Sunday, 25 October 2009

'The Millionaire Mind' and the economically productive household

Following on from last week's post about 'The Millionaire Mind' and vocation, this week I am looking at what this book has to say about household spending. In one chapter, Thomas Stanley analyses the spending patterns of the wealthy, and notes that the members of wealthy households are more likely than others to be in the habit of doing the following things:

-Changing telephone providers to benefit from cheaper deals
-Having shoes repaired
-Having furniture re-upholstered instead of buying new
-Using discount coupons when shopping
-Buying household supplies in bulk

He points out that although doing each of these things may result in a fairly small weekly or monthly saving, over many years, the amounts saved will be significant.

I found one of Dr Stanley's examples interesting: that of a wealthy woman who, together with her husband, lived in a very nice house in an expensive neighbourhood. She bought high-quality clothes, but from second-hand shops rather than bought new; she ate good-quality, healthy food, but used coupons, planning her meals in advance, and cooking from scratch, and did not drive an expensive car. She was happy to spend a lot of money on antique furniture, partly because good quality furniture would last for a long time and be worth repairing or re-upholstering, but also because antiques would generally hold their value over time, if not increase, and could be passed on to future generations.

The lessons I took from this chapter were that it is worthwhile taking a long term view as small habits can lead to significant savings of time; it is worth prioritising what you want to spend money on, and allocating resources accordingly; and that it makes sense to spend money on things which will hold their value, or increase, like property or antique furniture, rather than consumer goods, expensive cars, or cheap furniture, which will not.

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