Wealthy people who give away 10 percent or more of their income to charity tend to build a higher net worth — and to be happier — than other wealthy individuals who give less, says Thomas J. Stanley in his new book, Stop Acting Rich … and Start Living Like a Real Millionaire.
Mr. Stanley, who has written several books on the nation’s wealthiest Americans, including The Millionaire Next Door, based his latest findings on a survey of 944 millionaires with net investment assets of $1-million or more, excluding their home. He compared their net worth, spending habits, giving patterns, and self-reported happiness.
Those who gave the most to charity — 10 percent or more of their incomes — spent less on what the author calls “the impediments to building wealth.” Those include income taxes, expensive homes, clothing and accessories, motor vehicles, mortgages, interest on personal loans, club dues, and vacations.
The most-generous millionaires built their wealth by allocating more money to investments, pensions, or annuities and to financial-advice and asset-management services. They spent markedly less on prestige brands, fancy homes, vacations, and other luxury items.
Among millionaires living in homes worth $200,000 to $300,000, for example, about a quarter gave 10 percent or more to charity. Among those living in homes worth $1-million to $1.2-million, only 17 percent gave as much. In fact, Mr. Stanley found, only 10 percent of millionaires live in million-dollar houses.
The most generous wealthy donors, said Mr. Stanley, “are the least enamored with status. They have a small house and a big heart.”
And they have greater levels of overall satisfaction, he writes. “These people feel that giving is a substitute for spending more on products and pleasure-related services. They seem to get more satisfaction from accumulating wealth and giving than from consuming more.”