The super wealthy can afford to binge when they buy anything, but many don’t. That’s why they’re wealthy. They tend to look for the same discounts they sought before they attained super wealth.
So says Paul Sullivan, a journalist speaking at a session of the Investments & Wealth Institute conference on Tuesday in Manhattan and author of “The Thin Green Line: The Money Secrets of the Super Wealthy,” a book in which he studied how rich people attained their wealth.
He pointed to the story of an NFL player whom he recently interviewed: Jacksonville Jaguars linebacker Paul Posluszny had recently earned a big contract with a signing bonus in excess of $20 million. He wanted a big exciting car, Sullivan said. But this player, who didn’t come from a wealthy background, had sensible attitudes about spending and wouldn’t spend $90,000 on a new car. Instead he bought another car that he also liked for $75,000.
“So what did he do? He saved some 17 percent and still got something that he liked, something that he felt rewarded him for his hard work. I thought, if every money decision he makes saves 17 percent, then he is never going to run out of money. He is going to be that model client for you out there,” said Sullivan.
Sullivan in his own life noted that likes the best French wines, but that he only buys them on special occasions.
By contrast, he noted that some people in his community of New Canaan, Conn., appear wealthy but are not. They made millions of dollars but have run through the money and have almost no assets. He said this kind of person could be a “dissipater.”
This is someone who receives a lot of money for some period in his or her life, then burns through it. This person “is unlikely to ever reach that high-water mark again,” he said. They appear rich, but they are not wealthy, he said.
Sullivan urged the advisor audience to persuade clients “to think in such a way that they will end up wealthy and not rich.” He added that it was important that parents let children see how they budgeted and saved. He also urged advisors to “shout” at clients if need be, to do anything they needed to ensure clients had sensible approaches to saving and spending.
Sullivan also related cases of people growing up amid wealth who had no idea how to handle money.
What are the other characteristics of the wealthy?