Looking Rich Versus Being Rich

Looking Rich Versus Being Rich

Cleaning up my computer recently I came across an article that I’d copied and pasted for safe keeping back in the days before Google was a verb. “Simple living yields simply millions in savings” was a real eye opener at a time when I had just started my first job and was beginning to develop my financial philosophy.

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I’d always liked money and I knew I wanted more of it, but I had never thought that I could one day become a millionaire. To me, the rich earnt a lot of money or had inherited it and they looked like millionaires living in big houses, wearing expensive clothes and driving flashy cars.

The Millionaire Next Door turned that idea on its head. It turns out that looks can be deceiving as many millionaires are indistinguishable from the rest of us.

Looking Rich Versus Being Rich

Looking like a millionaire isn’t the same as being a millionaire. While being ‘rich’ is hard to define, having a net worth of $1 million is specific and measurable. Quite simply, you’re a millionaire if you have assets worth $1 million and over, while you can have a million dollar lifestyle but virtually zero net worth.

With this insight I studied the habits of the people around me. In my family, debt elimination and financial security counted more than appearances. But I knew colleagues, neighbours and friends who looked very well off despite having a similar household income. I had often wondered how they could afford new cars when the one I’d just learnt to drive in was over a decade old and not getting replaced any time soon. Now I knew.

While most people don’t openly talk numbers, many are quite happy to hint at their financial situation and discuss credit. And that it turns out is what was driving the appearance of wealth.

When my boyfriend bought a 6 year old car it was what he could afford in cash, while our ‘wealthy’ neighbour got finance for his luxury car. Colleagues were paying for spur-of-the-moment overseas holidays on credit cards and bought nice houses in good suburbs with big mortgages. Doing the sums it was pretty clear that the hedonists couldn’t be both spending a lot and saving a lot. But they sure looked like they could afford anything they wanted. Unlike us.

Looking rich to fit in

I’ll be honest, I get jealous seeing how other people spend their money. Like watching friends buy beautiful houses that I would love to live in, but know that I can’t afford without going into debt or compromising my financial security. I’ve felt left out when a colleague has suddenly become demi-gods in the eyes of others because of their flashy new stuff.

The reality is, that the well-worn path to becoming a millionaire is through compulsive saving and investing.

Working towards this goal has the significant downside of going against the grain in our easy credit society. It feels uncomfortable to not fit in with what the group is doing. Being the centre of attention and source of the envy does feel good from time to time.Stop trying to look rich to become wealthy

The trouble is you can’t see investment portfolios, nest eggs or mortgage free homes.

If appearances count for a lot, don’t expect to grow your net worth fast. To become a real millionaire, you need to let go of how financially secure you appear to others. That’s easier said than done.

How to letting go of looking rich

Letting go of the need to look rich involves changing your mind set. It means making choices around how you spend your money based on your actual needs and priorities, not other people’s perceptions. Change your thinking by:

  • Focus on your priorities. What is important to you?
  • Monitor your thoughts. What are you thinking when you see other people with things you want? How does it make you feel? Figure out how those things were purchased. Does the person look rich or are they rich?
  • Remind yourself of your goals. Where do you want to be in 6 months, 12 months, 5 years, 20 years? Is the way your friends spend consistent with your goals?
  • Accept that working towards your goals might feel uncomfortable sometimes. It might bring up unpleasant feelings like jealousy or frustration. Acknowledge whatever comes up and accept that these are just part of the experience of achieving something.

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3 thoughts on “Looking Rich Versus Being Rich”

  • “There are thousands and thousands of people out there living lives of quiet screaming desperation who work long hours, at jobs they hate, to enable them to buy things they don’t need to impress people they don’t like”. I know that the feeling of financial security is greater than the benefit of trying to impress others.

  • Well said! Letting go can be hard, but the good bit is that once you’ve made that first step all of the others come easier. Killing yourself and missing out on more important things to impress strangers doesn’t seem rational, but it takes an amazing amount of discipline to free yourself. The good news is it’s a lot more fun on this side!

  • it s always a nice balance isn t it between wants and needs. i personnaly value a lot that overseas travel (that i pay cash obviously :-)) but both our cars are more than 10 years old… our second one just bought… one month ago!

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