The Millionaire Next Door

Mom, Is that Lady in the Big House Rich?

Mrs. C wrote an enlightening discussion about what she told her friend/neighbor’s child when the little girl ask if the lady down the street with the big house and fancy cars was rich.

. . . I answered. . .with a statement I didn’t plan and it probably surprised my friend and her daughter as much it surprised me.  Having all those things only says how much [the neighbor] has spent not how much she is worth.

Ever since then whenever I begin to feel worn out by my neighbor’s need to “be better than me” I just think about this statement and realize that whatever goes into the purchase of a bigger house, more expensive car, etc. did not go into retirement or other savings.  I am secure with my financial situation and I’m on track to have a comfortable retirement.  According to my neighbor she is waiting for the pay day to arrive that will fund her retirement.

When I read it I immediately thought about one of the questions that I posed in Stop Acting RichWhat happens when your children attend school and/or interact otherwise with kids who display an abundance of expensive consumer products?  Your children are likely to ask you why you do not supply them with the same collection of products.  Tell them . . . never judge the true quality, the caliber of a person, by what can be purchased.  Often people who dress and drive as if they are rich are not.

Only 10.5% of the variation in the price paid for a motor vehicle is explained by net worth.

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