Millionaires Who Are Frugal When They Don't Have To Be

[summer]

NY Times

BOB WEIDNER likes to play a game when he goes to a high-end outlet store like Brooks Brothers or Ralph Lauren: How many things can he buy and not spend more than $100? On his last visit, the answer was seven.



“Every year, we go up to the outlets and find a deal,” he said. “It’s worth it.”



His wife, Angela Marchi, who chides him for darning his socks (just the toes, not the heels, he said), prefers to buy her clothes twice a year when her favorite stores put last year’s styles on sale. But she recently made an exception and bought her husband a Tommy Bahama shirt he had wanted — on a website that sells slightly worn clothes.



“He refused to pay full price,” she said.

You wouldn’t know it from their shopping habits, but Ms. Marchi, 56, a senior health care executive who has run hospital chains, and Mr. Weidner, 57, a senior researcher at a large nonprofit company, are worth millions of dollars. And while they own three homes — condominiums in Naples and Boca Raton, Fla., and a house in Lebanon, Pa., where they grew up, none of them are huge. One splurge is an annual trip to Italy.



The couple are the face of the self-made millionaire who has the financial security of true wealth, not the fleeting rush of sudden riches. While the popular perception of millionaires is that they are more ostentatious than frugal, recent research shows that single-digit millionaires, at least, are generally far more mindful about how they save, spend and invest their money.



“It’s about paying attention to what makes you happy and not just doing what our society tells us to do,” said Donna Skeels Cygan, a financial adviser in Albuquerque and the author of the book “The Joy of Financial Security.”



“They look upon money as a tool,” she said of couples like Ms. Marchi and Mr. Weidner, with whom she has worked. “It’s an important tool. They don’t neglect it, but they also don’t worship it.”



A recent report from UBS Wealth Management found that people with more money are generally happy, which probably doesn’t come as much of a shock. “I would say that millionaires in general are very happy,” said Paula Polito, chief client strategy officer at UBS Wealth Management Americas. “I wouldn’t confuse happiness with contentment or satisfaction or achievement.”



The UBS report found that satisfaction rose in line with wealth: 73 percent of those with $1 million to $2 million, 78 percent of those with $2 million to $5 million and 85 percent of those with over $5 million reported that they were “highly satisfied” with life.



What piqued my curiosity was how conflicted the report’s respondents seemed to be about the source of their wealth. They often have jobs that entail long hours, high pressure and working vacations.



“Part of this pressure to keep going is less about greed and more about insecurity that might be self-imposed,” Ms. Polito said. “If you ask people, ‘If you knew you had five more years to live, would you act differently?’ they say they would. That’s a showstopper.”

Money buys happiness, the report said. But what good is that happiness if the millionaires who have it cannot enjoy the freedom the money gives them, the freedom that most people would love to have?



I set out to talk to people who had what I considered an attainable level of wealth for people with well-paying jobs and the ability to control their spending and saving through their lifetime. They had wealth starting at several million dollars, but it did not stretch above the $10.86 million estate tax exemption level for couples.



(Once people’s wealth goes substantially past the estate tax exemption, they need tax and legal advisers for planning to minimize the estate tax. It’s a good problem to have, but it changes how they think about money.)



There were common threads in this group. These were people who had all made the money in their own lifetimes and done that as much by saving, investing and making careful choices about spending as by making large salaries.



One of the big choices was what they spent money on. A common thread was frugality about cars. Not only did they buy modestly priced vehicles, they kept them for a long time.



But fancy cars were more of a proxy for unnecessary purchases. Steve Ingram, a real estate and oil and gas lawyer in Albuquerque, said he and his wife simply didn’t care that much about material possessions.



“We have some nice things, but I drive a car for 10 years and then trade it in and get another car for 10 years,” he said. “We like to travel, and we’ll spend the money for that because it’s worth it having a real experience together.”



Mr. Ingram, 53, said he and his wife, Mary, 50, went to Charleston, S.C., and Savannah, Ga., last summer and on a New England foliage trip in the fall.



“We did go to Las Vegas one time and went into Cartier and bought watches for each other,” he said. “That was a real splurge. Or maybe we’ll buy a piece of art on vacation. That’s the time you let go a bit.”



Heather and John Darby, both in their mid-60s, said they waited until they were going to retire to build the house they always wanted, after making do with more modest homes. Their dream house is 3,600 square feet in Columbia, Mo., 15 minutes from the center of town, and far from their old lives in Los Alamos, N.M.



But they said they realized that what they really liked about their home was the privacy, so they bought three adjoining half-acre lots. “They form a semicircle that is a buffer between our property and where anyone else would build,” Mr. Darby, a nuclear engineer, said. “I tend to spend money on good investments.”



Why the habits that helped many of these people save millions of dollars persist when they are wealthy is harder to say. They may want to leave money to charity or to their children. Or they may simply not want for more than they have.



“Whether or not they realize it, they pay attention to what makes them happy,” Ms. Cygan said. “They have selective ways to spend on extravagances.”

Or they may not be comfortable spending because they have worked and saved their whole lives, said Sandra Bragar, director of wealth management at Aspiriant, an adviser that has clients with $3 million to $200 million.



She said she often encouraged clients to spend money on things that make their lives better or easier, like housekeepers, trainers and even personal chefs, but also on experiences that will make their lives fuller.



Either way, this group learns from its mistakes. Ms. Marchi said she and her husband had not been immune to the siren song of a large, beautiful home. “The two times that we did it we said, ‘Why did we do this?’ ” she said. “It’s just two of us. We don’t need this much space.”



They lost money on both houses when they had to sell them to move for work.



Given that experience, she never imagined having three homes, but she has a thought-out explanation. Naples is their permanent residence; the home in Lebanon, Pa., is close to her sister and elderly mother. They bought the condo in Boca Raton, where she works, cheaply, fixed it up and pay less on their mortgage each month than they would pay in rent.



And while she said she expected to lose money on their home in Lebanon when they were ready to sell it, she did not consider that a mistake. After her father died nine years ago, she said, she liked being able to fly up and stay close to her mother. It’s an example of spending money on something that matters.



But are multimillionaires who darn their socks really just cheapskates? Or are those little habits integral to their accumulation of wealth and part of the reason they have achieved a level of financial comfort?



“It’s interesting because it’s less about greed,” Ms. Polito said. “They’ve come from the middle class, the working class, and they still believe they’re part of the 99 percent, no matter what, because that’s how they identify themselves.”



And they don’t seem to take their wealth for granted. Ms. Marchi and Mr. Weidner play a gratitude game each night. One night this week, Ms. Marchi said she was grateful for antibiotics for an infection she had. For Mr. Weidner, it was shepherd’s pie — made by his mother-in-law.

[bina]

That's interesting, I'd heard before that millionaires actually tend to be pretty frugal.

It drives me nuts when someone asks "if you knew you would die in x years would you behave differently?"

Of course they would, who wouldn't? I feel like that is such a weak, throw away question.

[nomad100]

This could have been written about my parents. They value experiences over stuff and will spend big bucks on a trip but then grouse about how the cost of some random item is too much.

[msmerymac]

I say this all the time: there's a reason these people are millionaires. Yeah, yeah, good luck and high incomes, but they also don't throw money at anything that walks through the door.

[cookiemdough]

Is this really frugal? They are spending money it is just not on some of the material possessions that society attributes to a wealthy individual. Three homes and a splurge annual vacation to Italy sounds pretty glam to me

[Velar Fricative]

This is...not news.

Although I'm glad they mentioned the car thing. I have found that more often than not, the wealthy people we know just don't give a shit about cars and don't drive fancy ones. It's interesting.

[patbutcher]

Jun 6, 2015 7:10:35 GMT -5 Velar Fricative said:

This is...not news.

Although I'm glad they mentioned the car thing. I have found that more often than not, the wealthy people we know just don't give a shit about cars and don't drive fancy ones. It's interesting.

This.

The wealthiest people I have ever met were an ex bf and his family. Probably billionaires. Everyone drives Toyotas. His car was a second hand Corolla.

[gt7301b]

Jun 6, 2015 7:10:35 GMT -5 Velar Fricative said:

This is...not news.

Although I'm glad they mentioned the car thing. I have found that more often than not, the wealthy people we know just don't give a shit about cars and don't drive fancy ones. It's interesting.

The Millionaire Next Store series was published 15ish years ago and basically said the same thing as this article.

[LoveTrains]

Yep. It's the whole concept of the millionaire next door.

[Deleted]

I didn't read the article so maybe this was mentioned. But this phenomenon has already been covered in The Millionaire Next Door series.

[Deleted]

Not shocking.

The owners of my company drive a 2004 Dodge Ram and a 2012 Ford Fusion.

They vacation about once per month though. So there's that.

[LoveTrains]

Jun 6, 2015 7:48:26 GMT -5 @soudesafinado said:

And all that is nice but he works too hard and too much for me and I will likely never be a millionaire because while I don't have to have a lot of silly things, I do like nice stuff (I saw a Burberry watch that I made my heart skip a beat, and there's a Lindy bad in Hermes that could be mine) and I don't want a big house, but rather a historical one, I am not willing to darn socks and steal sugar packets to avoid spending money.

Some of this stuff we will take about on MM. You have the people that want to bring butter on vacation and roll their own TP to save money. And then you have others who are like eff that. 

[Velar Fricative]

If I were a millionaire, I think i would still drive a non-fancy car and take one vacation a year max. I would however buy lots of fancy clothes and shoes and bags. I do want to live a little because I could go get hit by a bus tomorrow and I don't want to save eeeeeeeverything for later when there might not be a later.

Don't worry, we still save for retirement. Just making that clear.

[scout8]

Jun 6, 2015 7:47:26 GMT -5 gt7301b said:

Jun 6, 2015 7:10:35 GMT -5 Velar Fricative said:

This is...not news.

Although I'm glad they mentioned the car thing. I have found that more often than not, the wealthy people we know just don't give a shit about cars and don't drive fancy ones. It's interesting.

The Millionaire Next Store series was published 15ish years ago and basically said the same thing as this article.

I was just going to say this and then you beat me to it. 

[aurora]

I think this kind of frugal behavior is how a lot of single-digit millionaires get to that point - decades of practice looking for deals to spend much less than they earn. Those habits can be comfortable.

Of course, 3 homes do cost a lot more than a nice shirt, even new.

[josieposy]

The wealthy folks I knew had one really nice car, but usually drove an old pickup.

[W.T.Faulkner]

These are my parents. They were so good at living simply that I had no idea how much money they had until they up and bought a vacation house in cash eight years ago. ll

[dragon's breath]

If I were a millionaire, I'd be a lot like these people. I'd have a house in Ireland, and a house in Germany or France. Then I'd have my house in the woods at home. I'd spend all my money travelling, or staying in those houses for months on end. (Instead, I have a house in town, property in the woods waiting for a house there, and only dreams of houses in foreign countries).

I'd continue to shop websites like sierra trading post, amazon, rei (clearance or big sales). I'd splurge on a couple nice items that would hopefully last a few years though, just, not often.

I've darned socks, replaced buttons, patched work clothing (but, I'm skilled labor and don't work with the public, so it's pretty common to do that).

Clothing, cars, fancy restaurants, expensive wine, etc, aren't my priorities. Seeing the world is.

I've had a couple coworkers who would make fun of me for not running out and buying new stuff, but fixing it or buying used. One commented he loved my shirt (it was for a local pub), and another day laughed at another one I had because it was really random. I explained both were 50 cents at St. Vincent's, I didn't see reason to spend a bunch of money on work shirts that were just going to get worn at work (where they eventually get torn, stained, etc). Guess which coworkers are most shocked I "can afford" a five week trip in Europe? We make the same money (well, one makes more since he's a boss). Comments like "it must be nice..." Well, yes, it is nice. But, you enjoy your name brand clothes and nightly whisky, and I'll enjoy my traveling.

Even if I could afford everything, I'd still prioritize, and I'd likely still enjoy a good deal enough to not pay full price on the daily things. I think I'll always be frugal when it comes to things I don't find important. But I'm not cheap-- don't steal, don't take more than you need, donate for a cause that resonates with you, give nice gifts that will be appreciated (whether they cost much money or not depends on the recipient).

[Cicero]

I have to wonder if one or two of the homes aren't being used to generate income since they only go on one vacation a year. That's a lot of insurance, taxes, and maintence to be paying for no reason otherwise.

[litebright]

Considering that our ballpark figure for retirement is to have $4 million, I hope to someday be like these people. I suspect my parents already are.

We definitely do the car thing. My Honda Odyssey is the touring/fancy version, but it's a 2005 that we found used with like 20K miles on it. My DH is getting his first non-used, actually "new" vehicle ever in the next couple of weeks -- but only because he bought an almost-new program truck, it had a ton of issues, and he negotiated with the dealer and manufacturer to replace it with a new model and additional cash back.

Although I did buy my dad a full-priced Tommy Bahama shirt for his birthday, lol. I hope that didn't derail us completely!

[EloiseWeenie]

I'm not totally surprised. My friend's family company is worth several billion dollars. She and her brothers shared an old ford explorer through their teenage years. They lived in a nice home, in a nice neighborhood, but it wasn't a mansion, or anything crazy. They do take amazing vacations. Everyone in the area knows about them, but most don't realize who they are- because the family isn't flashy at all. They are kind, down to earth people.

[ttt]

But how many jobs are they creating this way???

[decemberwedding07]

Jun 6, 2015 6:48:12 GMT -5 cookiemdough said:

Is this really frugal? They are spending money it is just not on some of the material possessions that society attributes to a wealthy individual. Three homes and a splurge annual vacation to Italy sounds pretty glam to me

My mom's parents were incredibly frugal. Her dad was in the army (enlisted, not an officer), and then worked for the FAA once he retired from the army. Once he retired from the FAA, he had SS, plus a pension from the FAA, plus his retirement pay from the army. It wasn't an insane amount of money, but they were very, very frugal people. They had seven children, but they never took trips, never had more than one car, never lived in a fancy house, never bought fancy things. Really, their only luxury was cable TV. When my mom's dad died at age 94, he left just over a million dollars to his kids. Now, there were 7 of them, so after taxes, nobody became filthy rich, or anything. I actually think a lot of the siblings ended up resenting each other, because it's hard to see that your dad left over a million dollars, and you got about $100,000. Obviously, that's still a lot of money, but I think it doesn't seem like that much when you're thinking, "It could have been $700,000! Why'd they have so many damn kids!" Even when he was 80 and obviously had more than enough to live off of, he still didn't take trips or buy anything fancy. My mom's mother always did all of the grocery shopping at the base commissary, even though they lived about 15 min away.

[ttt]

I think there is also an understanding among self-made millionaires that $1M, even $5M is a lot of money, but it's not THAT much money. It's not the kind of money where you can buy whatever you want, whenever you want. Once you start buying fancy cars and houses, $5M can go pretty darn fast. Just ask any number of professional athletes and lottery winners. 

[jln]

This is exactly how my grandparents got to the point they're at. My grandmother lives like she's in the Depression. She saves and reuses everything, coupons, and wears the same clothes as she did 30 years ago. And now they're very comfortable financially and are the "millionaires next door". In their older condo, of course.

[Deleted]

My uncle definitely aligns with the rich-but-still-working-his-ass-off type. He created a CPA business in Orange County, Cali. and now he's finally at the point where his staff can run it for him and he can start actually taking vacations. He has bought nice cars, but drives them for years. Plus he's really very generous with his wealth, especially to his staff.

I'd like to think if we ever find ourselves with a ton of wealth, we'd know enough from our struggles with finances to use it frugally and make things better for others along the way.

[ttt]

I also know someone like this too - he shops at Sam's Club for virtually everything, including clothes, and his biggest splurge is a new Toyota Camry every 3 years, and some VERY generous anonymous donations to animal shelters. He inherited his wealth but at age 69 is still working because he loves his job (and honestly, I don't know that he would know what to do with himself if he stopped working).

[sushi]

Jun 6, 2015 7:48:26 GMT -5 @soudesafinado said:

My uncle is a millionaire a couple, two three times over and he rarely if ever takes vacations. In fact, he was supposed to sell his last business this year and he and my mom were going to do a Gayle and Oprah and drive across the country. Now he won't go, which is another story. Anyway, he built his dream house for cash. And then doesn't really stay in it (which is good cause then I can and bring friends!!) because he still has his old house, which is paid for and it's closer to his businesses. He does like fancy cars but he buys and drives forever.

And all that is nice but he works too hard and too much for me and I will likely never be a millionaire because while I don't have to have a lot of silly things, I do like nice stuff (I saw a Burberry watch that made my heart skip a beat, and there's a Lindy bag in Hermes that could be mine) and I don't want a big house, but rather a historical one, I am not willing to darn socks and steal sugar packets to avoid spending money.

I'm your friend. Let's go!

[Deleted]

My socks usually thin out and aren't really repairable (and often after many years) but repairing minor issues in clothes really isn't a big deal. As long as I still have time to sit down and relax I will keep doing that.

[AJL]

I have two questions: so what? and who cares?