Are people who are rich smarter than you?
I grew up thinking that rich people were smarter than me. It’s hard to remember why I thought this way. After all, my parents sure didn’t drill the thought into me, but school and television very well may have.
When I was in middle school, one of my teachers had this poster on his wall:
I am sure that had something to do with it…After all, I bought a Porsche with a Masters Degree!
Either way, not much has changed to this day: many people actually believe that rich people are a heck of a lot smarter than the rest of us.
There is some evidence to support this. If you check out the US Census Bureau stats regarding education and income, you will find that the higher degree that one attains, the more money the person will make.
However, those that earn the most are not always the richest. If you have read my blog (and others like it) long enough, you are convinced that someone can make 300k a year and spend 301k, therefore not attaining wealth…ever. Someone earning 40k who spends only 30k a year will create a positive net worth over time that is enviable to most.
To determine real wealth, you need to create a balance sheet (assets minus liabilities) and determine your net worth — your income has little to do with it.
If you want to learn more about this concept, read anything from Thomas J. Stanley. His books The Millionaire Next Door, The Millionaire Mind, and Stop Acting Rich…and Start Living Like a Real Millionaire are all life-changing books in my opinion.
Stanley spent a ton of his life energy researching the habits and characteristics of America’s wealthy, and his findings are extremely interesting and informative. For instance, most millionaires (individuals with a net worth of 1 million or more) live a different lifestyle than the Rolex -wearing, Lexus driving people we envision.
Examples Stanley sites of “real” millionaires:
- They live in homes that cost less than 400k
- They don’t own boats and second homes
- They wear cheap watches
- They drive Hondas or Toyotas, not BMWs
- They are not obsessed with brand name and/or luxury items
So who is buying all the expensive shit?
Normal everyday folk who want to appear rich, but aren’t. Stanley calls us “aspirationals”.
I am as guilty as the next person for over-spending. I fell for it hook, line, and sinker. That is, until a year ago.
Us guilty ones are good people. We are well-educated and we probably make decent money (even six-figures). But our balance sheet sucks. We can’t hyper-spend on material goods and save a lot of money at the same time. And to be a millionaire, one needs to save. Saving leads to investing, and so on…
So while millions of us are chasing what we call “success” — working our asses off for meaningless material goods that we eventually throw out or give away — other people (not necessarily smarter, mind you) are disciplined savers and investors who are enjoying freedom, satisfaction, and peace of mind that comes from spending less than they earn. Those people don’t find self-worth through consumerism, they thrive on personal achievement and recognition for good work. They are truly free.
The rich are not smarter than us, but they know it is how they live their lives — not how much money they spend — that makes them rich.
We can all learn something from them.