Dave Sather's Money Matters: Show me the money
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For about 20 years, I have been fortunate to call Victoria home. During that time, I have worked as a certified financial planner, with the past 11 years spent as a fee-only wealth manager with my own firm.
It has been a tremendous opportunity to see inside peoples' lives, see how they tick and what makes them successful.
Today, our firm manages almost $200 million for a variety of folks in South Texas. Often, when people see our assets under management, many automatically assume we work for one or two large, well-known families. Actually, the opposite is true.
In 1996, "The Millionaire Next Door" was published. This was a playbook of who we wanted as clients - those who have been truly successful at accumulating wealth.
Fifteen years later, this book is still worth reading. It continues to be a cornerstone of our business and should be for anyone who is serious about accumulating wealth.
Contrary to what the media might lead us to believe, wealth in our nation, and community, is not held by the pop stars or pro athletes. It is not held by the people who drive the fanciest cars or head to Vegas each week.
Instead, it is held by the "boots and blue jeans" crowd.
Our average client has north of $1.5 million with us - just in cash and securities. However, they don't show up in a Mercedes or private jet.
So who are they?
Our typical client is often a business owner/entrepreneur. They prefer to drive a pickup and are incredibly skilled at living "below the radar."
Many run businesses that are dirty, dusty and certainly non-glamorous (think "Dirty Jobs" on the Discovery Channel). They might own a mobile home park, salvage yard, machine shop, beverage distributorship, oil field services firm or used car lot. They are contractors, auctioneers, accountants and engineers.
Beyond the occupation, however, they have common characteristics. They:
1. Understand the difference between "needs" and "wants." Their families have everything they need, but do not allow wants to lead them astray.
2. Use little or no debt. There are no ongoing credit card balances. They know that debt kills and would rather pay themselves than a bank.
3. Drive used vehicles until the wheels fall off.
4. Are big savers. They save on average 20 percent of their annual income.
5. Are disciplined to contribute to savings in all markets - good and bad.
6. Have saved enough money to live for 10 years if they lost their job.
7. Have nice houses - but only moved there after becoming wealthy.
8. Invest in higher education - not only for themselves, but for children and grandchildren.
9. Live well below their means. This provides flexibility to save, overcome financial hardship and re-invest. They truly understand saving for a rainy day.
10. Invest in things that go up in value (investments, businesses) as opposed to material things that depreciate (cars).
11. Rarely give the impression they have wealth and almost never brag about wealth.
As you can see, the so-called secrets of the wealthy really aren't secrets. The tools they use are hard work, discipline and the good sense to follow the above guidelines.
The wealthy didn't amass their wealth overnight. They built it over time - and you can, too.
Dave Sather is a Victoria Certified Financial Planner and owner of Sather Financial Group. His column, Money Matters, publishes every other Wednesday.