Friday, October 26, 2012

Frugal Friday: Wealth vs. Income

Here's something to think about this Frugal Friday:
"most people have it all wrong about wealth. … Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend.”
Thomas J. Stanley and William D. Danko, The Millionaire Next Door (1996)
I think this is an important financial idea that each of us should understand as we try to live within our means. Sometimes we see someone who dresses really nice or owns a fancy car and think to ourselves, "wow, they've got bucks!" But is that really the case? If you apply the idea above, perhaps what we should really be thinking is, "Wow, they've spent a lot of money." That's a whole different concept, now isn't it? They don't "have it" because they've "spent it".

I'd love to have a discussion. Why do you think this is important? How can you use it to modify your family's spending habits? How can it change the way you view yourselves in terms of those around you? Other thoughts on what is wealth vs. income, anyone?

Thanks for sharing and have a wonderful weekend!

Linked to: Frugal Friday, Hearts 4 Home, Thrifty Thursday


Robin Lewis said...

This is something that comes up a lot in our household. We have money because we save it. Probably our biggest expense is food because we buy good food. Our son knows we have money but that he doesn't have all the bells and whistles his friends do. We have explained that it's a choice. We choose security and independence over the material. Great quote. I'm going to use it!

Heather {Healthy Family Cookin} said...

Thanks for sharing Robin. I think that's great that you are trying to teach your son about this. I love what you said, "We choose security and independence over the material." That's profound. And so important no matter how much money you make.

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