Stop Acting Rich

I just finished the book, Stop Acting Rich: And Start Living Like A Real Millionaire by Thomas J. Stanley. This was an alright book (I thought his book, The Millionaire Next Door, was better written), but his points are salient. Here are some ideas I took away from the book.

Most rich people become wealthy and stay that way because they are frugal and are investment, not consumption, oriented.

People are made happier by experiences than by things.

One thing that sets the wealthy apart from others is they have a wide variety of interests and activities.

Millionaires value their time.

He defines a millionaire as those with investments of $1M or more (no longer a net worth with house value).

He states that the reason why many of us will not be rich is that to become rich, we “have to plan, cut back, be prudent, maybe even shop at Wal-Mart, invest, and even downsize. We lack discipline, the guts it takes to become rich.” Many of us are unwilling to want to do that.

A useful calculation is to estimate what your net worth should be: Your net worth [augmented] should equal 10% of your age * your annual realized household income (0.10 * age * income = expected net worth). If your net worth is above this, you are affluent, given your age and income characteristics.

Children: Are we training our kids to be poor and dissatisfied? “Today’s children get an average of 70 new toys a year. We may be inadvertently be providing the next generation with a foundation for permanent financial dependence and dissatisfaction with life.”


Location is critical when it comes to your home and your wealth!

It is not only about how much you make. More importantly, it is how much you keep. And the “keep” component begins and ends at your home address…If you want to actually become rich one day, then enhance your chances by living in a modest home – say, one valued at under $300k.

Statistically, it is much easier to become a millionaire if you live and consume like those who live in modest homes than in expensive ones.

To enhance your chances of becoming financially independent, you should live in a home and neighborhood environment that has high wealth-building productivity characteristics. You need to be surrounded by neighbors who have lower incomes than your household generates.

Buying a home: He states a good rule of thumb is that the market value of your home should be less than 3x your household’s total annual realized income.

The wealthier the person, the lower the value of their home as an overall percentage of net worth.

Essentially you are where you live, which is defines in part by the status characteristics of your occupation.


The reality is that income is not wealth. Often high occupational status dictates high consumption.

If you spend in anticipation of becoming rich, you are unlikely ever to become truly wealthy.

Ego products and brands are not common among the affluent population. They did not get rich buying such items, and they don’t stay rich indulging. When they do indulge, it is because the prices of these items are well within their means or because they are celebrity vanity purchases.

Conspicuous symbols of wealth, such as homes and motor vehicles, are better indicators of one’s credit use than of the size of one’s investment portfolio.


Wealthy do not
– buy expensive wine (On avg they spend ~$10)
– buy expensive watches (Most commonly: Seiko and Timex)
– buy expensive suits (They usually buy good quality but on sale)
– buy luxury cars (They usually drive Toyota, Honda, Ford, Chevy)
– buy boats

Millionaires involve themselves in activities that are complements to wealth: analyzing their investments, studying their businesses and product or service industries, and so on.

“Money makes life easier, not better.”

Money does not come inherited most of the time: “Most (91%) millionaires receive less than 1% of their income from trusts, estates, or any other form of inter generational transfer of wealth or income.”

When we think about rich, we think about acting rich over being rich.

The benefits of being wealthy are it has much more to do with being financially independent and secure than owning prestige brands. High self-esteem is related to achieving financial independence. Both the sense of achievement that comes from success and financial independence lead to happiness and life satisfaction, not meaningless badges.


Popular activities of decamillionaires:
– Visiting museums
– Raising funds for charities
– Consulting tax experts
– Attending fundraising balls
– Participating in civic activities
– Attending major league sporting events
– Vacationing overseas
– Attending Broadway plays
– Participating in trade/professional association activities
– Shopping for original art
– Gardening
– Attending antique fairs/sales
– Fishing
– Skiing in the Rockies
– Vacationing in Paris

Over a 30d period (taken from decamillionaire diaries):
– Socializing with children/grandchildren
– Planning investments
– Entertaining close friends
– Watching their children/grandchildren playing sports
– Studying art
– Playing golf
– Attending religious services
– Jogging
– Praying
– Attending lectures
– Caring for elderly relatives
– Playing tennis