In an earlier blog, I mentioned that the typical Balance Sheet Affluent (millionaires) had an annual realized household income of $89,167 (median) when he first became a millionaire ($1 Million: Something or Nothing? Part I, and Stop Acting Rich, pp. 17-29). In other words, one half of the BAs had incomes that were less than this figure. What does this tell us about building wealth and becoming financially secure? For most Americans one’s desire, discipline, and intellect are more important factors in accumulating wealth than earning a high income. The problem today among many high income earners is that they think that money (income) is the most easily renewable resource. Consequently they act according to the principles found in the “Handbook for Hyper Consumers.”
But not all Americans follow such principles or the path taken by the modal crowd in America. They think for themselves. And most rich people in this country become rich and remain that way because they receive much more satisfaction from building wealth and financial security than displaying expensive store bought badges. So it is with Mrs. C.C. who was kind enough to share some of her thoughts on becoming financially independent without once earning a high income.
Dear Dr. Stanley,
When my friends read your “Millionaire” books they always say, “C.C., it’s you he’s writing about.” I attended public schools where the teachers were role models and mentors. I have had the benefit of knowing many strong women, some who did well financially. From them, I learned to rely on myself and not wait for “Mr. Right” to support me. I was a scholarship student at a small liberal arts college. I had many mentors whose examples shaped my life.
While my net worth can be attrtibuted to frugality and canny investing, my lifestyle is shaped by an excellent education. I have always tended to wander away from the herd in my thinking, but my education taught me self-discipline, independence of thought, and strong ethics.
I am the child of a single, working mother, and my early years were fraught with financial uncertainty. I learned by watching my mother that women have to work harder and longer to achieve financial success.
While I am not as wealthy as most of your subjects, my net worth is above $1 million, and like most of your subjects, I started with nothing more than a college scholarship and a good mother. The thing that you may find interesting about me is that I have never earned more than $60,000. I have worked in middle management in state government most of my career.
I have accumulated most of my net worth by living below my means. I have everything I want, but I have learned not to want too much. Also I avoid debt. Midway through my career the state government was being downsized and I was in danger of losing my job. I told myself I wanted to get into a position where I would never again be faced with that uncertainty. First, I stopped giving myself raises. All new money went into investments. Then I paid off my house loan, and the house payments could go into investments. I am fairly conservative in my investment but not afraid of risk. Most years, I saved 30 percent of my income, if not more.
My net worth is my own, separate from my husband’s, and I manage it myself. Recently, I “semiretired.” It was satisfying to know I could afford the pay cut. While I have no biological children, I have had many foster children. I notice that have learned from me the ability to manage money well, as I learned from my mother.