As a financial advisor, I talk to all sorts of people about their money. Not all my clients are High Net Worth (a term often misapply to people who are high income earners but not wealthy) and I work with a lot of people who work hard, whether through running their own business or through employment.
With that comes all types of spending habits. Everyone tells me that they don’t live an extravagant lifestyle, sure they shop in Aldi. But they may like the finer things in life. And that is ok, as long as you can afford it. There are trade offs later when you want to retire but haven’t saved enough to maintain the cost of your lifestyle.
There is also the people who are very frugal and have always watched their pennies. This type of person tends to have an aversion to spending and it can cause issues when they meet someone who does like to spend money.
What brings me the most satisfaction is working with the “Millionaire Next Door” type of client. That is, the type of person that you could be living next to but don’t know they are a millionaire. They have a modest job and a modest income. They aren’t flash and they don’t spend their money on outward displays of wealth. But they aren’t mean and have a good life.
What they do have is a lifetime of good habits. They put away money every month either into their pensions and/or personal savings. By accumulating money over a lifetime, they spend less than they earn and so the cost of their lifestyle is lower and they don’t need to accumulate as big a pot of money to maintain it.
When they get to the age that they want to retire, the can because of the savings habits they have had over their lifetime. It takes decades to get to that position and it is not plain sailing. There are always lean times and the amount the can afford to save varies over time, especially at time when they are raising their family.
We are in a time when a lot of people are becoming incredibly wealthy in a very short period of time. This can be from coming up with a great idea that takes off or by gambling it all on meme stocks or crypto and it working out. While it is easy to read about these people online, they are the very few. It does not apply to the vast majority of us, who have to build wealth over a decades.
And it starts with having good savings habits.
17 January 2022