Save Money Like A Janitor

save money

Pay Yourself First

Last week I read about Ronald Read, a Vermont gas station attendant and janitor who was able to stockpile an $8 million fortune.  He passed away last year at the age of 92, but very few people knew he had that kind of money.  That is until a couple of weeks ago when he left most of his estate to his local hospital and library.

Mr. Read left $4.8 million to the hospital and $1.2 million to the library.

According to reports, he was a very humble person who drove a second-hand Toyota Yaris and who never splurged except on a daily cup of coffee and an English muffin with peanut butter at the Brattleboro Memorial Hospital.

How Could a Janitor Have $8 Million?

Mr. Read was very smart with his money and was able to grow his wealth by investing in Blue-Chip Dividend stocks.  He was doing what Warren Buffett has been preaching for years, “invest in what you know.”

Mr. Read’s portfolio included AT&T, CVS, Bank of America, Deere General Motors, and General Electric. “He only invested in what he knew and what paid dividends,” his lawyer Laurie Rowell told CNBC.

Nobody knows exactly what his savings regimen was, but based on the way he lived, it is assumed that he saved and invested as much as he could.

Is This Even Possible?

Many people think that you need to make a lot of money in order to be rich someday, but it has been proven time and time again that that’s just not the case.

Let’s take Mr. Read for example.  Again, nobody knows how he did it, but you can get to $8 million by investing around $360 a month for 65 years – assuming an 8% return.

Thanks to the magic of compound interest, you invest a total of $280,800 in 65 years and you get a whooping $8,000,000 or so.

Mr. Read probably started saving and investing as soon as he started working, and he was fortunate enough to live for 92 years, but this doesn’t mean that we can’t do this as well.

And the point of this story is not “how to get $8 million.”  The point we need to get from this is that we don’t need to make a lot of money in order to save.  Chances are we’re not going to be able to get $8 million – I started saving late – but $1-$2 million is definitely doable and, quite frankly, more than enough for me.

Make Savings A Priority

One of the most important, if not THE most important advice about reaching financial independence is PAY YOURSELF FIRST.

Before I learned this very important lesson, every time I received a paycheck, I used to pay bills and used my money to go out and get groceries, and then try to save whatever I had left at the end of the month.  As you already know, this plan didn’t work out too well for me.

Decide how much you want to save each month – this is when a written budget comes in handy – and every time you get paid, make sure you pay yourself first.  Treat your savings like another bill.  And remember to pay ALL YOUR BILLS.

Savings should be a priority, but it won’t be enough if you want to grow your money… you also have to invest, safely.  You can follow Mr. Read’s footsteps and invest in Blue-Chip Dividend stocks, which are a good bet.  Or you could lower your risk even more by investing in index mutual funds.

Right now I am keeping my investments somewhat safe, but I am also learning about the stock market so I can take more educated risks as I save more.

Are you saving like Mr. Read?  Where would you donate your millions if you are lucky enough to save $8 million? 

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25 comments

  1. William says:

    What a cool guy. I’m glad he gave it away to worthy causes!!!
    William recently posted…The Pros and Cons of Renting a Furnished SpaceMy Profile

  2. What a great legacy to leave behind! If he’s spent all his money on fancy things, no one would even know his name. I can imagine how happy he must have been to make plans for all that money to go to charity. If it were me, I’d leave half to scholarship programs for high school students and half to pet charities.
    Kim@Eyesonthedollar recently posted…Should Kids Have A Credit Card?My Profile

  3. Tawcan says:

    That is a great story. Donating that much money is great and is certainly something I wish to do in the future. Definitely shows that having a large net worth is possible with low income if you focus on a frugal lifestyle and save as much as you can.
    Tawcan recently posted…How to survive a shopping trip to CostcoMy Profile

  4. Wow, $8 million and he was still working! What a great example of compound interest. I wish there was more to learn about this man. He would have been very interesting to talk to.
    Emily @ Simple Cheap Mom recently posted…When You’re Too Cheap for Original Art… (help me!)My Profile

  5. I love stories like this! It really is quite amazing what you can do if you start saving young. The trick is getting young people to realize the importance of saving. At this point, our savings will go to our kids! I hope we will have enough left to leave them a little better off than we are!
    Jayleen @ How Do The Jones Do It recently posted…Park Perfect in the Garage Every TimeMy Profile

    • Aldo @ MDN says:

      One thing that I didn’t get from the articles I read is, what happened to the other $2 million? He had $8 million and donated $6 million. Maybe the other two went to his family or taxes? I really don’t know.
      Aldo @ MDN recently posted…Goal Settings for 2015My Profile

  6. Troy S. says:

    Pay yourself first. Yes I learned that a few years ago and do my best to live by it.
    One thing I have set up is an automatic deduction from my checking account to a savings account. To be honest, I do not know exactly how much is in there. The moneys are just tranfered every month and I do not see it but I know it is there as an emergancy fund. Not making that cool 8% but the money is liquid.
    Troy S. recently posted…#861 Monopoly makes me smile bigger than Rich Uncle PennybagsMy Profile

  7. I think I’m a little too selfish to donate THAT much money. Though I would love to be able to donate more than I do now.
    Stefanie @ The Broke and Beautiful Life recently posted…Diversity of Income, Diversity of Happiness: Why Having a Back Up Plan Isn’t Resigning Yourself To FailureMy Profile

  8. Aldo @ MDN says:

    You can’t really take it with you when you go. All that money is going somewhere, either you donate it or it goes to your family or the government.
    Aldo @ MDN recently posted…Save Money Like A JanitorMy Profile

  9. Lauren says:

    What an awesome guy! Wish there were more people like that in the world.
    Lauren recently posted…How to Shop Free on AmazonMy Profile

  10. Mrs. Maroon says:

    I wish someone had known about his fortune before his passing. I can only imagine how interesting it would have been to sit down and chat with the man – about everything in life. Just think about all the different things he saw throughout his life. And given his savings regimen, I have to believe he’d have some valuable lessons to teach all of us!
    Mrs. Maroon recently posted…Our Anti-Valentine’s JubileeMy Profile

  11. Mr. SSC says:

    That’s a pretty incredible story. Clearly his focus wasn’t on “being rich” even though he was very FI. It would have been great to get more backstory before he passed but I bet a lot of it is like you pointed out, consistent savings and compound interest.
    Drives home the point that you can save a lot just by putting a little bit away at a time.

  12. Kalie says:

    This is such an opportunity to educate people about how to grow wealth slowly but sure in a “boring” but effective way. Also very cool that he chose to be generous with his money.
    Kalie recently posted…5 Ways to Automate Your ErrandsMy Profile

  13. Mr. Read’s story shows that nearly anyone can get rich with a little patience and sacrifice. They give hope that the regular guy or gal can be wealthy too.

  14. It’s amazing what you can do with dividend stocks. I always like to say that time, not timing, is everything.
    MoneyMiniBlog recently posted…The Ultimate Money List: 75 Must-Read Books on Personal FinanceMy Profile

  15. Amazing story Aldo and it was so nice of Mr Read to leave his money to good causes like that. I’m definitely a late saver. I really regret that but I’m trying now to make up for it. Since our debts were paid off, my husband and I still live more or less like we did before. Every spare penny is saved – at the moment it’s for a deposit for a house but then everything will go into retirement savings.

  16. Great information, and people should save more. Dont spend your money on useless things because you see it in commercials. Be smart with your money and you will be better off in the end!