In 2014, most of the American public was shocked by this fact. What is it?
There’s this guy, named Ronald Read, who lived as a gas station attendant for 25 years and then became a janitor for 17 years in Vermont, USA. He lived a humble, simple life. Drove an old car, wore flannel shirts, and was known as quiet and kind. Nobody had a clue he had more than a modest income. But you know what? Turns out when he passed away at age 92 in 2014, he had left behind an $8 million fortune! Where did his fortune come from? Inheritance? Surely not. Gambling? Not a chance. Just to let you know, throughout his whole working life, he never earned much money from his jobs. He only got $50/week! Many of his friends were poor.
So, like, how on earth did he manage to do that?
Let me tell you how. There are three big secrets here. First, even though he never earned a lot of money, he did manage to save a little bit of the money he earned and invest it in high-quality, dividend-paying stocks, and hold them for many, many years. He never invested a lot; he just did regularly per month. Little by little, for a decade, until it grew bigger. Second, he lived a frugal, humble, and simple life. Like I said before, he drove an old car, wore second-hand clothes, and enjoyed eating at the local diner. His hobbies? Gardening and woodworking, nothing crazy like collecting drones! He didn’t spend on things he didn’t need. He lived simply, stayed away from debt, and saved consistently. No money wasted! Lastly, he was patient. He let time and compound interest do their work. Probably at least 55 years! He didn’t try to get rich quick. He just kept things steady.
And this is what I loved most, after he passed away, his wishes were for $4.8 million to go to a local hospital, $1.2 million to a local library (which he used to visit to read about investing) and the remaining $2 million went to his sons, caregivers and family. We can say, his money changed the lives of many people. From an unknown person while he lived, he became a well-known millionaire and philanthropist.
On the contrary, let me share the story of Richard Fuscone, he was a Harvard-educated finance executive who retired early from Merrill Lynch in 2000 to pursue personal and charitable interests, or we may say philanthropy. He was considered highly successful in the financial world. But then, in 2009, he declared his bankruptcy. What went wrong? It wasn’t just the 2008 financial crisis that wrecked his investments. On top of that, it was caused by overspending and excessive debt. This is what he did that led him to bankruptcy. He lived far beyond his means. He built a massive 21,000-square-foot mansion in Greenwich, Connecticut, by borrowing a huge amount of money. Its monthly maintenance cost is above $90,000! Insane! Even though he had retired early and no longer had a steady income, he kept up an extremely lavish lifestyle and took on huge debt to maintain that lifestyle. To feed his spending habit, he took out loads of loans, including several mortgages on his property. He thought the good times and high asset values would last forever. But when the 2008 financial crisis hit, his investments collapsed, and he couldn’t keep up with the debt. With no job and no cash flow, he defaulted on his loans and was forced into foreclosure. His mansion was seized and sold at a huge loss. And the rest, well, is history.
I bet you can already guess the differences between these two guys. Or probably others that you meet on your daily basis. We also noticed some celebrities ended like Fuscone. They have failed to follow basic financial principles like living below their means, avoiding unnecessary debt, maintaining a financial cushion (emergency fund), and preparing for worst-case scenarios. While Read succeeded. He lived below his means, invested wisely, was patient (let time and compounding do the rest), and focused on value, not appearance.
I totally agree with what Morgan Housel said in his book: The Psychology of Money, basically he said that:
Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach. even to really smart people. – Morgan Housel.
You can have a high IQ, advanced degrees, or deep technical knowledge of finance (remember that Fuscone guy?), and yet still make terrible financial decisions. But on the other side, let’s take a look again at Read, basically, he is just a regular guy who didn’t have advanced degrees or deep technical knowledge of finance, but he did make amazing financial decisions. That’s because money decisions are often driven by Emotions (fear, greed, ego), Impulse (spending to feel good), Desire (trying to look “rich”), and Short-term thinking (ignoring the long game).
And why is behavior on managing money behavior hard to teach, even to smart people? Because, like I said, Money decisions are emotional, not logical. Even intelligent people can make impulsive choices when fear, greed, or pressure take over. Take Sir Isaac Newton for example. We can tell he has a remarkable IQ, but still, he failed in investing his money and lost tons of money. You can Google it; there are so many resources about his investing story. Furthermore, experience influences behavior, not just knowledge. Intelligence can’t replace life experience, and behavior is often built from how we’ve lived, not just what we’ve learned.
What makes it hard, too is that discipline and patience are rarely taught. We’re taught math, but not how to stay calm during a market crash or resist lifestyle creep. Skills like saving consistently, staying out of debt, and thinking long-term, is require emotional control, not just intelligence. And what makes it worse, ego gets in the way. Smart people might think they can “outsmart” the system or beat the market. However, personal finance values humility over arrogance. And don’t forget this one: Our surroundings influence our habits. Even the smartest people are influenced by others’ actions. Peer pressure, social media, and desire for status make it hard to maintain consistent behavior.
Got the point now? So it’s more about behavior, not about how smart we are. If we have this dream to become financially confident or even better, financially free, we have to look forward to our behavior on how we manage our money. The Bottom Line is: “How you behave with money is more important than what you know about money.” Because once again, behavior controls your real-life decisions. And decisions, not knowledge, will determine how you will end up. Rich or broke? You choose. Be wise and behave!
Love,
Kirana
