Your Voice of Financial Reason

Who Are the Truly Wealthy?

Tuesday, April 13, 2010

Based on two decades of research, Thomas J. Stanley, author of the Millionaire Mind, catagorizes people as either wealth accumulators or hunter gatherers

The first group is comprised of those he describes as "balance-sheet wealthy."  They have become financially independent because they have focused on building their net worth.

In contrast, the "hunter-gatherers" tend to be high income, but low net worth.  They often did well in school and have a good job, but love to spend money.  They fall into the trap of believing that if you look rich, you are rich.  Stanley claims that most Americans are income statement affluent, and "judge their worth on what their income can buy, not on what their wealth can provide."

Stanley also points out the most important difference between wealth accumulators and hunter-gatherers is not the size of their assets, but the scope of their freedom.  Hunter-gatherers are totally dependent on maintaining their high incomes in order to survive financially. They can't afford to quit their jobs even if they want to because they are drowning in debt. 

On the other hand, Stanley found that wealth accumulators are not motivated by the trappings of wealth, but by the independence that wealth can provide.Through planning and sacrifice, they achieve a financial status where they can "afford" to choose work based on the level of meaning and purpose it brings to their lives and not by the level of income it provides.

Stanley also points out that the most satisfied wealthy people don't just have financial goals, they also have life goals.  In other words, they have clarity around what they want in life and use their wealth to support those values and priorities.

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