How to Become a Millionaire – The Simple Truth

A week or so ago, I shared some tips from Warren Buffett about how to become a millionaire. Today, I wanted to share some tips from our eight year old.

This weekend, I had an interesting financial conversation with our eight year old. This is the same kid that has an impressive knack for saving. To set the scene, we were tooling around town when the subject of cars came up…

As we pulled up to a stoplight, a particularly sweet ride rolled by. As soon as they spotted it, our kids started marveling at how nice it was, and how much it must have cost. The undertone of the conversation was that the owner must be uber-rich. Never one to miss out on a teachable moment, I mentioned that stuff like that isn’t necessarily an indicator of wealth.

Taking a page from “The Millionaire Next Door, ” I explained that some of the wealthiest people that they’ll ever meet are the ones that don’t flaunt it. In fact, most people probably wouldn’t even realize that these people are rich — rather, they’ll seem just like “regular” people leading a “normal” life.

This prompted our eight year old to say:

“Why doesn’t everyone just buy normal stuff? That way they could get rich. And if millionaires just bought normal stuff, then they could stay rich.”

While this is a bit of an oversimplification, I think our society could use a healthy dose of eight year old logic. In fact, if more people thought like him, we wouldn’t be talking about negative savings rates and multi-billion dollar bailouts.

Intrigued, I asked him if he wanted to be a millionaire. His response?

“Maybe someday, but not right now. If I was a millionaire, I’d probably just worry about my money all the time.”

From the mouths of babes…

19 Responses to “How to Become a Millionaire – The Simple Truth”

  1. Anonymous

    Lot’s of truth to this story. Took me two decades to save my first million dollars. Only took me a few years to save the next $2 million. I’m working on $4 million just 2 years later. It helps to have my own small business and of course the returns on my stock and bond investments are helping more dramatically now. Helps that I live below my means. I’ve never owned a Benz, BMW, etc but am happy with the moderately priced new cars I buy. Money isn’t everything, but it sure eliminates a lot of worries in life. Give a chunk of your income away each year to a deserving charity. I give to my favorite christian ministries every year. You can’t take it with you, so try to make a difference in this world while you are alive to see it.

  2. Anonymous

    Beware of Envy. The underlying assumption being pushed here is that someone in a nice car can’t afford it or shouldn’t be allowed to have it. Regardless of what you may want to believe, there are plenty of folks out there who can afford many nice things and frankly they should be allowed to have them and not feel guilty in the least for that. Plenty of Average Accumulators of Wealth will do just dandy throughout their lives and will reach financial independence at standard retirement ages. Not everyone is inclined to become wealthy by living in a small home in a working class neighborhood while driving 12 year old Chevy’s and drinking Budweiser. The point of being frugal and accumulating wealth is not to live as a miser, but to focus and spend your money on those things you find of value in your life. As long as you are meeting all your financial goals (e.g. staying out of debt, retirement, college, etc.), why not own a nice car? or have a boat in the three car driveway? or take out of country vacations? Sure, there are folks who pretend, but as long as you aren’t one of them don’t go projecting your envy on others by demonizing their choices of what they like to spend their money on. Just because I wouldn’t allow myself to spend money on a Porsche or Ferrari because I would feel it was extravagant doesn’t mean every time I see one I get to assume the person driving it can’t afford it.

  3. Anonymous

    That reminds me of a verse from the Bible, which echos that wisdom:

    Proverbs 13:7:
    One man pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth.

  4. Anonymous

    I’m a multi-millionaire and I constantly think about making money. I don’t really worry about the money I have because its very safe.

    I hear a lot of statements such as rich people don’t buy new cars, big houses, etc.

    Some rich people don’t buy new cars. I don’t I purchase my vehicles from auctions. But some of my rich friends buy new cars and some of them lease cars.

    I have over 30 friends that earn millions a dollars per year and the only thing we really have in common is that we save our money and we own our own businesses.

    When we want to buy something we get it, but we understand that business comes first.

    It’s too complex to just simply say don’t buy this or don’t buy that because Warren B said so!

    Every rich man/woman has their “Thing” that they overspend on. Some buy cars, boats, art, houses, etc.

  5. Anonymous

    I’ve always maintained the philosophy that in order to be good stewards of not only our money but the world’s resources, we should all be buying “normal stuff” and in moderation. The more resources we use up, the less there is for others.

    Economy is based on demand. If we demand less stuff and extravagance and demand more charitable organizations, renewable resources, etc, the world would be a much better place.

  6. Anonymous

    Out of the mouth of babes comes some pretty amazing wisdom.
    My own son once asked me whether I thought it would be a good idea to have a debt / equity indicator on every car which I thought would certainly work out who owned the car rather than who was paying to drive it.
    But wait there’s more… A couple of months later he asked whether there should be a debt / equity indicator on the letterbox of every house in our street to see who really owned the house or who was simply a part owner and paying lots of interest to the bank!!!
    I guess the moral of the story is to listen to our kids. They can always teach us something if we’re prepared to listen!!

  7. Anonymous

    It just goes to show, while the principles of proper money management might be difficult for some to live by, there are pretty simple to understand. If you always live below your means, you should never need to worry about money.

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