Wealth is What You Don't See

While checking out at Kroger recently I asked the guy bagging my groceries if he was from New York state since he was wearing a Geneseo sweatshirt. (The name is familiar since I know a couple people from college who are from there) He responded that he went to school up there and proceeded to ask me if I was a professor at UK. I told him that I am a financial planner and he said, “So you help rich people manage their money.”

Now, he didn’t say that in an angry, resentful tone at all. To him, it was just a given that, if someone worked with a financial planner/advisor, they must be rich. It didn’t occur to him, I guess, that those who wanted to become wealthy might seek advice and counsel too. It also got me thinking about our clients and how he probably wouldn’t see them as rich when they come through his checkout line.

In the mid-‘90s two economists wrote a book titled, “The Millionaire Next Door.” They had set out to find who in this country is “rich” and how they achieved it. To their surprise, they discovered that most wealthy people didn’t necessarily live in the most expensive neighborhoods but lived in relatively modest homes and drove ordinary vehicles. All while accumulating their wealth by…..not spending all their income. As the name of their book suggests, these people couldn’t be identified by observing their possessions. They live among us and slowly, but surely, accumulate their wealth where it can’t be seen. But, significantly, where it can eventually be spent when they choose not to work anymore. Emphasis on “when they choose.”

When Lisa and I became clients of Moneywatch about 30 years ago, I remember Bob Bova telling me we would be rich one day. I laughed out loud…because LOL hadn’t been invented yet. I didn’t quite realize it at the time but this concept of saving regularly and investing for the long term was exactly what Bob was referring to.

So, if I’d had ten minutes to explain to my Kroger bagger friend, I would have explained that, yes, a lot of our clients are rich. If you define rich as having wealth enough to offer choices, such as whether they want to work or not. But, most of them achieved that status of “rich” or “wealthy” not the old-fashioned way, but by following the formula in the book: spend less than you earn, save and invest the rest for a long time, through stock market peaks and valleys.

Our clients are smart people who are or were successful, busy professionals who want help planning for their financial futures and managing their 403(b)s, 401(k)s and all the rest. And they know that, as Morgan Housel puts it in his book, The Psychology of Money, that “wealth is what you don’t see.”

Steve Byars, CFP®