Warning: This is NOT a political post, so do not turn it into one. I'm simply highlighting a statement from a very wealthy individual/family which demonstrates a solid financial principle.
One of the blogs I regularly read pointed to this article which features a story about Ivanka Trump.
She said she learned a valuable lesson about money when she was 14. Her mother booked a trip, reserving coach seats for Ivanka and her brothers. Her mom had a first class seat.
Ivanka's mother told her she could use her own money to pay for an upgrade if she wanted to sit in first class.
Now here's the gold nugget. Here's what Ivanka said she learned from the experience:
"Be judicious when deciding where and how to spend your money. Invest wisely and splurge selectively.”
Exactly!
As long as you make a relatively decent income, you can buy what you want as long as 1) it's in moderation comparable to your means and 2) select what to spend on and what to save on.
To me, this is EXACTLY the formula to apply so you both control over-indulgence but also spend on what you want to so you can enjoy life.
I think it's best described as moderate and selective frugality and even the top 1% of the top 1% (like the Trumps) use it.
Perhaps this is one way they built their wealth...
I couldn't agree more with this idea of selective indulgence. I try to live on a pretty tight budget compared to others by choice. This allows me to be selective in indulging in others things in life. For example all my coworkers give me a hard time for not going out to eat every day with them...I feel like its a waste of money. But I have no problem spending $7,000 to go on a Hawaiian vacation, of which I leave next week for. Being purposeful with your money is the key to becoming wealthy!
Posted by: Donnie Gardner | January 11, 2017 at 07:40 AM
I would extend that rule to OPM ('other peoples money'). For employees that's company funds, and for executives that's shareholder profits.
Where I work travel expense accounts are moving away from per diem to covering everything up to a set limit that's pretty high IMO. I have a feeling they're going to be surprised by how close everyone's tab will be to the ceiling.
Posted by: freebird | January 11, 2017 at 09:39 AM
There are literally thousands of people who have expressed this principle AND have lived it...Warren Buffet among others. Many of them have compelling stories. But you choose "the Trumps" instead -- a family known more for having gold-plated toilets than their selective frugality -- and then claim this is not political!?
And then the kicker: "perhaps this is one way they built their wealth" (!!). I can think of several different ways they built their wealth, and selective frugality doesn't crack the top 10...unless stiffing contractors counts as selective frugality, which I guess one could argue.
Thank you for pushing me off the fence about whether this blog continues to provide value. It hasn't for awhile, and I'm now unsubscribed.
Posted by: HN | January 11, 2017 at 09:55 AM
@HN
Thank goodness! You're best off somewhere else where you can simply read about things you already believe.
Posted by: FMF | January 11, 2017 at 12:00 PM
Warning: This may NOT be a political post, but someone will turn it into one.
Posted by: Steve | January 11, 2017 at 09:31 PM
I think it'sall about prioritizing what's important to you. For example. Mr. Picky Pincher and I got rid of a car payment but still indulge at a nice restaurant a few times a year. You can still have and do nice things while paying off debt; it's just about what matters to you more.
Posted by: Mrs. Picky Pincher | January 12, 2017 at 06:13 AM
I agree with this lesson completely. When I was a child I had a similar experience where my dad made me purchase a treat from an ice cream truck, but with my own money. Not quite as luxurious of a story as the trumps, but lesson learned none the less!
Posted by: Piggy Bank Hank | January 13, 2017 at 11:04 PM