A sensible shopping list for when you become rich

Posted by John Reed on Sep 01, 2015

I started out poor. Although, like most poor people, we didn’t know it. My parents spoke about poor people at times. They meant people who had even less money than we did.

Now I know that their referring to others as poor was only relative. We wore hand-me-down clothes, ate fish sticks and peanut butter sandwiches, and got the occasional big treat of a glass of off-brand cola. I’m not complaining. We were happy. We did not know what we were missing—literally. Our neighbors, classmates, and playmates were in the same boat. The poor generally only feel poor when they are around those who have a lot of money.

My brother came home one day from work and announced to our family that we were poor. How did he come to this realization? He was working on the homes of rich people.

Not know how to spend

As an adult, I became nouveau riche—French for “new rich.” One of the common problems of the nouveau riche is that they do not know how to spend money. They tend to waste a lot of it. They also tend to buy stuff that Hollywood shows rich people having in movies and on TV, like caviar, limousines, mansions, private planes, yachts, and all that. Or as “Lifestyles of the Rich and Famous” host Robin Leach used to say, “champagne wishes and caviar dreams.” That’s Hollywood bull. Champagne is a beverage for a few occasions—if you drink alcohol at all. Caviar really doesn’t taste very good. It’s expensive because it’s scarce and because it acquired cachet in an earlier, cruder age, not because it tastes good.

Here’s another French word that’s often used by Americans for you: arriviste. According to Dictionary.com, it means,

A person who has recently attained success, wealth, or high status but not general acceptance or respect; an upstart

a person who has recently acquired unaccustomed status, wealth, or success, esp. by dubious means and without earning concomitant esteem.

One way to achieve arriviste status is to run around ostentatiously spending your new found wealth on stupid Hollywood-image-of-the-rich stuff.

Preppies

I also went to Harvard Business School. There I met preppies—short for prep school graduates. Prep schools are very expensive boarding high schools. Preppies usually have old money. Old money means they are from families that made a lot of money generations ago and still have it.

Generally, over time, the nouveau riche make the transition from nouveau riche to old-money rich. As part of that process, they learn how to spend their greater amounts of money more wisely and less in imitation of Hollywood images of rich people. As rich people, they typically join exclusive clubs and so forth and meet other rich people and learn among other things, how to spend money wisely. By going to Harvard Business School, I was joining a sort of exclusive club that included a lot of old-money rich. My wife also went to Harvard Business School in the class behind me. So we got a double dose of explicit and implicit instruction on how to spend money.

The book Dress for Success generally revealed the secrets of how preppies dress when they are not in their prep school “uniform” of topsiders with no socks, L.L. Bean chinos, two Ralph Lauren Polo shirts worn on top of one another, and a khaki corduroy sport jacket. It’s a good book to follow, but it came out in the 1980s and was not updated. For more recent instrution on how to dress, see:

• Style and the Man by Andrew Flusser
• Dress Your Best by Kelly and London
• The Handbook of Style by Esquire magazine
• A Gentleman Gets Dressed Up by Bridges and Curtis
• Details Men’s Style Manual by Daniel Peres
• Gentleman’s Guide to Grooming and Style by Bernhard Roetzel

Finally, after being affluent for years, we developed our own ideas about how to spend money wisely when you have a lot more than you grew up with. I think the nouveau riche spend lots of money foolishly, childishly. But I also think, to a lesser extent, that the old-money people spend some money unwisely as well. Here are my suggestions which attempt to take the best from the old-money people as well as the experience of my wife and me.

Purchase	Do	Don’t
principal residence	2,500 to 3,000 square feet maximum. Depends on how many children you have. If you want to buy a more expensive house, buy one in a more expensive location. Strengthen your home against earthquake, flood, fire, hurricane, etc. risk.	a bigger house than you need or one with extravagant finish like solid gold faucets, more than an acre of land
car	one late model new or used car for each licensed driver in the family, luxury car OK Click here for what you need to know when you buy your first convertible	vintage car or any truck, vehicle that costs more than $100,000 or that has capabilities you do not use regularly like ability to tow large trailers or drive off road or carry large loads
boat	if your principal residence is waterfront property and you have your own dock, boat big enough for whole family use	if you have no waterfront and dock at your home, rent a boat when you want to use one
horse	if you live on horse property with a stable and a place to ride and you do this each week	if you rarely ride or have to board the horse elsewhere, you can rent horses to ride occasionally and can specify a particular horse in most cases if you go regularly
vacation home	only if you are sure you will live in it at least three months a year for at least ten years	Don’t own to use less often, just rent one when you want to use it
bedrooms, beds, etc.	test mattress, pillows, sheets, blankets, sound proofing, heat, humidifier, and air-conditioning until you find the optimum combination, since you spend at least one-third of your life in bed, the cost per hour is relatively low even when you buy the best	more than 400 square feet, extravagant fixtures like four poster bed, pillows that you do not use, fireplace in the bedroom
swimming pool	if you live in Hawaii, the Florida Keys, or Puerto Rico and use the pool each week and have no un-drown-proofed kids under age five, otherwise, join a swim club if your kids want to be on swim team; the children of the rich sometimes die or suffer permanent brain damage in backyard pools; the poor cannot afford to subject their kids to such risks; indoor pools have no climate contraindications but have safety and moisture-damage issues that I have no experience with	above-ground pool, in-ground pool when you live in continental U.S. other than Keys, pools are summer only in almost all areas of the continental U.S.
kitchen	eat-in with standard appliances	more than 250 square feet, restaurant-type appliances
garage	bay for one vehicle per licensed driver living in the home with enough space between that you can open the car door all the way without touching the car in the next bay—that’s much wider than the vast majority of garages	bays for more vehicles than licensed drivers who live in the home
tennis court	join a tennis club	build a court on your property
country club	if you use the facilities weekly or almost weekly and the cost represents the best value for such facilities locally	join an expensive club just because it is expensive and prestigious
health club	generally you should install whatever exercise equipment you want in your home; it is almost true that no matter how expensive, home equipment is always cheaper than joining and commuting to a health club	join a club that costs a lot over the years you are a member and that requires a commute that is expensive when the cost of operating your vehicle and the value of your time are taken into account
shirts	good brand name, custom made or modified for better fit if necessary	monogrammed
suit	Nordstrom, Brooks Brothers, or similar made-to-measure; tailor-made only if the difference between your chest and waist exceeds six inches	tailor-made,extremely expensive, imported, suit
vacation	man-made and natural destinations in U.S. and civilized countries; stay at most convenient hotels at destination; Inexpensive decent motels enroute when driving—lose the notion that travel per se is good. Since 9/11, air travel has become an unequivocal ordeal. Being away from home is less attractive than being at home in may ways from controlling the quality and quantity of what you eat to the quality of your sleep. Tourism involves more than normal time outdoors, standing up, and walking—additional exertion like skiing and swimming in some cases. People tend to lose track of how much of each they are doing and unwittingly discomfort themselves with sunburn and extraordinary fatigue and soetimes overuse or other injuries. Tourism, even at expensive, glamorous destinations, is, at best, a mixed experience. Don’t let returning vacationers bragging about how “fabulous” it all was blind you to the reality of expensive travel.	exotic vacations to areas that have dangerous terrain, unsafe transportation, climate, political unrest, diseases, lawlessness; also unsafe rides and adventures in countries where such things are not adequately regulated
aircraft	if you make your living as a pilot, flying a private plane that is fully equipped for instrument flying can be sensible	own and/or fly a plane which is not fully equipped for bad-weather flying or when you are not instrument rated and flying enough to maintain a top level of competence; this is another “Deathstyles of the Rich and Famous” way to spend money, e.g., John Denver, John F. Kennedy, Jr., Cory Lidle
neighborhood	safe, affluent with excellent public schools if you have school-age kids (you can no longer assume a public school is excellent because of the home values in its neighborhood; one of the bad schools in the Waiting for Superman documentary was Woodside High School in CA, one of the most affluent communities in the whole country; you must check out each school with regard to violence, drugs, and the academic performance of each of your child’s teachers course by course; generally, the AP coures are good and the remedial repeat course are awful no matter the affluience of the community; trust but verify)	if have school-age kids, big city neighborhood where public schools are so bad that you must send your kids to private schools—not all private schools are excellent, but they generally are devoid of the union/bureaucracy problems of public schools
food	nutritious, modest portions; restaurants including expensive restaurants OK Five-star restaurants are generally not worth it and even a waste of money. Basically, their chefs are trying to be unique and innovative. What are the chances that your taste buds will align with some guy who is trying to be new and different? Those restaurants tend to be very weird—like combining pumpkin with your steak. Five-star restaurants are to food what French poodles are to dogs. The service in such restaurants is typically great, but probably beyond the point of diminishing returns. Most decent restaurants give adequate service. I prefer restaurants that serve classic, popular dishes prepared in traditional, popular ways like Bobby Van’s and Rosie O’Grady’s in New York City and Joe’s Prime Steaks in Miami, Chicago, and Las Vegas. What you want is care in the selection of raw materials and care and competence in the preparation of the food. Always tell them to put the sauce on the side. Zillions of expensive meals are ruined every day by sauce that the diner does not like.	caviar, foies gras, vintage wines, vegetables you never heard of
jewelry	functional watch (For years, I wore sporting goods store watches that cost $19.95. My wife finally got me to get a modest one-dial, one-knob Omega so it would look decent.)	expensive watch, gold chains, rings
furnishings	functional nice stuff you need	Persian rugs, expensive art, etc.
parties, bar mitzvahs, weddings	normal food, beverages, and entertainment in your home or an adequate size facility if your home is too small	big-name entertainment, extravagant food like caviar and vintage wines, and rental of meeting places that are far more expensive and prestigious than necessary, this is usually done to one-up other party givers and to show off the financial ability to spend such large amounts
education	buy a home in a neighborhood with excellent public schools	send your kids away to boarding schools or to local private schools; although private schools cost more, they generally are inferior in many ways to good suburban or selective urban public schools including size; number of books in the library, variety of friends, extracurricular activities, sports, courses
entertainment center	full cable package, big flat-screen TV, DVD player, quality sound system, comfortable chairs (I recommend the Perfect Chair also called Zero Gravity) These are items you use many hours a day so you can afford the best on an hourly basis	home theater

As the above list reveals, there are some basic principles to this:

Don’t buy a larger size or greater quantity than you need
Don’t pay for features that you don’t use or need
Don’t spend money to show off
Do spend money to reduce the risks your family faces
Do use your wealth to reduce the amount of time you spend pursuing money and increase the amount of time you spend on other worthwhile activities
Health should be your top priority, including moderate diet, at least an hour of exercise per day, and appropriate medical care (your Body Mass Index should be 18.5 to 24.9—one guy said this is a poor measure if the person has an athlete's body fat percentage, like 6%, because muscle is denser than fat. Here’s another measure that some say is better: your waist-to-hip ratio should be below .9 if you are male and below .7 if you are female. My BMI on 3/15/07 was 23.7 and my waist-to-hip ratio was .82)
More expensive things are generally better, but only up to a point. For virtually every product and service, you can overpay because vendors know many dumb rich people value things according to their price.
Bigger is sometimes better, but appropriate size is what you should be striving for. Don’t keep buying bigger and bigger homes and boats and vehicles just because you can. Buy what you need.

The shopping list of a rich person is shorter than the poor think. Money can’t buy everything and Americans in general are already quite affluent. Pretty soon after you become rich, you should stop shopping and start listing all the risks we are all subject to and reduce whichever ones you can reduce by using your money. It’s nice to eat well, but it’s also nice to sleep well. That means reducing risks that you can afford to reduce. Here is a list of risks that you can generally use your wealth to take steps to protect your family from.

fire
flood
earthquake (occur nationwide, not just on West Coast)
tornado if you live in tornado area
hurricane
loss of public utilities
depression
catastrophic lawsuit judgment against you
decline in value of asset category that you own

I suspect that many of you will think the above shopping list is not as much fun as you expected to have when you got rich. Good. That is one of my points. Being wealthy is not as great as the poor think. Money can only do so much to make your life better.

The important things are health, family, friends, and job satisfaction. You can improve those things somewhat with money, but generally, they are not monetary matters.

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