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How do People with Low Wage Jobs Become Millionaires?

How do People with Low Wage Jobs Become Millionaires?

I’m not a big fan of the word “wealth”.  There are blogs out there that have the goal of making you wealthy.  That’s fine, but that is not the goal of this site.  What is, then, the goal of this personal finance website?  My goal, instead, is to change your relationship with money forever.  I’m of the, well researched, belief that wealth does not create happiness.  I am also of the, well researched, belief that when you rid yourself of money shame and live a life where you take true ownership over all of life’s precious resources that you will then unseal the spring to happiness.  

So, why, you may ask, am I writing a blog post about how people with little made it big?  I answer that these individuals provide us with important case studies.  They inform us of how changing our relationship with money has a profound impact on where we end up in life.  These are people that can show us, through example, how having a mindset of money not being the boss of them actually created a life of abundance even when they lived on a seemingly low monthly cash flow.  These are my favorite stories.  They are the stories of the shoe shiner or the gas station attendant that, unbeknownst to those around them, socked away a fortune.  Let’s find out how it is done.

The Case Study

This happens to be my favorite “rags to riches” story.  Here it is in case study format:

Gas Station Attendant Amasses an $8 Million Fortune: Ronald Read died last year at the age of 92.  Having worked as a gas station attendant and janitor, he left little evidence in his daily life that he was also a savvy investor.  Most of those who knew him described him as both frugal and private.  They also said he knew how to handle an axe as he preferred to cut his own fire wood to heat his home (aka: my kinda guy).   In fact, his one indulgence was eating breakfast at a local restaurant every morning.  One morning someone picked up his check mistakenly believing that Mr. Read didn’t have the means to pick up the bill himself.   When he passed away, a collection of stocks and meticulous financial records were found.  When all of his stocks were cashed in they added up to $8 million.  What his friends and neighbors didn’t know was that Mr. Read’s appreciation for the time value of money helped him amass a fortune even with his small monthly cash flow.  He understood that he could save a lot of money just by having discipline over his daily spending habits.  He could then take that money he saved and invest it for the future.  He didn’t pick glamorous stocks hoping to strike gold overnight.  He instead invested in companies like Proctor & Gamble and the local gas and electricity company.  These were longstanding companies that he had gained familiarity with throughout his normal course of life.  His preference for these tried and true companies was a smart one as these are the companies that happen to also pay high “dividends”.  Those dividends were an important part of Mr. Read’s strategy.  I’ll write another post soon on what dividends are and explain how he used them.    

What can we learn from Ronald Read’s story?  Quite a few things, it turns out.

Getting Passed Money’s Mental Hurdle

Let’s face it.  Many of us our intimidated by money.  Sometimes this is because we think we do not have a “mind for numbers” and only special people with special degrees can learn such things as finance.  We think that those special people are not us (see here why that’s not true).  Sometimes it is because we have made so many bad decisions that we are paralyzed by money shame and feel that we can do nothing about it (see here why that’s not true).  Sometimes it is because we feel so behind with our money goals, and we make so very little, that we feel we will never catch up.  That’s exactly what this post is about (and it turns out that’s not true either).

I’m here to tell you that I don’t care what you did in the past, and you should not care either.  What is done is done.  Let’s deal with that money shame, let’s grow the necessary sense of gratitude for everything around us, and then let’s build a plan for the future.  Your plan for the future means a whole lot more than any mistakes you made in the past.  I also have good news for you.  You don’t need to read the Wall Street Journal every morning in order to be good with your money.  All you have to do is make all of the little decisions you make every day that right decisions for you and for your money.  It is all of those little decisions that add up to a healthy financial future.  Don’t believe me?  Check out how changing just four of those habits could make you $700,000.  Mr. Read made enough changes every day to save $8 million over the course of his lifetime.  

What are we going to do to fix this?  We are going to change your relationship with spending.  The best way to do that is with a spending fast.

What is a Spending Fast?

A spending fast means that, for a specified period of time (that you choose), you will only spend money on your needs.  This includes your shelter, your food, electricity, etc.  During this process the goal is to not only save money but to, more importantly, become very comfortable with both the question “Do I need really need this?” and any answer of “no”.  This means not buying things like clothing and shoes as a want but only when they are truly needed.  You will learn that’s not very often.  You will want to consider growing out your hair or going with your natural hair as the case may be.  You need to stop buying gifts for people.  That one can be particularly hard for women.  However, much like the face masks that present themselves in an airline emergency, you have to take care of yourself before you can take care of anyone else.  The ideal would be to use this spending fast until you have paid off your credit card and high interest personal loan debts.  You also want to make sure that the monthly living expenses for your needs are no longer past due and are well managed.

Fight the Urge to Spend When Money Begins to Accumulate

You are forming new habits here.  As such, it is mighty easy to fall back into old habits.  That is especially true once you have paid off your debts and you see things like your emergency fund or your investment funds accumulating into cold hard cash.  It is all too tempting to spend it.  

However, let’s use Mr. Read’s story as an example.  Mr. Read understood the time value of money, and you should too.  You can read all about it in “Money Doesn’t Grow on Trees. Find Out Where It Does Grow“.  You can actually use one of Mr. Read’s tactics to help you along as well.  Notice that he did not keep his money in a bank account.  He instead invested in stocks, and he actually held the stock certificates, which creates quite a few degrees of separation between actual cash.  Meaning, Mr. Read made it harder for himself to spend the money he had.  You can do the same by investing in your 401(k) that takes money out before it hits your checking account.  You can do so by investing in a Roth IRA that, like the 401(k), will give you a penalty if you withdraw from it before retirement age.  Or, you could do like me and invest your emergency fund in a small time bank in a different state that doesn’t yet have online banking.  The process of withdrawing that money will prove more difficult, which means I will only do so if I truly have to.

Use What You Learned (and Earned) to Make the World Better

There is a part of Mr. Read’s story that I left out.  Remember, this is a man that had amassed an $8 million fortune.  He could have cashed those stocks in and built a big money pool to swim in like S. McDuck if he wanted to.  Instead he lived a life where he had ownership over how he would spend his resources.  He built some room for his morning breakfasts at the local restaurant.  He likely also lived quite securely knowing that if he had a major accident or emergency that he had a safety net to cover him.  However, do you want to know what he actually did with his money?  In his will he gifted $1.2 million to the Brooks Memorial Library, which was founded in 1886.  He then gifted $4.8 million to the Brattleboro Memorial Hospital, which was founded in 1904.  It seems that Mr. Read invested in charities in the same way that he invested in stocks.  He picked well established organizations that continue to stand throughout the test of time.  Mr. Read’s legacy will now live on in the minds of library patrons and the hearts of patients in his local community for generations to come.  That’s money well spent.

Melody grew up in poverty, and she was homeless throughout most of her childhood. Even after the hard work of getting out of poverty was accomplished, she still lived in fear of the next bad thing that could happen. She knew that, without the security of a safety net, one misstep would mean certain disaster. It was not until this safety net was established that she truly felt liberated and free from the anxiety of living in poverty once again. She is now motivated to share this sense of freedom with all women.

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