I am a love-hate reader of the New York Timesâ€™ â€œWealth Mattersâ€ series. I find such articles embarrassingly addicting. Less focused on straight real estate porn than the Wall Street Journalâ€™s â€œMansionâ€ section, Wealth Matters provides an interesting sociological window into the world of wealth. The section often reveals more than it intends, about both its subjects and its comfortable reading audience.
Consider one recent column by Paul Sullivan: â€œMillionaires Who Are Frugal When They Donâ€™t Have to Be.â€
Sullivan opens with a charming anecdote about a middle-aged couple nearing retirement:
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.
â€œEvery year, we go up to the outlets and find a deal,â€ he said. â€œItâ€™s worth it.â€
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 yearâ€™s styles on sale.
Sullivan notes that
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.
â€œItâ€™s about paying attention to what makes you happy and not just doing what our society tells us to do,â€ said Donna Skeels Cygan, a financial advisor in Albuquerque and the author of the book The Joy of Financial Security.
â€œThey look upon money as a toolâ€¦. Itâ€™s an important tool. They donâ€™t neglect it, but they also donâ€™t worship it.â€
I know this world a little bit. I know some of its little self-satisfactions, too.
Weidner and his wife seem like wealthier versions of my wife Veronica and me. We have prudently invested 25% of our gross income for a decade now. I proudly drive a banged-up old Hyundai Elantra whose blue book value hovers in the high two-digits. We own a much cheaper home than those awful â€œmortgage affordability calculatorsâ€ say we can afford. I nag my peers to live similarly. I even produced a financial advice index card, which Helaine Olen and I have turned into a forthcoming book. Sensible savingâ€”and, yes, living somewhat below oneâ€™s means–is how one accumulates millions of dollars over oneâ€™s career.
Iâ€™m sure Weidner and Marchi could provide useful advice to garish over-spenders such as Senator Marco Rubio, who seems chronically unable to manage his finances without being bailed out by a sugar daddy billionaire. And, yes, thereâ€™s nothing wrong with reminding yourself, in small and big ways, to remain frugal after youâ€™ve accumulated a nice bit of wealth.
Thereâ€™s only one problem. While this article flatters the self-image of comfortable readers, its main theme is really quite misleading. Weidner and Marchi are not garish or flashy; they not especially frugal, either. Right after that lovely sock-darning anecdote, we learn the following:
And while they own three homes â€” 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.
According to Zillowâ€™s, the median sale price of a Naples condo is $290,000. One would have to darn 185,699 pairs of nice Hanes crew socks to pay for it.
Sustained high income provided the main reason for their accumulated wealth. Marchi, is a veteran hospital chain executive. An anonymous sourceâ€”A.K.A. Google search–indicates that she is President and CEO of an impressive organization called Vicinitas Cancer Care. The Times identifies Weidner as a senior researcher at a nonprofit.
Barring horrible luck or exceptional family circumstances, sensible people who earn high incomes for decades, will retire multi-millionaires. Itâ€™s not particularly complex or virtuous, though Weidner and Marchi deserve credit for following through. You sensibly invest a reasonable chunk of your high income every year. Then you watch the money grow.
This isnâ€™t rocket science. But you do need the rocketsâ€”by which I mean the actual cash to put aside. A 28-year-old secretary raising her kids alone will skimp a whole lot more than this couple to pay her family bills. She will also derive less tax advantage from the alphabet soup of 401(k)s, 457(b)s, 529s, SEP-IRAs and other tax-advantaged savings vehicles that were expressly designed for the affluent.Â My original index card told people to save 20% of their gross income. For tenured professors like me, this is great advice, and an achievable goal. For many others, this is often out of reach.
For the couples willing to be profiled in Wealth Matters, conspicuous non-consumption, even cheapness in trivial matters, says more about the image they project to themselves and to others than it truly indicates about how people live or how they actually become wealthy.
While itâ€™s charming to read stories of successful professionals spending their time sock-darning, there is something mischievous in these stories. Tales of apparent financial discipline invite the Timesâ€™ affluent readers to see their superior character as the main ingredient of their own financial success, and to downplay the critical role of luck and advantageous personal circumstances. Tales of penny-pinching as a personal hobby are easily confused with the more-genuine sacrifices made by people of ordinary means who seek decent daycare or who struggle to pay their bills and to save the bare minimum for their own retirement.
Thereâ€™s something off-putting in the suggestion that wealthy professionals are more aware of the true value of money than some single mom whose own splurges involve McDonalds Happy Meals. She might need financial advice. She probably doesnâ€™t need to be told that her spending should be devoted to whatâ€™s most important rather than what her neighbors think.
Wealth really does matter. The accompanying awkward realities seem easy to miss in wealth journalism these days.