Today we dive into Dr. Thomas Stanley’s book Stop Acting Rich . . . and Start Living Like a Real Millionaire and share several key insights.
(The video is 4 1/2 minutes. Full transcript is below.)
Full Transcript of video
Hey friends, the Fearless Advisor here. Today I am going to discuss insights from Dr. Thomas Stanley’s book Stop Acting Rich and Start Living Like a Real Millionaire.
Stop Acting Rich comes from 30+ years of research
You are most likely familiar with Dr. Stanley’s work in The Millionaire Next Door, in which he and his co-author show the reader what common American millionaires look like. Dr. Stanley’s 30 plus years of research is further refined in Stop Acting Rich.
Wealthy people Type #1: The Glittering rich
To begin, Stanley breaks down wealthy people into three types. First, there are the glittering rich. These are who we see and read about in the press. They make so much money that hyper-consumerism will not affect their net worth. However, all that is communicated to us, the audience, is their possessions.
Wealthy people Type #2: The Income affluent
Second, are the income affluent. These folks have high income but low net worth. Keeping up with the glittering rich is their goal. Sadly, they have very little money saved and live a high-stress life hoping the paychecks keep coming in to pay for their lifestyle.
Wealthy people Type #3: The Balance sheet affluent
Third, are the balance sheet affluent, the most common type of wealthy person. These folks implement the number one rule to becoming rich: They spend less than they make, and they invest for the future. How they do this is the key to their success. (To be balance sheet affluent is the goal of these three types of wealthy people.)
The main goal of the Balance sheet affluent is financial independence. Living a comfortable lifestyle is a nice bonus.
The Balance sheet affluent are happier than the Income affluent.
Stanley’s extensive research concludes the main goal of the balance sheet affluent is financial independence. Living a comfortable lifestyle is a nice bonus. The contrasting goal of the income affluent is to live as comfortably as possible while remaining dependent on their source of income. Not surprisingly, Stanley’s surveys showed that the balance sheet affluent lead happier lives than the income affluent.
How do people become bent toward one of the 3 wealth types?
How do people become bent toward one type of wealth? Stanley’s research states that much of this foundation is built as a young person at home. In addition, the marketing we are exposed to tells us how to think and act to be a certain type of person. Commercials, billboards, and internet ads are all trying to convince us consumers that we need their product or service to be accepted in society.
The Balance sheet affluent do not define themselves by what they consume.
Stanley uses the example of vodka extensively in this book to get his point across. The point he makes is that vodka is a basic type of spirit and is not as easily distinguishable as gins and whiskeys. Many of the income affluent will consume high-priced vodka, like Grey Goose. However, the balance sheet affluent will consume much lower-cost vodka because they do not define themselves by what they consume. Marketing tells us higher-priced spirits define us. This thinking can keep you from becoming one of the balance sheet affluent.
The biggest factor in determining your wealth type is where you live!
Finally, Stanley states the biggest factor in determining your wealth is where you decide to live. If you live in a neighborhood with hyper-consumption, you will constantly be tempted to consumer more. Statistically, this temptation will take its toll on you and your wealth.
What do the Balance sheet affluent value? Relationships and good work!
What do the balance sheet affluent value? They value time with their family and friends and not the cost of the food and drink consumed during that time. They value growing businesses and companies that allow them to do good work and live comfortably. They enjoy deep relationships with those they care about.
Whether you are familiar with Stanley’s work or not, this book is worth the read for an introduction or a reminder of what his research suggests. Spend less than you make and invest the rest for your future.
Would you like to develop the habits recommended in Stop Acting Rich?
If you have questions about developing the habits Stanley discusses, we are available and would be happy to have a discussion with you. You can request a consultation. Thanks for joining us!
Photo credit: Bookshelf: Inaki Del Olmo (on unsplash.com). Book cover: Thomas Stanley on unsplash.com
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