In “The Thin Green Line: The Money Secrets of the Super-Wealthy,” author Paul Sullivan makes a distinction between being rich and being wealthy.
Rich people, he explains, have a lot of money. Wealthy people have the security that comes with knowing how to manage however much money they do have, so they will still be wealthy tomorrow.
Super wealthy people apply that know-how to an enormous bank account balance.
So, what’s it like to be super-wealthy?
Sullivan, who is also the New York Times Wealth Matters columnist, shares here seven of the money secrets he’s unearthed in his research.
'In an effort to keep children motivated, parents shelter children from their wealth, as best they can,' Sullivan writes. 'It is not unlike parents of middle-class children who don't talk about money and leave their kids to guess about how much they have when they might have far less.'
This leads to what he calls 'sheltered inheritors,' or kids who have no concept of how to deal with the massive wealth they have received.
There's another approach, though: Sullivan writes of Doug Ideker, who started and owned a building-supply company in Colorado until he sold it for enough money to retire in his 40s. He always decreed that his two sons either find summer jobs on their own or work for his company ... on the loading dock at 6:30 a.m.
He created two adult sons who are 'inspired inheritors,' which Sullivan describes as 'a class of kids who are driven in spite of their family's wealth.'
Sullivan characterises wealthy spenders into three types:
Dissipators, who get rich young through something like a professional sports contract or selling a company, and will never earn that much again.
Accumulators, who 'amass a pile of money doing something that is intellectually interesting or challenging but wait until much later to spend it on something they are passionate about.'
Make-and-spenders, who let money come in and go out as they make what they need and buy what they want.
But the ones who remain wealthy are the ones who recognise their wealth is limited.
In a chapter called 'Spending Tips From People Who Spend a Lot But Aren't Broke,' Sullivan speaks to Adam Carriker, former defensive end for the St. Louis Rams.
After getting a five-year, $US14.5 million contract in 2007, Carriker missed a season due to injury and was then traded to another team across the country, having to sell his local home at a loss.
'The best line I've heard was 'Don't live like a king for a little bit, live like a prince forever,'' he told Sullivan. 'Once they have lived like a king, it's gone.'
One of the highlights of research Sullivan conducted with Dr. Brad Klontz was how the spending habits of the super wealthy compare to the wealthy.
'The two takeaways are that the main difference between the 1% and the average wealthy person -- the 5%, the 10% -- is that the 1% eats out 30% less, and they save 30% more of their income for retirement or whatever they may need,' Sullivan says.
He continues, 'To me, it's a great example of the choices and decisions and behaviours in the book -- not, 'I'm going to deprive myself and hoard my money,' or 'I'm going to spend it all now and hope more comes in.' It's making rational choices to make sure you're still wealthy many years from now.'