Couple in chairs on beach The wealthy like to travel — and they like their privacy. (Photo: Shutterstock)

We have plenty of misconceptions about the rich. Watching “Real Housewives” you conclude they spend money buying designer clothing, having meals out every day and taking their friends on expensive vacations. Step up to the billionaire category and we are thinking of huge yachts, sports teams, exotic cars, outrageously expensive jewelry and grand houses. Maybe this is true in Monte Carlo, but not where you live. How does your relatively rich local resident spend their largess?

If you haven’t read Tom Stanley’s “The Millionaire Next Door,” you should. His message in 25 words is: The plumber who stays married to the same person, drives a midsize car and still lives in the first house they bought is probably pretty wealthy.

With exceptions like great inherited wealth and lottery winners, this probably describes the moderately wealthy people you would like as clients. (OK, maybe they aren’t all plumbers.) Let’s assume they are in their 50s or older, have children and possibly grandchildren.

10 Ways Your Local Rich Folks Spend Their Money

So how do they spend it? Not quite as you might imagine.

    1. Privacy. The more money you have, the less you want people to know about you. This means large properties, long driveways and lots of trees. It may not necessarily be grand. A battered mailbox on a winding dirt driveway going off into the distance sometimes leads to a grand house.
    2. Vacations. If they have demanding jobs, they want to get away too. Here, privacy plays a role. Money buys privacy. The most obvious example is the Princess Grill and Queens Grill accommodations on Cunard’s Queen Mary 2. Separate check-in to board. Separate cocktail lounge. Separate dining rooms. Separate open deck space for sunbathing. The upscale travel magazines talk about safaris and other trips where cost is no object. Abercrombie & Kent and Tauck are a couple of the firms catering to this market.
    3. Supporting their children. Rich people have boomerang kids, too. Maybe it was the death of a spouse or a divorce. They may have set out on their own career and been downsized later in life. They may be writing checks to support their adult children.
    4. Educating their grandchildren. They buy into the concept: “If education gets you ahead in the world, get the best one money can buy.” The rich will often foot the bill for their grandkids’ education. With many grandchildren, this can get expensive.
    5. Dining out. You’ve heard it said: “The grander the house and the grander the kitchen, the less likely it’s ever used.” Many consider cooking a chore, so they eat out a lot. Minimum monthly spends at private clubs is a contributing factor. They have their circle of close friends and do the rounds, keeping in touch over dinner. In the vast number of cases, checks are split evenly, unless parents are taking their grown children (and grandchildren) out.
    6. Charitable contributions. Many wealthy people strive for a type of immortality. They will contribute amounts large enough to get their name put onto something, or at least chiseled into the wall along with other donors. Putting it more kindly, they see giving back as an obligation of wealth. They also attend charity galas (another form of dining out.) They solicit their friends to buy tickets. They buy tickets to the friend’s charity gala in return.
    7. Health care. Like education, they buy into the “you want the best” argument. This might involve concierge care or specialists who are outside the coverage limits of the conventional health plan.
    8. Their hobbies. (1) Many of the wealthy have them. Wine is an obvious example. People amass large collections from hard-to-get producers in the best vintages. Wine conveys bragging rights. Sometimes, it’s even on display in the dining room in temperature-controlled glass cabinets. Classic cars and art are also popular.
    9. Their hobbies. (2) Here’s an important point worth special attention: The wealthy often treat collectables as alternative investments. There’s a time to buy and a time to sell. They will send their wine or artwork to auction if the price is right. You might think they build up a collection like a museum. Their collection may be dynamic, with stuff coming and going. In the case of art, they sometimes loan pieces from their collection for museum exhibitions. When a piece of art has appeared in a museum show, its value often increases.
    10. Professional services. Wealthy people want to stay that way. Estate planning is important. Having proper insurance for their art and wine is, too. They often outsource day-to-day investment decisions to professional money managers, unless investing is their hobby.

What Have We Learned?

The wealthy have some concerns that align pretty closely with your own. Education and health care are important. They help their kids out financially if they are in a tough spot. You learned other lessons, too. They place a high value on convenience. They dine out instead of cooking at home. They often outsource day-to-day investment decisions.

They also like getting a good deal. They won’t discuss it in front of others, but they want to save money where they can. Your local rich usually aren’t into ostentatious displays of wealth. They place a high value on privacy instead. As a financial advisor, you can see the value you can bring, personally or professionally.

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Bryce SandersBryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor,” can be found on Amazon.