7 ms·

From what I understand, that penny pinching is often why the rich are rich (excluding those born into more wealth than they can spend). Edit: I'm getting the i

by ColanR 7y ago

From what I understand, that penny pinching is often why the rich are rich (excluding those born into more wealth than they can spend). Edit: I'm getting the impression that a large subset of people replying ignored my parenthetical comment.

mikeryan 7y ago
Penny Pinching does not make people rich and is not "often" why they're rich. This is a horrible misconception.
- swsieber 7y ago
  It's not the sole cause, true. But it'd definitely a differentiator. Sort of how like practice isn't the only contributing factor to being skilled, but talent without practice is useless too, soo...
- the_gastropod 7y ago
  It sounds like you may hold the misconception. Only ~12% of millionaires inherited their wealth. The remainder are "self-made", in that they lived below their means, and saved.
  - deleted 7y ago
    [deleted]
  - magashna 7y ago
    Millionaire doesn't mean too much these days considering you can take a long road there with fairly conservative investing and a decent income.
  - AnIdiotOnTheNet 7y ago
    There's a difference between spending below one's means and penny-pinching. Penny-pinching is refusing to tip the waiter, it just makes you an asshole.
  - mikeryan 7y ago
    No I'm not saying most millionaires inherit their wealth. I'm saying that penny pinching isn't how you create it. Most people create wealth via entrepreneurship. The amount you can create via saving is minuscule compared to starting a business, investment banking, being a lawyer etc. Work creates wealth. Side note, many of the people I know who are wealthy enjoy spending it which is the antithesis of penny pinching.
    - the_gastropod 7y ago
      There are two ways to becoming wealthy: 1. Have wealth given to you. 2. Live beneath your means (aka save part of your income) I get "penny pinching" can mean being cheap or something. But ultimately, saving is what makes you wealthy. And it's a much more accessible and in your control than winning the lottery of life by starting a successful business, or being some hotshot lawyer. Side note: Warren Buffet enjoys not spending his wealth, which is exactly penny pinching ;-) https://www.scmp.com/magazines/style/people-events/article/2184930/just-how-frugal-billionaire-warren-buffett-youd-be https://www.scmp.com/magazines/style/people-events/article/2...
      - mikeryan 7y ago
        Live beneath your means (aka save part of your income) This is where your premise breaks down. There are millions of people who do this who are not “wealthy”. They’re just “retired”. Acquiring real wealth requiring vastly more then your means to the point where the ratio of income to expenses doesn’t really mean much. Even if you consider Buffet a penny pincher that’s not how he created his wealth.
        the_gastropod 7y ago
        I guess it depends on your value of wealth. I'd pin it somewhere around the "never needing to work again" level. Sounds like your definition is quite a bit higher. Funny enough, though, Buffet got started working a pretty regular job, saving over a million in inflation adjusted dollars before starting his business.
IfOnlyYouKnew 7y ago
That's a myth. Most people are rich because their parents were. Most of the rest is rich because they were/are lawyers or medical doctors. (For the super-rich, business and finance becomes more important. But for your average "middle-class rich", lawyers and doctors just dwarf their numbers. Business also has highly unequal outcomes). As to why this myth persists, I guess it goes well with American puritanical roots. Many possibly don't belief in a strict correlation, if not causality, of everyone's financial situation and their individual moral character, but still promote the idea. See also: prosperity gospel, Ayn Rand.
- JMTQp8lwXL 7y ago
  Fidelity found that only 12 percent of millionaires inherited at least 10 percent of their net worth-- 88% are self-made. https://money.usnews.com/money/blogs/on-retirement/articles/7-myths-about-millionaires https://money.usnews.com/money/blogs/on-retirement/articles/...
  - algorias 7y ago
    That statistic sounds highly suspect: if I inherited $5M 30 years ago and am now wort $50M, do I count as "not having inherited my wealth"?
    - dsfyu404ed 7y ago
      Nobody ever got anywhere without at least some luck involved. I think people deserve credit for any wealthy growth above and beyond what you'd expect for the asset they started with.
    - AnIdiotOnTheNet 7y ago
      They say the first million is the hardest, so I imagine getting that for free makes the rest of it much easier if nothing else.
  - ryandrake 7y ago
    “Being rich because your parents are rich” can happen by a lot more ways than inheritance. In addition to gifts at death, there are gifts throughout the parents’ lives, equity gifts (you can buy one of the family houses for cheap or live in it for free), fully paid Ivy League education, prep schools, the parents can finance a startup, provide low interest loans, etc. I wouldn’t consider any of these as “self made” but they are not inheritance.

by ColanR 7y ago

mikeryan 7y ago

Penny Pinching does not make people rich and is not "often" why they're rich. This is a horrible misconception.

swsieber 7y ago
It's not the sole cause, true. But it'd definitely a differentiator. Sort of how like practice isn't the only contributing factor to being skilled, but talent without practice is useless too, soo...
the_gastropod 7y ago
It sounds like you may hold the misconception. Only ~12% of millionaires inherited their wealth. The remainder are "self-made", in that they lived below their means, and saved.
- deleted 7y ago
  [deleted]
- magashna 7y ago
  Millionaire doesn't mean too much these days considering you can take a long road there with fairly conservative investing and a decent income.
- AnIdiotOnTheNet 7y ago
  There's a difference between spending below one's means and penny-pinching. Penny-pinching is refusing to tip the waiter, it just makes you an asshole.
- mikeryan 7y ago
  No I'm not saying most millionaires inherit their wealth. I'm saying that penny pinching isn't how you create it. Most people create wealth via entrepreneurship. The amount you can create via saving is minuscule compared to starting a business, investment banking, being a lawyer etc. Work creates wealth. Side note, many of the people I know who are wealthy enjoy spending it which is the antithesis of penny pinching.
  - the_gastropod 7y ago
    There are two ways to becoming wealthy: 1. Have wealth given to you. 2. Live beneath your means (aka save part of your income) I get "penny pinching" can mean being cheap or something. But ultimately, saving is what makes you wealthy. And it's a much more accessible and in your control than winning the lottery of life by starting a successful business, or being some hotshot lawyer. Side note: Warren Buffet enjoys not spending his wealth, which is exactly penny pinching ;-) https://www.scmp.com/magazines/style/people-events/article/2184930/just-how-frugal-billionaire-warren-buffett-youd-be https://www.scmp.com/magazines/style/people-events/article/2...
    - mikeryan 7y ago
      Live beneath your means (aka save part of your income) This is where your premise breaks down. There are millions of people who do this who are not “wealthy”. They’re just “retired”. Acquiring real wealth requiring vastly more then your means to the point where the ratio of income to expenses doesn’t really mean much. Even if you consider Buffet a penny pincher that’s not how he created his wealth.
      - the_gastropod 7y ago
        I guess it depends on your value of wealth. I'd pin it somewhere around the "never needing to work again" level. Sounds like your definition is quite a bit higher. Funny enough, though, Buffet got started working a pretty regular job, saving over a million in inflation adjusted dollars before starting his business.

IfOnlyYouKnew 7y ago

That's a myth. Most people are rich because their parents were. Most of the rest is rich because they were/are lawyers or medical doctors. (For the super-rich, business and finance becomes more important. But for your average "middle-class rich", lawyers and doctors just dwarf their numbers. Business also has highly unequal outcomes). As to why this myth persists, I guess it goes well with American puritanical roots. Many possibly don't belief in a strict correlation, if not causality, of everyone's financial situation and their individual moral character, but still promote the idea. See also: prosperity gospel, Ayn Rand.

JMTQp8lwXL 7y ago
Fidelity found that only 12 percent of millionaires inherited at least 10 percent of their net worth-- 88% are self-made. https://money.usnews.com/money/blogs/on-retirement/articles/7-myths-about-millionaires https://money.usnews.com/money/blogs/on-retirement/articles/...
- algorias 7y ago
  That statistic sounds highly suspect: if I inherited $5M 30 years ago and am now wort $50M, do I count as "not having inherited my wealth"?
  - dsfyu404ed 7y ago
    Nobody ever got anywhere without at least some luck involved. I think people deserve credit for any wealthy growth above and beyond what you'd expect for the asset they started with.
  - AnIdiotOnTheNet 7y ago
    They say the first million is the hardest, so I imagine getting that for free makes the rest of it much easier if nothing else.
- ryandrake 7y ago
  “Being rich because your parents are rich” can happen by a lot more ways than inheritance. In addition to gifts at death, there are gifts throughout the parents’ lives, equity gifts (you can buy one of the family houses for cheap or live in it for free), fully paid Ivy League education, prep schools, the parents can finance a startup, provide low interest loans, etc. I wouldn’t consider any of these as “self made” but they are not inheritance.