Here is a powerful story about how a comfortable life, ability to enjoy ones job and relationships and astute investments can lead up to wealth.
Robert Morin who worked as a librarian for nearly 50 years at the University of New Hampshire library has left $4 million to the school as his estate. He was able to build that fortune completely with his salary as a librarian. One may be astounded as the only way to riches is perceived to be entrepreneurship leading to huge success in business. This example just shows that an ordinary person in a job with average pay can build a substantial fortune with frugality, finding pleasure in your work and relationships and astute investments over a very long period of time. Let us see how this worked for Morin.
1. Frugality :- “He would have some Fritos and a Coke for breakfast, a quick cheese sandwich at the library, and at home would have a frozen dinner because the only thing he had to work with was a microwave,” He lived alone, rarely bought clothes,and drove a 1992 Plymouth.
2. Find pleasure in your job and relationships :- “His whole life was the library,” said Edward Mullen, Morin’s longtime financial adviser. He spent spare time reading almost every book — in chronological order — that had been published in the United States from 1930 to 1938. Morin cherished his time with the many students and staff he met over nearly half a century at UNH. “He loved talking with students, especially the students who worked at the library,” Mantz said.
3. Astute investments over a very long period of time :- Morin said he met Mullen in the early 1970s, a time when the librarian had been stashing nearly all of his income in a checking account and certificates of deposit. Mullen helped him expand into mutual funds and annuities, which complemented the sizable savings Morin was accruing in a retirement account. I think the fact that he did not withdraw any amount from the corpus and let it grow for almost 45 years also contributes to the growth of the corpus to the astounding number.
This should convince anyone that serious wealth can be an outcome of frugality.
The first impression one has when one hears the word frugality or frugal is that of a person who tries to buy things that are cheap. The perception is that frugal is buying low cost things potentially at the cost of quality. This is not necessarily true. This article brings that out well.
In an excerpt from the article:
Frugal vs. cheap
A cheap person has a short-term mindset, may be scared to spend money, and generally prefers to hang onto their money. They’ll try to get the lowest price on everything, even if that means passing up a good opportunity or deal. Cheap people often keep a running tally of what others owe them, and they probably won’t be shy to ask for the $4 they spotted you last time you went out for coffee together. In short, cost (or price) is what’s most important to cheap people.
Frugal shoppers, on the other hand, look for the best deals and understand that brand items aren’t always better. However, they will pay more for things they really care about. Frugal people have more of a long-term mindset (short-term loss for long-term gain!) and prefer to save their cash for better quality items or experiences. They understand being frugal is about prioritizing spending so that they can have more of the things they really want or need. In short, value is what matters most to frugal people.
I think the author is bang on here. The key criterion for the frugal people is the long term importance or value of a good or a service. As I mentioned in the last article, most millionaire spend liberally on health as well as education but will buy a house or a car with a lot of caution. So spending on all goods is not equal for them.
The word frugality brings in many emotions and many reactions. Most people think that frugality is the denial of good life. The image of a frugal person is the one that denies himself or herself the pleasures of life just to make future life secure. With that image, most of the people feel repulsive at the idea of implementing frugality in their lives.
Frugality actually is far away from mindless stacking away money at the cost of day to day happiness. Frugality is “conscious spending”. It is the realization that there is a cost to spending. It may mean working harder for longer period of time doing things that one does not like. The key trade off for a spending decision is the bang-for-the-buck that you are getting in spending that amount of money. Whether it is the “life energy” as defined in the book Your Money or Your Life or some such measure that you evolve for yourself, ultimately a frugal lifestyle would mean becoming more conscious or intentional in spending your money do that your enjoyment of that pleasure justifies the pain required to earn that money.
That is probably why Thomas Stanleys study of the millionaires showed that they are amazingly frugal yet spent a lot of money on children’s education and their own health. That is the power of intentional spending. It can let you enjoy regular life while becoming a millionaire in the process. I hope you enjoy the journey and accept the philosophy.