If I had a million dollars, I'd buy a Toyota

Millionaires spend their money smarter than other people and don't buy into luxury brands

"The Millionaire Next Door," a book that dashed our notions about who America's millionaires really are and how they spend their money, marked its 10th anniversary recently, and nobody noticed. No party. No 10th-anniversary edition. Nothing.

That's shocking for a runaway book that sold out its first printing in three days, held a spot on The New York Times' best-seller list for more than three years and is hailed as a staple for any personal finance book collection.

The book by Thomas J. Stanley and William D. Danko, subtitled "The Surprising Secrets of America's Wealthy," was published Oct. 25, 1996. But the striking and profound findings revealed in that book a decade ago are as true today as they were then--especially when it comes to spending money.

The book showed that millionaires spend their money smarter than other people. They still do.

Most important, the book showed that people with average, steady jobs can become millionaires over their lifetimes--that most millionaires are made, not born. Indeed, 80 percent of millionaires are first-generation rich, the authors found. They are modest. In fact, they might live next door.

The book's fundamental message about spending is this: You can look wealthy or you can be wealthy. For most people, the choices are mutually exclusive.

During a blunt conversation, Stanley talked about common spending traits of millionaires a decade ago and in his current research, which will be explained in his next book, which has the working title "Looking Rich in America."

THE WEALTHY KNOW SPENDING MATTERS.

Financial health is about earning and spending. Although earning a lot of money is correlated with wealth, it's not a perfect correlation. "The spending issue is significant," Stanley said. "I believe very strongly that not everybody can play great offense. In other words, not everybody can make $1 million a year or even $100,000. The typical household in the United States makes under $50,000 a year.

"Given that, you have to look at defense. To play great defense, you have to know where all the money is going. And most people don't. So the first thing I would tell people is to account for every dime and nickel they've got and write it all down. You'd be shocked at how much money people waste. It's ridiculous."

THEY ARE THRIFTY.

"There is still a wonderfully frugal group of people in America that we don't talk about, but they're out there," Stanley said. "The majority of them don't have a wine collection. They do serve wine to guests, but the median value of a bottle was about $13, not expensive stuff.

"It's not an impressive lifestyle; it's just that they're not confused. The reason they don't have a second home isn't because they can't afford it. It's just a hassle."

Stanley's most recent research for his coming book is about brands that wealthy people use. "There are a lot of millionaires buying stuff at Wal-Mart. They don't have a problem with buying, maybe, socks or underwear there or at a Costco or Sam's Club. Men's Warehouse is selling them a lot of suits, I can tell you that," he said.

"People think, `If I wear a $900 suit, I'm going to look wealthy.' The problem is, if you wear a $900 suit and put the glitz on, you're not going to look wealthy, because wealthy people don't do that.

"What I'm trying to tell people, especially young, impressionable people, is this ain't the way the world works. If you're looking at being happier by having more things, get a life."

THEY ARE NOT DEPRIVED AND MISERABLE.

"On a scale of happiness, they're quite happy," Stanley said. "In fact, the more wealth you have, the higher your satisfaction." But their happiness comes not from material things but from achievement and being financially independent. It comes from satisfaction with their family and job.

"There is absolutely no correlation between happiness and the brand of car you drive. It has nothing to do with it. What happens is before you buy the Porsche, you'll think it will make you happy, but it doesn't work that way. The guys wearing a Seiko watch or a Rolex or a Timex have no difference" in happiness.

THEY DON'T DRIVE AWAY WEALTH.

The No. 1 make of car owned by millionaires in 1996 was Ford. Today, it's Toyota, according to Stanley's new study. Luxury brands do not top the list, and many millionaires, 37 percent in 1996, bought used cars.

"There's certainly something about buying used cars," Stanley said. "Today, they're a little more likely to buy new cars. But what they'll do is buy a $22,000 Toyota and keep it a long time."

Stanley's research shows high-priced cars seem to be wealth-repellant.

"What's interesting about spending is that everybody thinks all the millionaires in America have BMWs. Even among the highest income levels, about 60 or 70 percent have never owned a BMW," he said. "I think BMW is a great car. I'm a car guy. But I won't buy one because there is a relationship between wealth and how much people spend for cars. There's no doubt about it. It's a significant relationship."

THEY DON'T CARE ABOUT THE JONESES.

"In a lot of the surveys we've done, you find people making 200 grand a year, which is in the top 2 percent of American households, and they're not happy," Stanley said. "Those are the people who are living in neighborhoods where the median income is $300,000. That's the problem. I don't think people really understand that. The people who try to keep up with the Joneses and ahead of the Smiths, well, they are the Smiths. They don't get it."

Stanley, who grew up poor in New York City, said the biggest thrill he ever had came a decade ago when "The Millionaire Next Door" approached No. 1 on The New York Times' best-seller list. To celebrate, he went out and bought a Toyota 4Runner.

Where is that vehicle now, 10 years later, when he's a wealthy man? In his garage. "It has 140,000 miles on it," he said. "I'll never own a BMW or Mercedes or Rolex because ... I know how many people who are not wealthy at all but have the glitz. It says nothing about your inspiration, your wealth or anything else."

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Well you know it's not surpirsing, and there are many more than people like this and not just for Toyota, maybe even for Volkswagen

As the article points out in 1996, Ford was the most bought brand by Millionaries.. Of course there are a number of factors which could keep someone away from buying a supercar or a high end luxury brand, firstly being the most obvious. Not everybody cares about cars and I would imagine the second being the deprecation of cars. I know there are people that are so business oriented they see buying a high end vehicle as a bad investment, something that will just depreciate and costs lots of money to repair and fill with petrol.

Each his own

This reminds me of my family my parents own five houses in some of the nicest areas but will refuse to spend over 20grand on a car. All that matters to him is feul economy and saftey. I wish he would spend money on cars though

I would fall into the category of persons who spend money like there is no tomorrow and put it out for all to see. That's me.

I can fully understand the appeal and ovbious benefits of shopping frugally, minding your finances and eschewing middle-class consumerism, but on the other hand, I think enjoying life is an end in itself, not the creation of wealth.

To my western consumerist psyche, life is all about carrots and sticks. I'm of the mind that you rob yourself of life's finer experiences if you're constantly preoccupied with saving a buck.

That's not to say that I'm all for shopping sprees at Neiman Marcus and funiture ensambles from Design Within Reach. Short of my preoccupation with Swiss Watches, Designer Jeans and German Cars I'm a guy of simple means. I think you can have your cake and eat it too - and sometimes I feel bad for the independently wealthy who haven't the foggiest clue of what to do with their hard-earned money.

A pretty good philosophy. If you can live nicely and have some money to spend while you are younger, you will enjoy the better things life has to offer more fully. Fate has a funny way about it sometimes and those who lead a truly frugal life saving to enjoy it later sometimes are not around or unable to enjoy the fruits of their labors.

What a fascinating article ...and I definitely think it is all true. I have met people who appear to "have it all" but later found out they were in serious debt and living far beyond their means. I also know people who live relatively modestly, they do drive nice cars but don't wear designer clothes or show off, but they are very wealthy.

Osna, I imagine you not to be somebody who buys things to show off but rather because you appreciate high quality -- for example, you would never be interested in a Jacob & Co watch, but you would probably sell your soul for a Philippe Dufour (like I would ).

You're right, but then spendthrift behavior manifests itself in many forms, not just what we associate with consumerist yuppie culture or hip-hop "urban" excess.

Sure, in certain ways, I'm extremely frugal. I'm content to shop at Ikea, H&M and try to keep my weekly overhead at a minimum. On the other hand, I'm on a perpetual hunt for jeans I don't need, am constantly scheming to get another pricey watch and have a mental laundry list of garbage I'd buy if $5,000 fell from the sky.

Cars are a big thing, because they become a fincancial vortex from which no equity can escapee, so it's almost sensational to say that "rich people buy Toyotas." In my book, there's a whole world of things aside from cars that swallow up money besides luxury cars, it's just a matter of priorities - "The Good Life" means different things to different people.

I think most of us, fall in the middle of the pack. We all work our asses off to earn a living, and like to reward ourselves when we've achieved access to stuff we want. It's compelling to say that "looking and being rich are mutually exclusive" but I think, in practice, it all depends upon our individual appetites.

So yes, I'd probably sell my soul for a Philippe Dufour, and am still scheming to get a BMW in my carport, but on the other hand I there's lots of things that barely register on my "possession radar" that other people spend good money on...

Anyways, thanks for posting that Yannis. I'd like to read that book.

I like you Osna, but i am right in the middle. I will spend the half of my money like there is no tommorow, both in consumerism goods and alcohol, in order to create some great momments of drunken adventure as you said once.

But the rest of the money will stay in the bank until it is spent the right way, weather it means buying a car, a house or spending it in an other "creative" way

Most people in this world (including rich people) consider a car to be a simple tool to transport people from point A to point B. As such, many people think it is stupid to spend large amounts of money on a car which will 1) depreciate heavily over time), and 2) will eventually rust/breakdown and need to be replaced. Most people value quality for the money, reliability, and safety. For that, a Toyota is an excellent choice.

Only serious car enthusiasts will spend large sums of money on an automobile which provides either excessive luxury or sportiness over the average car. But there is one fact which is undeniable: only people with enough money can even THINK about buying a high end luxury or sports car.

I don't think I'll ever buy a brand new car. Unless it's something like SLR.