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By | May 20, 2012

Dear Toolkit,

I'm a young man who aspires to vast riches and early retirement. Any tips on how I can accumulate a fortune before I'm 50?

Wannabe Rich

Dear Wannabee Rich,

The secret to accumulating money is simple—simply live below your means! The measure of wealth, however, is more complicated as it's a "relative" thing. You may only have $1.97 but you'd be deemed wealthy by someone who possessed but a single dime. The best tips I can give you on both scores take the form of book reviews.

Hie thyself to thy local library and glom onto The Wealthy 100: From Benjamin Franklin to Bill Gates—A Ranking of the Richest Americans, Past and Present. The authors of this gem, Robert Gunther and Michael Klepper, have ranked the 100 richest based on their estimated total wealth at the time of their death (or, in the case of those still living, their wealth at a fixed point in present time) as a percentage of the GNP (Gross National Product) in current dollars for that year. This ingenious formula permits comparisons across centuries.

Each little biography tells a tale ranging from curmudgeonly stinginess to beatific benevolence and is a wealth (pun intended) of information about how riches are gathered. #1 is John D. Rockefeller, frugal oil magnate. Bill Gates doesn't appear until #31, well below Vanderbilt (shipping), Astor (land), Carnegie (steel), Mellon (banking), Sam Walton (retailing), and a host of names you've very likely never heard before.

At least Gates beat Leland Stanford (railroads) who came in 34th and Warren Buffet, who was 39th. George Washington (land) did pretty well for a civil servant at #59 but Howard Hughes (aviation) limped in at a lowly #81. Even Paul Allen (Bill Gates' sidekick) outdid poor old Howard by placing 75th. Ben Franklin (printing), by the way, landed at #86. The pack is rounded out by William Wrigley (chewing gum) at 99th and Dave Packard (of Hewlett-Packard fame) at 100. But it's the stories of all those unknowns in between that are really, really interesting.

Once you've read that fascinating tome, you'll have a clear idea of what big-league wealth accumulation is all about and you'll be ready to begin your journey to your own first million. At this point, it's time to hit the library again and check out The Millionaire Next Door: The Surprising Secrets of America's Wealthy. Written by Thomas Stanley and William Danko, the authors set forth seven characteristics commonly found among individuals they interviewed who have self-built fortunes.

Their homely advice is anything but original. Your grandmother probably told you all of it years ago. (Save early, much and often. Spend less than you earn. Waste not, want not. Avoid conspicuous consumption for invidious distinction—if your grandmother was an anthropologist.) This book is not rocket science but, apart from the obvious fluff, it definitely includes some good common sense. It will not tell you how to make a million but it will tell you how your average millionaire neighbor accumulated his million. And you can make a good beginning by using your free public library rather than buying this book. You'll be glad you did (use the library) and didn't (buy the book).

But, young man, consider well the difference between living rich and living well, being rich and being happy, accumulating wealth and accumulating a wealth of good friends and good works. These are too often mutually exclusive. You might be better off to aspire to balance, to moderation in the Aristotelian sense. In short, be careful what you wish for.

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