Being in the banking industry I get asked all the time whether I see archetype customers walk through my doors, i.e. the big spender or the tight wad. The answer is yes, we see these kinds of people, but what we don’t see is a stereotype. What I mean is, not all women are shop-a-holic’s and not all men wearing designer suits have matching bank accounts. What you see isn’t always what you get.
If I’ve learned anything it’s that people are surprising. I’ve had customers that have walked in dressed as a street urchin and smelling to high heaven. The natural assumption is that they are homeless and penniless – living off of welfare and our hard-earned tax dollars because they’re too lazy to get a job. But, when you look at the account it tells a whole different story completely. They’ve got money, and lots of it. Conversely, I’ve seen customers step out of million dollar cars and wearing designer suits walk in. They’ve got that swag, you know, the walk that reeks of money. But, when you pull up their account you’d find they’re usually overdrawn. How’s that for irony?
You can’t make a judgment about someone based on the clothes that they wear, the car that they drive, or the walk that they walk. You just never know!
I worked for a bank whose CEO was the kind who liked to make assumptions about people and their money. At one of our annual meetings, he flat out told everyone that if we were opening an account for someone with only $25 and someone else walked in with $1 million to deposit, we were REQUIRED to leave the customer with no money and talk to the customer with money. Color me stupid, but how is that a non-discriminatory practice? Furthermore, what does that say about the type of business that he runs and what does that say about me for working there? Needless to say, I didn’t stay long.
But, as an example of how that backfired on him, we had a situation where an employee did what he was told. There was a man who walked in with a few thousand dollars to deposit into a free checking account. The employee began opening the man’s account and as they talked, the employee made the assumption that this few thousand was all the man had. So, when another customer walked in and wanted to open an account with $100,000 – guess who the employee picked as the better customer? That’s right, the $100,000 man. As it turns out, the guy with a few thousand dollars was just giving the bank a try. He had over $3 million in total assets that he was looking to move because he was unhappy with his bank. Had the employee done his job instead of making assumptions, he would have discovered this information. But, he assumed the guy with $100,000 was a better customer and so he focused his attention there, leaving someone else to handle the man with a few thousand dollars.
Just in case you’re wondering, the guy with $100,000 turned out to be kiting money between three different banks – all of which was part of a much larger money laundering scheme. I doubt very much the employee is still in the industry. All he saw were dollar signs and incentives for him. He missed the warning signs of trouble and he snubbed someone with much more legitimate worth. I believe the CEO was also relieved of his responsibilities when his comments and this situation were brought before the stockholders.
Honestly, the biggest difference between those with money and those without are their spending habits. If you pulled an average three month statement for someone without money and looked at it, you’d typically find erratic spending behaviors – eating out is the biggest offender! If you looked at someone with money, you’d see less spending across the board and you definitely don’t see a lot of eating out.
So, let’s do the math. Let’s say you eat out three times a week, at least two meals each time (believe me, this isn’t a stretch, I’m probably underestimating). I live in Austin, so the average meal costs about $10 roughly. This takes into account sit-down meals and tip. So, on average, a meal costs an individual $10. At two meals, three times a week you’re talking $60. Multiply that by four weeks in a month and that’s $240 just to eat out. But wait! Take $240 times 12 months and you’ll see that people spend $2880 a year just eating out – this doesn’t include the additional money spent on groceries each month.
This example is one I talk about a lot, EVERY DAY! People come in and they can’t understand why their account is overdrawn, what could they possibly be spending their money on? When we pull their statements and look at them, eating out is a large chunk of where their money goes. And the thing is, it’s a tough habit to break. People reason that they have to eat and it’s no big deal – I’m guilty of that myself! But those who have money have learned frugal living – unless you’re Paris Hilton and have money handed to you, but that’s another story.
If you truly sit down and examine your budget, you can figure out a way to save money and build wealth. It may take some cut-backs and sacrifices, but it’s better than struggling month to month. I often wonder how those customers who pretend they have so much money actually live the lie. It’s got to be a lot of pressure and a lot of lying.
Bottom line: Don’t assume that you know someone’s worth just by looking at them. They may drive a beat-up Honda because they know a depreciating asset isn’t the way to build wealth. They aren’t concerned with outdoing the Joneses; they’re concerned with ensuring they have a financial future. On the flip side though, don’t assume just because someone has money that they actually know what to do with it. Take the fact that Jose Canseco just foreclosed on his mansion. He bought more than he could really afford given his financial situation and now he’s paying the price.