Brooks Library for $4.8 million and $1.2 million, respectively, according to his attorney’s office.
In the preface to an updated version of “The Millionaire Next Door,” Stanley addressed the question of whether his research still holds true following the Great Recession. It does, he said. In fact, it puts an exclamation point on his life’s work of studying the rich.
The economic downturn pulled the curtain back from many wealth pretenders. They had a lot of stuff, highly mortgaged homes, but little to no savings or assets they could sell to carry them through hard times.
“One of the reasons that millionaires are economically successful is that they think differently,” wrote Stanley, who interviewed hundreds of low-profile millionaires.
There are a lot of rich pretenders. They spend on prestige products and services but are two or maybe even one paycheck away from financial disaster.
But look at typical millionaire couples. They don’t buy clothes at upscale stores. They don’t frequently swap cars. Many don’t live in upscale neighborhoods. They are more likely to be living in homes valued at $300,000 or less. They simply live below their means.
Why did Stanley spend his life researching the rich?
“It is not for the benefit of rich people,” he said. “What I write is designed to enlighten those who are confused and misinformed about what it means to be rich.”
Dare to be different and you can live a rich life. That’s Stanley’s legacy.
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