Lessons from very rich people

[Gsxrboy]

I have had the great opportunity to know some very rich people in my life, I have had the awesome experience to know very well how they live, work, and manage money. Here are some lessons I have gathered and I want to share with everyone and hopefully you can get some knowledge on how they view money.
This is of course my personal views and questions that I have asked them as I got to know them. The three people that I am drawing this post from are from the following backgrounds, there is always exception to the rules of course, but for the most part these are true.

Family A : Owns a large kitchen cabinet company, has a nice home (nothing huge) and loves to eat out and travel, but dresses humbly and drives a used jeep cherokee.

Family B : Owns a steel manufacturing company and also dresses humbly, travels, loves to eat out in nice restaurants and also drives a used car. They are the ones that bought the property in Acapulco and only travel there for vacations. Their son asked for a new BMW M3, the father bought him a used Ford Explorer!

Family C : Owns a manufacturing company and also dresses humbly, lives in the Bridle path area, drives an older car bought new over 5 years ago, also has a property in Cancun, and only travel there for vacations.

Cars
They don't believe in new cars, they actually hate new cars. The only time they will purchase a new car is only for business purposes, but not for personal use. They like reliable used cars or if they do purchase a new car, they hold on to it till it dies.

Investing
They do not invest in the stock market, they hate investing in terms of risk, they would rather grow their business and only invest in things that they know with a high certainty that they will get a great return. Think properties, businesses that they know will make a great return etc.

Money
They are cheap wads when it comes to spending, don't expect them to rush in and pay for things when you are out with them, unless of course they invited you. They hate buying things that don't provide some kind of value, they will buy the most expensive thing for their needs, but only because of reliability and the ability to sell it later for a nice sum. Most of the people I know don't even have a flat screen tv, most of them have some old tv sets or they only have one LCD tv in the family room. Don't believe me, go to estate sales in a rich neighbourhoods, you will be shocked at what you see in there. They use credit cards like crazy, but only because it gives them points and provides protection on purchases.

Vacations
They love vacations and travel often, however, they either buy a property in the place they like, which saves a ton of money and it provides the ability to sell it later. For some who don't want to buy a property overseas, they will stay in very nice resorts, this is the rare time they will spend some good money in a place (though deep down inside, they wish they could go for free)

These are the lessons that I have learned from them as well, I drive a used car and bought a used mini van as well for the family. I do my best not to spend on frivolous things and try to buy things of value for selling at a good price later on. I don't have any LCD tv's at home and the one day that I do, I will find the best price and buy it cash.

[ashedfc]

True, most rich are very frugal in real life. They know the value of money & hence they spend it very wisely.
Example Warren Buffet, I came to know that he gifted a ring bought from a thrift store.. That's real cheap (no wonder he has lots of money; because he isn't spending it)..

Bottomline: spend less than you earn; & whatever you spend do is wisely (like buying a used car, where to find a good one.. go to financebusters.com or leasebusetrs.com)

[Gsxrboy]

I forgot to mention as well, they are workaholics, they will work 12 hours or more everyday, including the weekends. Family life suffers a bit, but that is why when they do travel, they go all out.

[idonovan]

when i start to work again, (after school) im great at saving..I had 2 grand saved b4 school, but i also know how to spend, I love to eat out and travel,,, I want one day a new car but a toyota yaris or a V Golf. I like nice clothing but when i buy pricy things I save for them and only buy a few... I learnt not to care about labels. I have prada shoes but I have others from walmart... so realy all about balance saving and knowing what you can have. Oh my dream home is 3 bdr with a large closet and a master bathroom with a big tub and a shower... nothing big just an avrg middle class home..

[lucy16076]

Thank you for posting. I think this is a great link to get across to people that people are "rich" because they SAVE, not because it's been handed to them....(most anyway). Spend less than you make...a wonderfully easy concept!!!
I have learned to shop second hand stores since I was a child, eat out occasionally but nothing beats a home cooked meal, to travel at least once a year to rejuvenate myself, & to be kind to others & give where I can, even the small amounts of money & time create a difference.

[marstec]

The one thing those three people have in common is that they are all business owners. My husband always joked that you could never be truly rich if you received a T-4!

We tend to buy new cars and drive them for a long time. We also live within our means. It's hard to teach lessons of frugality to the younger generation because they want it all...now! My children think it is normal for their parents to pay for their education and to take them on a tropical holiday every year, but it's our financial decisions that have made it possible.

It's all about balance...you can save all the money that you want, but if you can't enjoy some of it along the way, you aren't really living.

[ashedfc]

The one thing those three people have in common is that they are all business owners. My husband always joked that you could never be truly rich if you received a T-4!

True, Unless you are in a senior management position, a T4 can hardly make you rich..
Being rich is a relative term; a mean a millionaire may consider himself poor when he looks at a billionaire..
Being content with what you earn is more important.. Its all about "What you Need" & not about "What you Want"..
Todays generation kids have not seen misery (& bad days of world war, depression, severe inflation, etc.), so they do not understand the value of money.

And above all creation of money by thin air had made debt easily available, so instant gratitude has become a norm. This is where the problem lies "Spend now & pay later", in reality that later never comes..

Being in business helps; & business owners know they had to work hard to earn the money they have; that's the reason why they spend it wisely..

As parents, its our responsibility to teach our kids "or else they will never learn early in life; & learning from one personal mistake always proves very costly"..

[Shwa Girl]

The one thing those three people have in common is that they are all business owners. My husband always joked that you could never be truly rich if you received a T-4!

According to Thomas Stanley, author of The Millionaire Next Door, teachers are another category of millionaires. They invest in the stock market but research the companies like crazy before buying. They buy and hold.

Like the OP stated, many millionaires drive used cars or new cars until they die.

Sam Walton, founder of Walmart, use to drive around in a beat up Ford truck. He dressed so plainly, that he did not stand out as a millionaire. He was a tightwad too, when it came to spending his millions.

Good thread OP.

[frugal50]

i'm a tightwad and hate spending money
and my bank statements
and investments have been very good to me!

[Darth Penguin]

I
Investing
They do not invest in the stock market, they hate investing in terms of risk, they would rather grow their business and only invest in things that they know with a high certainty that they will get a great return. Think properties, businesses that they know will make a great return etc.

This a horrenous double -edged sword....If their business model is good then re-investing in it makes a profit. If the business model is bad or they are not able to to expand and compete at a higher level, then they are throwing good money away. Some people can't see that thier business was good 2 years ago but in today's market...it's not viable.

Not all small, medium or large business owners make the correct decision at the right time. The accumen that a good business owner has means you may have to change the route you are going down. Dropping a previous good venture means that you are not bleeding your company dry in the next 5 yr cycle.

[lekate]

According to Thomas Stanley, author of The Millionaire Next Door, teachers are another category of millionaires. They invest in the stock market but research the companies like crazy before buying. They buy and hold.

Like the OP stated, many millionaires drive used cars or new cars until they die.

Sam Walton, founder of Walmart, use to drive around in a beat up Ford truck. He dressed so plainly, that he did not stand out as a millionaire. He was a tightwad too, when it came to spending his millions.

Good thread OP.

I don't see the point in being a complete tightwad if you have millions of dollars, but that may be just because he grew up/came of age during the recession, I'm told a lot of people from that generation, regardless of how times have changed, were more reluctant to part with money or 'things'.

[lekate]

I forgot to mention as well, they are workaholics, they will work 12 hours or more everyday, including the weekends. Family life suffers a bit, but that is why when they do travel, they go all out.

The thing is that, day to day life is what matters. Vacations shouldn't be there to substitute daily family interactions. At least, that's how I feel.

[Darth Penguin]

The thing is that, day to day life is what matters. Vacations shouldn't be there to substitute daily family interactions. At least, that's how I feel.

+1...Dh is a senior manager. we can't go out of cellphone reach so "da hole company willdye"..or so they tell me...we haven't had a family holiday without Mr P having to be in contact for several hours a day for 15 yrs..

No wonder my first requirement is for a wifi-less place.

[Sanrio]

Unless you are in a senior management position, a T4 can hardly make you rich.

agreee

[sharkie]

I totally agree with you on this subject...thanks for posting