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Stop Acting Rich review – What determines wealth?

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So you want to become wealthy? Have you ever wondered how others who have started with nothing retire with over $1 million in assets?

The best way is to study your prey — do what they do and you'll reap the same rewards. That's what the late author Thomas Stanley did for over 20 years.

In his influential book The Millionaire Next Door, Stanley discusses the typical life of a millionaire in depth. The Millionaire Next Door is an eye-opening book that goes against many misconceptions. In my opinion, this book forever changed the way I think about being wealthy.

To continue the theme, Stanley released a follow-up, Stop Acting Rich… and Start Living Like a Real Millionaire in 2009. The evidence he presents goes against the grain of what we typically see in the media and how most people assume the wealthy live. 


Stop Acting Rich

Quick Facts

In this follow-up to the landmark The Millionaire Next Door, Thomas Stanley details the habits and trends of America's wealthiest people. What constitutes true wealth? And how can you achieve it? This book provides answers.

The three types of wealthy

In this book, Stanley breaks down wealthy people into three types:

  1. 1.

    Glittering Rich (GR) – The ones you see and hear about in the press. This is what most people think of when they think “wealthy.” The Glittering Rich are hyper-consumers, but no matter how much they spend, it's not going to affect their overall net worth.

  2. 2.

    Income Affluent (IA) – Typically, high income, but low net worth. They try to keep up with the Joneses (Glittering Rich) but fail miserably. They have very little money saved.

  3. 3.

    Balance Sheet Affluent (BA) – The most common type; these people plan to be wealthy by saving and investing. The Balance Sheet Affluent is the focus of most of Stanley's work.

From reading Stanley's previous work, I just know that one of our neighbors fits perfectly into the Income Affluent (IA) category — they lease their BMW, are constantly doing construction on their house and dress in the best clothes. Although I'm not mocking them, I know that's not how my wife and I want to live. They're a sterling example of what NOT to do with your personal finances.

Stanley perfectly frames how to become wealthy: either by a great offense (high income) or by a great defense (being frugal and saving a decent amount of income). Most folks have the chance of becoming wealthy by great defense.

The book states:

The only way you will become rich is to play extraordinary defense like those millionaires at the other end of the continuum: by living well below your means, by planning, savings and investing. We need to stop acting rich, and you need to adopt the values and lifestyles of self-made millionaires.

How wealthy are you?

Compared to your peers, how do you stack up? I've always been the type of person who beats his own drum and doesn't follow the herd. After all, do what everyone does and you get what everyone has.

That said, I have a computer science background and I love stats. I always want to know how my current measurements stack up. Am I on track, or do I need to amp up our savings?

Stanley has a great method to help measure becoming BA wealthy:

Use the Wealth Equation to determine how you stack up. Simply stated, your net worth [augmented] should equal 10 percent of your age times your annual realized household income (0.10 x age x income = expected net worth). If your actual net worth is above this expected figure, I consider you're affluent, given your age and income characteristics.

This was originally in his first book Marketing to the Affluent. In Stop Acting Rich, he adds the wealth index (WX) to differentiate the BA group from the IA group:

The threshold WX for those included in the BA group was 1.84. The median WX for those in this category was 2.49. In other words, the “typical” member of the BA group had an actual net worth that was 2.49 times the expected figure, given this age and income at the time he first reached the seven-figure wealth threshold. The IA, interesting enough, had a much lower net worth respective of their age: The IA millionaires ranked in the bottom quartile along the WX continuum. The highest WX within this group was 0.880; the median WX was only 0.665. This means that the typical IA had an actual net worth that was only 66.5% of what was expected, given his age and income at the time of hitting the millionaire threshold.

Tax the rich?

Whenever the government talks about taxing the rich — known as “IA” in the book — it is targeting high-income earners. Throughout history, it hasn't been accumulated wealth that's been taxed; it's been income.

Stanley confirms that high-income earners are targeted by the government:

The average IA paid more in income tax than the typical BA generated in income during a year: $95,847 versus $89,167. Overall, IAs pay nearly six times more in tax than the BAs. IAs pay the equivalent of about 10 percent of their wealth each year in tax. BAs pay less than 2%. The large tax burden associated with being an IA is reflected in their less-than-stellar wealth index.

He then continues: 

This situation will worsen, given federal and state tax increases that high-income earners now face. The road to becoming rich via the IA method is lined with income tax tolls and consumption-inspired roadblocks and detours.

So going under the radar of what currently is considered rich (the sub-$250k threshold) might be a better route to minimize your taxes and lower consumption. This is something I've always suspected, and the book's data shows this.

What motivates the wealthy?

I've always been interested in the psychological aspect of things in life: Why do people want to become wealthy?

Thomas states:

Most millionaires are motivated by their need to gain financial independence. For most, consumption is a nice side benefit to becoming wealthy. It is not the most compelling reason why these people become financially successful. When asked, they will tell you that given the choice, they would readily unload their consumer goodies before ever giving up their independence.

I agree that the things don't matter; the important point is having enough money to choose what you want to do in your life. It's the ultimate freedom that allows you to live your life to the fullest. It's not about purchasing some fancy car.

Where do hyper-consumers live?

This question is something of concern for me since I live on Long Island, N.Y.

The highest concentration of glittering rich people in America lives in the Tri-State metropolitan area of New York. Understandably, this area also contains the highest concentration of aspirationals. Not only are we what we eat, we are also the product of where we live.

I live only a half-mile away from one of the most frequented malls in the country. During the Great Recession, I was amazed at the number of cars I see going into that mall. You would never have known we were in a severe recession. 

It's also amazing that my wife and I don't frequent the mall that often. Typically, it's “get in and get out.” We buy what we need and go home. I guess we are fortunate enough to have the discipline of not going on weekly buying sprees. 

Stanley contends that the biggest factor in determining your wealth is the choice of where you live:

The bottom line is that your choice of house and neighborhood will have the biggest impact on your balance sheet. Your choice of home, more than anything else, will have the greatest impact on your spending — either a lot or not so much.

While we don't live in a very rich neighborhood, we see hyper-consumption all around us, and it's hard not to mimic what others do. It's part of human nature.

I love the term that Stanley uses in the book for many income affluent people: “Big Hats, No Cattle.” This could definitely apply to many in the area where I live.


This book is more a compilation of the author's previous works than a completely new effort. Yes, some of the content is repetitive, and what's in the book could have been condensed into 30 or 40 pages. Even so, it's a quick read, and I enjoyed it. As with Stanley's previous books, Stop Acting Rich is slightly preachy in the conclusions he derives from the data. While I don't flat-out disagree with his conclusions, it is possible that alternative conclusions could be drawn.

If you have read any of Stanley's other works, there are some new nuggets that might be worth the price of admission. If you have never have read any of his other works, you should definitely pick up this book.

Larry Ludwig Freelance Contributor

Larry Ludwig is a freelance contributor for Moneywise.


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