7 money secrets of the super wealthy

"In an effort to keep children motivated, parents shelter children from their wealth, as best they can," Sullivan writes. "It is not unlike parents of middle-class children who don't talk about money and leave their kids to guess about how much they have when they might have far less."

This leads to what he calls "sheltered inheritors," or kids who have no concept of how to deal with the massive wealth they've received.

There's another approach, though: Sullivan writes of Doug Ideker, who started and owned a building-supply company in Colorado until he sold it for enough money to retire in his 40s. He always decreed that his two sons either find summer jobs on their own or work for his company ... on the loading dock at 6:30 a.m.

He created two adult sons who are "inspired inheritors," which Sullivan describes as "a class of kids who are driven in spite of their family's wealth."

In some cases, the IRS can present a major threat to super wealthy people ... unless they're smart about their taxes.

"The wealthiest people understand that with the proper guidance, they can pay exactly the amount they're supposed to pay in taxes — not a penny more," Sullivan says. "That's a lot less than what people think the bill will be. There's a way for them to work the system without breaking the law."

Sullivan characterizes wealthy spenders into three types:

Dissipators, who get rich young through something like a professional sports contract or selling a company, and will never earn that much again.

Accumulators, who "amass a pile of money doing something that is intellectually interesting or challenging but wait until much later to spend it on something they are passionate about."

Make-and-spenders, who let money come in and go out as they make what they need and buy what they want.

But the ones who remain wealthy are the ones who recognize their wealth is limited.

In a chapter called "Spending Tips From People Who Spend a Lot But Aren't Broke," Sullivan speaks to Adam Carriker, former defensive end for the St. Louis Rams.

After getting a five-year, $14.5 million contract in 2007, Carriker missed a season due to injury and was then traded to another team across the country, having to sell his local home at a loss.

"The best line I've heard was 'Don't live like a king for a little bit, live like a prince forever,'" he told Sullivan. "Once they've lived like a king, it's gone."

One of the highlights of research Sullivan conducted with Dr. Brad Klontz was how the spending habits of the super wealthy compare to the wealthy.

"The two takeaways are that the main difference between the 1% and the average wealthy person — the 5%, the 10% — is that the 1% eats out 30% less, and they save 30% more of their income for retirement or whatever they may need," Sullivan says.

He continues, "To me, it's a great example of the choices and decisions and behaviors in the book — not, 'I'm going to deprive myself and hoard my money,' or 'I'm going to spend it all now and hope more comes in.' It's making rational choices to make sure you're still wealthy many years from now."

The super wealthy suspect that things might not always be as good as they are today. In fact, they know it.

"The savviest people are still enjoying themselves today," Sullivan explains. "They're not living like monks, but they're imagining a time in which something will go wrong and very carefully putting money aside. They're making sure they have that cushion so when that thing does happen, it's not completely destructive to the life they were living."

"It's either heartening or depressing, based on your point of view, that people with money make the same ridiculous mistakes that everyone else does," Sullivan says.

The survey Sullivan and Klontz conducted found the following, as described in "The Thin Green Line":

... The One Percent were actually more likely than the top 5 percent to make common investing mistakes. They were overconfident in their investing ability. They made more trades. They took pride in selling winners, and they were more likely to hold on to investments that had lost value instead of selling them, taking the loss, and moving on to something else. They also invested in businesses run by friends — even though they said they knew it was a bad idea — and took friends' advice over that of a financial adviser on investments.

For an example of what it might mean to be fully rational about money, read the question economist Richard Thaler posed to Sullivan.

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