The Means to Millions

The headline — "Five Billionaires Who Live Below Their Means" — seemed to imply that some billionaires live beyond their means. Of course, if they lived beyond their means, they wouldn't be billionaires. Still, the article was a interesting series of snapshots, because there's a lot to learn by looking at what these billionaires do and don't do with their money.

Cover of The Millionaire Next Door

Several years ago, I learned some valuable lessons about wealth from a book called The Millionaire Next Door. First, it defined a millionaire as someone whose net worth equaled more than a million dollars. So living in a $2 million home and owning a jet and a yacht and several expensive cars doesn't make you a millionaire. In fact, most people who live extravagant lifestyles are heavily leveraged with debt. In short, they owe more than they own. Second, it offered a great many insights, all based on researching the spending and saving habits of millionaires, about how millionaires become millionaires.

As you'd expect, being smart helps. And working hard is essential. But neither is enough.

Here's the myth: Some really wealthy people live frugally despite their great wealth.

Here's the truth: Most really wealthy people are really wealthy because they live frugally.

The other great truth I learned about millionaires is that they are givers — not just after they reach certain levels of wealth but regardless of their levels of wealth. They gave when they had very little and they continued to give as their net worth grew.

So the lessons I take from all of this are simple: Work hard, give generously, and live frugally.