I just got done reading the book "The Millionaire Next Door" which many of you may have read as well. It's basically all about accumulation of wealth and how millionaires are typically frugal and don't live high consumption lifestyles. It says that many doctors and lawyers tend to be hyperconsumers and have little net worth compared to their annual salaries. One reason for this is that society holds these professions in high regard because of their high earnings potential, and these people feel pressured to "look the part" of a successful doctor or lawyer (expensive cars, wealthy neighborhoods, country clubs, etc). Teachers, who make significantly less, are often better savers. This brings me to the question: Since successful traders must have excellent money management skills and in many cases be bargain hunters in their jobs, is the typical trader that has a 6+ figure income likely to live a high consumption lifestyle outside of work or to be a frugal saver???
I knew a guy that was exceptionally thrifty, worked as an engineer and traded bonds on the side. He is wealthy today. He told me that he lived on 80% of his income no matter what and when one of his kids was born he had the money in the bank but "Let the hospital take it out of some charity fund". I don't care much for all these thrifty fuck heads I meet. Some don't want to tip the waitress, others don't want to even pay for the food and do any of them do anything for people that are down and out??
Ok, theres a good example of the difference between cheap and thrifty. I consider myself thrifty, I kind of have to be while I'm in school...my goal is to graduate college with no debt whatsoever. Thrifty to me means bargain shopping, never paying full retail for clothes or shoes, not buying a new 300$ cell phone every 6 months, driving an extra mile to save 15 cents a gallon on gas....but I don't let these habits fuck other people over...f.e. im a very generous tipper. Being cheap affects the people around you negatively. When I'm with a particular buddy of mine I find myself overtipping because I know he's shorted the waiter or bartender from a reasonable tip, and he will never willingly offer to chip in on gas during a road trip.....theres a huge difference.
oK, if we were hanging out I would not get any alarming signals from you. All the people that I know that don't want to tip, or will not pay their fair share if a collection has to be taken up for dinner, are also not throwing stuff away without a fight, are grabing freebies everywhere, one I knew was a fortune hunter, he found a gal with a big settlement and took off for the hinterlands to buy a ranch. Probably nobody likes people that self serving in the long run. My daughter is very thrifty, seeing as how she can support herself on $1300 a month in Los Angeles!! Well, I had to give her money to buy a car last year but big deal, she got a great little used car for $3500, again, very good with her money. She told me last night she couldn't pass up a lady in a wheelchair that needed food money. Personally I have always spent it all and more, no thought about the future and I give it away too. Now I'm retired and just getting profitable trading, most likely, if I get the income up there I'll overspend again. Wifey and I have two house in So. cal and only about a half a mortgage so it has worked out fine really.
I read the Millionaire Next Door at least once every 2 years. From the threads I have read since being on the ET boards most people here appear to be PAW (Accumulators of Wealth) instead of UAW (under accumulators of wealth). I'd be interested to hear other thoughts on that.
How frugal people are as adults depends on how they were raised as children. The people I know who grew up in blue-collar or middle-class families tend to be frugal, because their parents taught them to save money and probably bought cheap clothes from Walmart/Kmart and didn't splurge on toys. Occasionally, someone converts from frugal to big-spender after making it big, but for the most part old habits die hard. I know some people who were spoiled as children, and that fact becomes very obvious now that they're adults. So, it's not about whether traders are more frugal than doctors or firefighters or plumbers, it's about their upbringing.
By the way, Millionaire Next Door is a great book but I wouldn't want all Americans to live by it, else our economy would be in the tank.
Good point. Just think.. if people suddenly stopped buying cigarettes, expensive cars and over-priced suits.. We'd be out of business. Yikes!! :eek: