Making More Money Is Not The Solution to Every Financial Problem

Dallin H. Oaks tells a story I enjoy about two men who formed a partnership to sell watermelons. They obtained a truck and paid a farmer $1 each for enough melons to fill it up. Then they drove the truck to a stand they had built by the side of a busy road where they sold the truckload of watermelons for $1 each.

They went back to the farmer and purchased another truckload of melons for $1 each and again sold them for $1 each. As they drove to purchase the third load of melons one of the partners said to the other, “We’re not making much money on this business, are we?” “No, we’re not,” his partner replied. “Do you think we need a bigger truck?”

Below is a short 1 minute video that tells this story.

This story is funny because it is no ridiculous. We can’t imagine real people being this foolish. And yet Thomas J. Stanley and William D. Danko, who spent years studying wealthy Americans, would probably not be shocked by the irrational behavior of the businessmen in our story.     

In their fabulous book The Millionaire Next Door, Stanley and Danko describe how many high-earners, like our hapless business partners, fail to correctly identify their problem. Speaking of these high-income, low-net worth people they write:

“They assume that by focusing their energy on generating high incomes, they will automatically become affluent. They play excellent offense in this regard. Most are positioned in the top 3 or 4 percent of the income distribution for all U.S. households. Most look the part of millionaires. Yet they are not wealthy. They play lousy defense.” They conclude, “It’s much easier in America to earn a lot than it is to accumulate wealth.”

Figuratively, the people Stanley and Danko are describing believe bigger trucks – more income – will solve their problems, so they put all their focus on making more money and none of it on controlling expenses. The result is they make a lot but spend virtually all of it not only on bigger trucks, but also bigger houses and more expensive cars and vacations. A lot of money passes through their hands but they have very little to show for it.              

If you’re not making progress financially the first step is to correctly identify the problem. If you are already controlling your spending a bigger truck – more income – might be the solution. However, if you make more than enough to cover your needs, but spend it all, a bigger truck will probably not help. In that situation a plan to control your spending should be your first step.

As with the foolish business partners our minds seem to automatically default to the position that making more money is the solution to any financial problem. As the story illustrates this is not always the case. To avoid making a foolish mistake take the time to correctly diagnose your money problems before trying to solve them.

  8 comments for “Making More Money Is Not The Solution to Every Financial Problem

  1. May 18, 2017 at 6:47 am

    Love the millionaire next door book – literally changed my mindset and my life!! Thanks for sharing the story and the post !

    • Brent Esplin
      May 18, 2017 at 6:49 am

      It is one of my favorite books also. Glad you enjoyed the post and thanks for the kind words.

  2. Steve from Arkansas
    May 18, 2017 at 7:10 am

    That’s very true. My dad never made a high salary as an insurance agent. Never got close to six figures of income. But he was thrifty and invested well. I saw first hand how a guy who made average wages became a millionaire. As a higher earner I got there quicker than my dad but I did it the same way. Living well under my means and saving aggressively and giving generously while still having a life full of fun and adventure.

    • Brent Esplin
      May 18, 2017 at 5:42 pm

      Sounds like your dad set a great example for you. Making a higher income is rarely a bad thing, but when you have learned how to control your expenses first it can be a truly wonderful thing. Thanks for contributing to the conversation.

  3. May 18, 2017 at 10:19 am

    The millionaire next door is definitely a classic. Big hat an no cattle indeed. Ultimately it comes down to a mix of three things: Earnings, Savings, and Investing. You really need all 3 to get ahead over a lifetime. You can tilt one way or the other depending on your situation. We currently are tilting towards income as savings and investing are already in line. But as time changes so will our focus.

    • Brent Esplin
      May 18, 2017 at 5:51 pm

      Yes. The millionaire next door is a true classic. I would add a fourth item to your list: controlling your expenses. Without good financial defense saving and investing aren’t possible and increased income is likely to disappear in order to keep up on the hedonic treadmill.

  4. June 29, 2017 at 7:00 pm


    The Millionaire Next Door is one of my favorites. I read it about the time I started hitting a decent six figure income, about when it first came out.

    I had the only Chevy pickup in a parking lot full of BMW’s and Mercedes!

    Too bad it took me about a dozen years to figure that out…

    The Wease

    • Brent Esplin
      June 29, 2017 at 8:27 pm

      It took me too long to learn as well. I used to think that being rich meant buying things that made it look like you were rich. Maybe its just a symptom of youth. “The Millionaire Next Door” completely changed the way I looked at money.

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