My parents were the definition of being a “Millionaire Next Door”. For me, that means I grew up with a different personal finance foundation and saw money differently. I knew my parents had money but never knew how much because they did not spend on lavish things. If there was something we didn’t want anymore, my mom would recycle, reuse, or donate. We used coupons for food or discounts at retail stores.
Not only did I get the frugality from them, but I got a different financial view point. I knew what an umbrella policy was. I knew how to invest. I knew more about personal finance than most because while it wasn’t mainly talked about, the knowledge was skillfully infused. For example, my dad was in a multi-car accident and had shared that the guy who had caused the accident did not have car insurance. Because he did not have this (which most people have) they took pretty much everything he had to pay for the damages including his house! There are some good lessons to be learned here:
Lesson #1: Have car insurance
Lesson #2: Have an umbrella insurance policy (this covers you so that the insurance company does not take assets)
Lesson #3: Put your assets in a trust which allows your things to be “protected” from incidents like these. Your assets belong to the trust and not to you specifically, so lawyers, for example, cannot seize them.
Most people stop at lesson #1, but when you come from the “1%” you learn a little more about how to protect what you have. When I got my first job at 18, I knew right away to sign up for a 401k – why? Because that’s what my parents told me to do. Now, later in life, I see the true benefits for my retirement, but most don’t get that education. I had a Roth IRA before I was 20 and consistently contributed to it.
Even though my parents were the millionaire next door types, it doesn’t mean they weren’t partial to spending their money on things they liked. We have been a BMW household for almost 20 years, but it wasn’t about being flashy or have the nice new ride. It was about stability, longevity, and a good solid brand. Okay the BMW sleekness was nice too.
I have learned more in my twenty-something years of existence about personal finance than most got in much of their lifetime. While I continue to grow and learn about personal finance, I do have a different perspective and what some might call an “upper hand”, but I won’t let that put me down.
Join the newsletter
Subscribe to get all the tips and tricks to growing your net worth by email.