August 22, 2011, 5:00 am

What Do Warren Buffet, Carlos Slim, Ingvar Kamprad & Frederik Meijer have in common?

by: The Financial Blogger    Category: Assets and Net Worth
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Okay, I won’t take long to answer this simple question. In fact, chances are that you don’t even know who Frederik Meijer is. To be honest, I didn’t know before writing this article either ;-).

 

So here’s a quick description of each guy :

 

Name: Warren Buffet

Occupation: CEO & Chairman of Berkshire Hathaway

Net Worth: $50B

 

Name: Carlos Slim

Occupation: Business man (mainly active in telecom, real estate & mining companies)

Net Worth : $74B

 

Name: Ingvar Kamprad

Occupation:  Founder of IKEA

Net Worth: $6B

 

Name: Frederik Meijer

Occupation: Businessman (Meijer Supermarkets)

Net Worth: $4.7B

 

All right, you guessed it… they are all rich!

 

Nope, think again.

 

They are also known for their frugality. While Buffett and Slim live in their very same house as 40 years ago, Ingvar drives a 15 year-old Volvo.

 

But that’s not my point either. In fact, it is only half of the story. Some people pointed out in one of my latest posts (Why Cutting Out Your Starbucks Won’t Make You Rich) that frugality pays off over time and that some of the richest men on Earth are frugal.

 

All right guys, you made a point: there are frugal billionaires out there. But, seriously, do you really think that these guys amassed their fortune by saving 50 cents on toothpaste?

 

What they really have in common is the following: they are all creative businessmen. And this is really how they made their money: by founding a company.

 

In fact, it appears that there are only few ways to become a billionaire:

#1 Inherit a huge fortune (such as M. Stefan Quantd who owns 17% of BMW… my favorite car constructor!).

#2 Be part of the first Facebook collaborators (such as Mark Zuckerberg, Dustin Moskovitz, Sean Parker and Eduardo Saverin).

#3 Be an incredibly awesome entrepreneur (like most people on the Forbes Billionaire’s list).

 

So I told you last week and I’m yelling this proudly again: frugality won’t make you rich. My theory is that frugality will slow you down and prevent you from becoming rich. Forget about being billionaires like these guys. Just think about living the good life without having to budget because you make more money than you spend anyways. This is financial independence:

Working because you want to instead of needing to

Living in the same house for 40 years if you want to instead of having to

Making money from your passion not from a measly bi-weekly pay check

 

And how do you reach financial independence? By not restraining your passion, your guts, your brain. Get rid of this old set of restrictions indoctrinated in our minds since youth. Open up your mind and see further than the 2 for 1 coupon stuck in the wallet in your back pocket.

 

I think these frugal billionaires are an exception. And I also consider that there should be a balance between living frugal and over spending. This balance is what I call “financial independence”. As long as you can spend money as you wish and that you don’t have to budget, that’s the real life, regardless how much you spend.

 

Then, it’s only a matter of earning more than you spend… and doing it through passive income ;-). In the end, I would rather look like Richard Branson than Ingvar Kamprad but that’s probably because I prefer driving cool cars than sitting on a nice chair in my kitchen ;-).

 

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Comments

I have always found this interesting as well. Warren Buffett has taken the place of sports heroes in my pantheon of non-deserving idol-worship (I hate that the purity of sports has been ruined by professional athletes, but I digress). I was watching a documentary about Buffett one night (I could probably have written at least half of it by now) and my girlfriend sat down with me and commented, “Hey, he wears the same shoes as you.” As soon as she said it Warren pointed out how that he would rather be comfortable in his favourite brand of comfy running shoes (New Balance), than constantly flaunting his wealth with 1K Italian leather or something similar. Forrest Gump really was right, you really can tell a lot about a person by their shoes!

Yes, the key to their riches is building businesses and not frugality. It might help initially to keep a business going, but you have to build revenues or it won’t work.

I think you’re giving frugality a bad name. While I agree that making more money is valid, earning potentials of individuals vary. Based in your education and experience, you have a very high potential, over 6 figures. To you, earning more money makes a larger relative difference than saving a few nucleon dinner.

For myself, earning less than 50k, frugality has a much bigger impact on my bottom line. I do not believe that going back to school to increase my earning potential would increase my quality of life.

Nonetheless, I plan on becoming just as financially independent as you, we’ll just get there by different means. Both are valid methods and I don’t think one is better than the other. Its a personal choice.

Not a fan of frugality but not a fan of profligate spending either. Life is not a dress rehearsal. You need to enjoy it the first time around.

[…] at The Financial Blogger presents What Do Warren Buffet, Carlos Slim, Ingvar Kamprad & Frederik Meijer have in common?, saying “A look at creative businessmen and their […]