A few months ago, physician, author and blogger Jim Dahle posted an interesting essay at his popular White Coat Investor blog about four techniques or rules he followed to become rich.
The post summarizes some interesting points—and provides an example of stuff we’ve talked about in posts here like “Smart Wealth Strategies of the Top One Percent.”
But to me, the really interesting element of Dr. Dahle’s essay is not that he’s become rich through hard work and intelligence, common sense and good luck. No, the interesting part to me is that Dahle feels rich. He feels wealthy.
What’s weird about that? Well, a couple of things. Many people with high incomes and impressive net worth don’t feel rich or wealthy. Even though they are. And then often people with high income or high wealth feel (mostly) stressed. Or financially insecure. Or like runners in a rat race.
Dahle, to his great credit doesn’t feel this way. And with an eye toward the Thanksgiving holiday, I’d like to suggest three reasons why I think this is maybe the case. Some good general principles fall out Dahle’s story…
Generosity Fuels an Abundance Mentality
A first idea? Charity and generosity count as awfully healthy habits for people who want to feel rich.
When Dahle talked in his blog post about his charitable giving, he ignited a bit of a kerfuffle. People argued for a mathematical truth that if you give money away (even to someone who really needs it or really deserves it), you have less money. As a result, you are by definition less wealthy.
But maybe the point is to feel rich. And maybe charity and generosity do help us with that feeling. I kind of think so.
Charity and generosity—and here I’m just a guy making an observation—can positively feed an abundance mentality. An attitude of gratitude. A sense of sated-ness.
The neat thing about charity and generosity as habits that lead to a feeling of riches or wealth? You don’t need a ton of money or scads of time to exercise these habits. You just need a generous spirit and a kind heart.
Spending Less Than We Earn Creates Financial Space
Another idea from the White Coat Investor blog concerning feeling rich or wealthy: Dahle spends less than he earns (a lot less actually). And that means he and his family aren’t seeing their expenses bump up against their income at the end of the month.
Something healthy happens to our financial mindsets, I think, when we’ve got a cushion like that. That cushion enhances a feeling of financial freedom.
But that makes sense, right? You or I can make only a little bit of money, an average amount, or even a lot of money.
But if we spend everything we make—no matter how big our incomes—we’re going to feel stretched and stressed and like we don’t really have enough and actually need just a little bit more please.
The good part of this insight? Most everybody can with a little more discipline over time spend less… and that should over time enhance feelings of richness and abundance.
Simpler Portfolios Dial Down Wealth Worries
And a final, quick point: While managing wealth often burdens people with surprising levels of work and stress, the passive, tax-efficient, low-cost approach to investing promoted at the White Coat Investor blog probably also nicely contributes to a feeling of riches and abundance.
Dr. Dahle’s investing strategy, with its index funds and tax-deferred accounts, doesn’t burden him with a bunch of complexity or hassle or extra fiddle-faddling. He’s got his portfolio mostly on “autopilot.” That is a really smart approach. And you and I can take important cues from him.
And here I’m going to end. I’ve got to help get ready for the big family get together in a few days.
Happy Thanksgiving to you, your family and your friends.