Let me introduce two of my favourite books - The Millionaire Next Door and Stop Acting Rich, both written by Dr. Thomas J. Stanley. The main theme of the books is that you can’t judge a book by its cover when it comes to personal wealth. The author has spent many years researching the typical life of a millionaire, which goes against many misconceptions that people still have today. In Stop Acting Rich, Thomas defines a group of people he calls "aspirationals," as people who choose to act rich, but don’t have the financial resources to back it up. They are typically high income earners but aren’t wealthy, and are low net worth individuals with little savings. Aspirationals often spend exorbitantly beyond their means (think luxury homes, country clubs, BMWs, Rolex watches, and the like) just to appear rich, leaving them vulnerable to losing everything should their financial positions turned for the worse.
Not long ago, one of my property agents spoke casually with me about his friend, a Singaporean businessman, who owns a business distributing personal care products. According to my agent, his friend has a lavish lifestyle - staying in an expensive landed house in Singapore, driving a BMW, owning country clubs, often spending thousands of dollars on a single occasion in high-end restaurants, and having another pool bungalow overseas as his weekend holiday home. Weeks later, my agent called me and told me his friend's business got worse in recent years, and that he needed to sell off assets urgently to raise funds. You know what happened next? I ended up acquiring his pool bungalow at a bargain price! I've since leased out the bungalow to an expatriate, providing me with good rental income. This is just one story of an aspirational. In fact, there are many people that fit perfectly into the "aspirationals" category everywhere.
The solution to financial success is simple - stop being an aspirational! Accumulating wealth isn't complicated. You just need to work for money, spend less than you earn, and invest your savings to grow without your active participation. And the ability to enjoy all that life has to offer, without the need to spend exorbitantly, is key to whether one is able to accumulate wealth.
I find that many people are sacrificing every cent they own to have rich appearances, and potentially pushing themselves into financial ruins. Rather than keeping up with the Joneses, my wife and I would maintain our frugal lifestyle to ensure that we'll continue to be rich, and stay rich.
All that glitters isn't gold, and certainly all that glitters isn't the millionaire’s goal!
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Kelvin Wong is a millionaire investor and landlord. He currently owns a multi-million dollar property portfolio in Singapore, Australia and Malaysia. With his assets generating multiple streams of income to sustain his desired lifestyle, Kelvin became financially free at 39. He holds a Bachelor of Business (Dean's List) degree and a Diploma in Business Management. Kelvin writes about building wealth and achieving financial freedom in his free time.
Copyright © 2011 Kelvin Wong
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