How To Lead a Rich Life

The best defensive players answer "yes" to four critical questions. First, does your household operate on an annual budget? Most millionaires have a budget, and even those who don't invest first (a minimum of 15% of their annual income) and spend later. Do you know how much your family spends each year on food, clothing, and shelter? "Accumulators know exactly what they spend on everything," says Stanley. "Hunter-gatherers don't keep track. They're especially insensitive to the price of what they call small items. But it's the $9 double martinis that add up to the water that breaks the dam." Do you have a defined set of daily, weekly, monthly, annual, and lifetime goals? The most satisfied wealthy people don't just have financial goals, they also have clarity about what they want in life. Do you spend a lot of time planning your financial future? Wealth accumulators spend nearly twice the number of hours per month planning their investments as the income-statement affluent do -- yet they spend considerably less time worrying about their financial well-being.

Probably the most critical defensive play that you can make to avoid the fate of the Joneses -- the vast majority who make money to spend more money on the good life -- is to avoid entering their neighborhood in the first place. Affluence can be a bad influence. If you live in a fancy neighborhood, you'll begin to feel the pressure to decorate accordingly, to send your children to expensive schools, and to buy the $40,000 SUV. Boom! You and your kids are on the earn-to-spend treadmill. It's easier never to get on it in the first place, says Stanley. His golden rule for aspiring wealth accumulators: Never purchase a home that requires a mortgage that is more than twice your household's total annual realized income.

Just because wealth accumulators are frugal doesn't mean that they aren't fun. They dedicate a lot of time to the good things in life, which turn out to be a cheap date. The two things that wealthy people devote more time and energy to than financial planning are spending time with their children or grandchildren and entertaining close friends. They spend significantly more time on a rich mix of peoplecentric leisure activities each month than on big-ticket items. According to Stanley, there is a strong positive correlation between the number of people-related lifestyle activities that one engages in and his level of net worth. But wealth accumulators aren't not just better off for it, they also feel better about their lives.

"It's like a recording," says Stanley. "Every time I talk to these people, it's the same thing: 'I love my life. I love my wife. I can't wait to get to work in the morning.' "

And that, folks, is as rich as the rich life gets.

Sidebar: The Rich Life In & Out List

The cost of living large has begun to take its toll: We are overspent, overfed, overtraveled, and overentertained. More people in the world know the meaning of Gucci, Vertu, and Lexus than know the meaning of life. Hence, the latest trend: spending less and living better.

Sidebar: Happiness

A Price List

We know that money doesn't really buy happiness, but now -- thanks to statistical regressions by some cutting-edge economists -- we know how much money certain "happiness events" are worth. As Andrew Oswald, professor of economics at the University of Warwick, and a leading thinker on the economics of happiness, describes it, you can plug life events such as marriage, divorce, a lost job into a "happiness equation" and attach a dollar figure to the impact of that event on personal happiness. Here are his estimates.

*We can't believe it either. "It's one of the most surprising results," says Oswald. "There's no value judgment implied. All it's saying is that people without children recorded equally high happiness levels as people with children."

Sidebar: Can You Solve the Wealth Equation?