The following are both true statements:

• You should save until it hurts.

• Money is meant to be enjoyed.

A couple of weeks ago I dove into The Millionaire Next Door. I got frustrated with it after about 45 pages. Story after story of people wearing awful suits, driving s---box cars, and living in 1,200 square foot houses, with multiple seven figure bank accounts.

Admittedly, those people are rare. More commonly, we find people with expensive suits, expensive cars, and giant houses—crushed by hundreds of thousands of dollars in debt, and with no savings.

You do not want to be either of these people.

Category 1: The CF

Don’t write me asking what CF stands for. If you can’t figure it out from the context, I can’t help you.

Saving money and living below your means is good, especially early in life, when you are better able to tolerate cheap clothes, cheap food, and cheap apartments. Live below your means, save money, pay down debt, invest, and build wealth. I do not have a problem with someone under the age of 45 living below their means.

I do have a problem with someone over the age of 45, who has accumulated lots of wealth, living below their means.

The Millionaire Next Door is full of stories of people who live like they are poor, even though they are actually rich. These are people who are close to or in retirement. It is not an issue of financial security—they have plenty of money. Spending it would simply give them no pleasure. They just like to watch the number in the bank account get bigger.

I have a moral problem with that. If you earn money, you had better ------- enjoy it. Maybe not when you are 35, or even 45. But by the time you are 55 (and hopefully before), you had better be enjoying the product of all the work and good risk-taking you have done over the course of your life.

Not many people will openly admit this: money allows me to buy material things, which give me pleasure. What the authors of The Millionaire Next Door don’t get, is that a suit is not a suit. The cheap ones are not the same as the expensive ones. I have a few people give me grief about my shirts, which are not cheap. They say I could buy $29 shirts at Charles Tyrwhitt. Admittedly, Charles Tyrwhitt makes decent shirts, but screw you—I like my shirts. They give me pleasure. They are better than Charles Tyrwhitt. They look better, too. And they last forever.

I had a friend who was a very senior investment banker. He is a CF.

One day I asked him, “Are you still wearing the JoS. A. Bank suits?”

“Oh yeah,” he said.

“You go to fundraisers and political functions and closing dinners in those suits?”

“Of course. Nobody cares.”

“They do care,” I said. “People can tell.”

“Nobody can tell,” he said.

I was getting nowhere. It is pretty rare that you have a CF who changes his mind and stops being a CF.

But optimally, that is how it is meant to work. You’re supposed to be a CF early in life, accumulating assets, and then not a CF later in life, decumulating assets. The problem is, most people can only do one or the other. Born a CF, always a CF. Or, you could be the opposite—a high roller.

Deep down, in many ways, I am still a CF. It pains me to pay for dry-cleaning—I did all my own ironing for years after college. To this day, I have never paid for a shoe shine.

Category 2: The High Roller

Some people are the opposite of CFs.

My wife and I went to Safeway in our 20s and bought all generic brand stuff. Lots of people don’t do it that way. They go to Whole Foods.

There is a big difference between a Safeway grocery bill and a Whole Foods grocery bill. It could be a difference of a couple of hundred bucks a week.

Is there a quality difference between generic brands at Safeway and the stuff at Whole Foods? Of course. Is it worth $10,000 a year? Your call.

I don’t really have a budget (more on budgets shortly), but I do keep track of how much I spend, usually by looking at my credit card statements at the end of the month. If I normally spend x, and one month I spend more than x, then I’ll usually tighten the belt for the following month.

Budgets are annoying, but guess what—some people, like the high rollers, need budgets. Not spending money doesn’t come naturally to some people.

What really needs to be taught to these people is austerity—the idea that you can make do with less. If you explain to them that the choice is either ramen at 25 or Alpo at 75, they will think it’s a false equivalence and spend the rest of their lives knocking on Door Number 3, trying to earn more money so they don’t have to undergo austerity.

The problem with high rollers earning more money is that the spending usually expands along with the money, leaving them no better off than they were before. And once you expand your spending, austerity is hard. Increasing your standard of living is easy. Decreasing it is one of the hardest things to do.

As much as I deplore The Millionaire Next Door, I have to concede there is some wisdom in the book. The little things, taken in accumulation, do matter. The example people typically use is skipping the venti caramel macchiato at Starbucks every day, which saves you 6 bucks. Multiply that by 252 work days, and that’s real money. It adds up.

I should also point out that if you have seven figures in the bank, you can have the venti caramel macchiato if you want. You’ve earned it.

It’s a Balance

It’s tough to sell centrism.

Dave Ramsey has made a living selling extreme austerity as an antidote to spending like a sailor. That works for a lot of people, because an all-or-nothing solution is easier to implement than some middle ground solution.

My solution is two-fold:

1. Implement austerity while you’re young and building wealth, and for the love of God, spend your money once you’ve accumulated it.

2. Remember that it’s a balance. Being cheap affects relationships. People remember that stuff.

You know how every once in a while, you hear these stories about some 90-year-old lady who dies and leaves $7 million to a cat shelter? And nobody realized she was sitting on 7 million bucks?

I have mixed feelings about those stories. I’m happy, of course, that she saved 7 million bucks (and I’m happy for the cats) but I’m bummed when I think of all the things she could have done to enjoy herself, but didn’t. Save money, but don’t save it without a purpose. As Saul Bloom famously said in Ocean’s Twelve:

“I want the last check I write… to bounce.”

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