Wealthy people spend more time planning their finances and feel more secure as a result. In contrast, under-accumulators tend to not plan and spend more time worrying about security. The authors contrast two doctors they interviewed in their research, “Dr. North” and “Dr. South.” Both faced challenges: a lengthy education, postponed entry into the workforce, long working hours, and the social pressure to live an upper-class lifestyle. Dr. North and his wife carefully planned their finances and lived within their means, setting aside millions in the process. However, Dr. South—who earned the same $700,000 a year as his counterpart—had only $300,000 in net worth. He and his wife did not communicate about finances and both overspent on luxury purchases like clothing, cars, and club memberships.

The Norths always talked about their finances and kept close track of their money, sharing credit cards and joint accounts. This helped them to achieve their goal of living well below their means. According to accountants, the wealthiest people tend to closely track every expense so they can understand how they spend their money and budget wisely. The authors endorse this approach, suggesting that people try to set aside 15% of their pretax income for investing each year.

Dr. North has few financial concerns. He raised his kids to be frugal, independent, and self-sufficient. He does not waste time and energy on making big purchases; for instance, it took him a few hours to replace his old car with a modest, good-quality used vehicle. He does not pay for a financial advisor. Instead, he manages his own investments, which he carefully researches, and holds stocks long-term.

In contrast, Dr. South worries for his adult kids, who were raised in a lifestyle of luxury and are addicted to consuming. Both rely on his financial aid, increasing tensions in the family. Dr. South also wastes time and energy making big purchases, such as buying a new luxury car each year. While he thinks he is being frugal by shopping around for the best deal, he could be directing his energy more wisely toward investing. Dr. South also worries more about potential inflation, changes to his profession, and tax increases. Ironically, he has four financial advisors, none of whom he trusts, and spends money on short-term stock trading.

The authors warn the reader against accepting financial advice and investment opportunities from random callers. It is essential to get sound advice from honest and qualified people. Always investigate the person’s credentials and how they approach their own finances before taking their advice. It is best to interview several CPAs (Certified Public Accountants) before hiring them and taking their advice.

The sharp contrast between the doctors drives home how professionals with the same income can have completely different financial realities. Dr. North is a financial role model, while Dr. South’s story is presented as a cautionary tale. The authors paint a clear picture of how frugality and careful investing can yield long-term financial independence.

Chapter Lessons

• Wealthy people are conscious not only of how they spend their time, but their money and energy
• Under-accumulators waste time and energy chasing deals and short-term stock options
• Millionaires consistently spend time researching investments and use their savings to invest

Reflection Questions

• Do you “budget” your time and energy? If not, how could you improve this skill?
• Do you feel you have adequate investments? If not, how could you begin researching this area and make the most of your savings?