article is from a newsletter I have been subscribing
to for years. I hope you enjoy it:
Simple Living January 2009 by Janet
I just read an article about a
young high school sophomore who planned to be a
millionaire by age 30. Don’t worry-becoming a
millionaire is not the focus here. Instead, I’m
sharing his story so you can see what behaviors will
lead you to your own financial independence. Here’s
the part of the young man’s story that jumped out at
He fervently read the
biographies of millionaires like Donald Trump, Sam
Walton, The Motley Fool duo, and other wealthy
entrepreneurs. Before long, their messages began to
have an effect on him, and he soon became very
interested in saving and investing. Even his
thrifty mother thought that his interest at times
Now I want you to sit up and
notice this next paragraph:
One Christmas a few years ago,
this young man’s sister gave him a $40.00 designer
watch, and instead of him keeping it and showing off
to his friends, he took it back to the store for a
refund. He purchased an old watch for $5, polished
it up to make it look brand new, and then invested
the remaining $35. He got back in a money market
The article goes on to say that
although the mom never gave her son an allowance for
chores, he consistently squirreled away birthday
money and worked odd jobs to earn extra cash.
Not two days after reading that
article, I had my own similar, real –life experience
with a friend. I love my friend, but she just never
seems to get ahead financially. We were at a
gathering that day and I said I was coming down with
a cold. She suggested we go to Whole Foods, which
was two blocks away, so that I could check out a
particular supplement that might help ward off my
cold. There we were, perusing the vitamin aisle,
and we found two herbal cold remedies. One I had
heard of and the other was a mixture of Chinese
herbs that I knew nothing about. I was ready to buy
just one bottle-the one I knew something about-but
she strongly encouraged me to buy both. I kept
hesitating. Each bottle cost about $6.
Later, she asked me why I
hesitated about buying the Chinese herbs. Was it
because I was uncomfortable taking Chinese herbs?
“Heck no”, I said. “I’ve taken
plenty of them. I even have my own Chinese herbs
brewing pot. It was because I want to spend money
only on what I know will work or on what I really
need.” I didn’t know about those particular herbs.
“But the Chinese herbs were only $6!” She said
incredulously, as if $6 was nothing.
When I pointed out that this is
how I’ve always managed my money-not spending $6
here, $25 here, $50 there, and so on, she was
surprised. I never thought of that! She said. I
guess I should start thinking that way.”
Get my drift? If you only
spend money on what you absolutely need or
absolutely love, you will suddenly have a whole lot
more money to save. It’s all of these little
expenditures that, when saved, really add up. And I
mean really add up. People who never seem to get
ahead financially don’t think about it like that.
They think $6 or $25 is nothing, but they forget to
think about how much all of these little expenses
add up over time.
So, I have no doubt the high
school sophomore will probably reach his goal
because of his spending habits and his interest in
finances. And this is the lesson I hope you take
with you from our current dismal economy: Since
practically everyone is cutting back on spending
these days, use this time not to be miserable, but
to learn a new way of managing your money and your
And once again, for the
millionth time, I’m not talking about deprivation or
being a miser or a pathetic penny pincher who nobody
wants to be around. I’m talking about watching all
of those little “throwaway” expenses that really
don’t add anything to your life. Let’s take the
kind’s $40 designer watch. What kind of high school
sophomore needs a designer watch, anyway? And why
do I need a $6 bottle of Chinese herbs I know
nothing about? I buy plenty of herbs and
supplements, but only when I have been educated on
their effectiveness. I‘d rather spend money on
products and experiences that have real value to me,
or that bring me true pleasure.
This subject got me thinking
about the classic book the Millionaire Next Door by
Thomas J. Stanley and William D. Danko. The authors
interviewed loads of people who are classified as
millionaires, and they were surprised to find that
they became millionaires for several reasons-but
especially by not being seduced by consumerism.
They drove older cars, lived in normal, modest
homes, and watched what they spent.
If you haven’t read it or if
it’s been a while, I suggest reading it. (go to
Amazon.com, where I’ve seen used copies for as
little as 20 cents.) Most people are forced to
spend less these days, so why not take full
advantage of the situation and educate yourself
about a better way to live? Plus, conspicuous
consumption is passee’ and uncool. Thank heaven for
a new era.
I decided to go right to the
chapter is the book titled “Frugal Frugal Frugal”.
The authors ask the following question: What are
the three words that profile the affluent? Answer:
Frugal Frugal Frugal .
They also write that the
opposite of frugal is wasteful, and they define
wasteful as a lifestyle marked by lavish spending
and hyper consumption.
“Being frugal is the
cornerstone of wealth-building,” write the authors.
The only reason why most of us think having a lot of
money means being flashy is because that’s what we
see in the media. There, we’re indoctrinated with
the belief that “if you don’t show it, you don’t
have it.” But in fact, save for movie stars and
sports figures, the average wealthy person does not
live a flashy lifestyle at all. Unfortunately, most
Americans deal with increases in their realized
income by spending it. “Their need for immediate
gratification is great, “write the authors.
Continued next month: