“One person pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth” – Proverbs 13:7
“Better to be a nobody and yet have a servant than pretend to be somebody and have no food” – Proverbs 12:9
Perhaps one of the biggest reasons why many people do not have wealth is because they waste so much of it trying to look wealthy. We live in a culture where we are never satisfied with what we have. Dissatisfied with our current status, we use our purchases to project the life we wish to have. In the words of Dave Ramsey, “We buy things we don't need with money we don't have to impress people we don't even like”.
That mentality will keep you from obtaining the wealth you desire. If you truly want to get to the point where you have real, tangible wealth, you’re going to have to start by not caring how you look to people around you. Rather than purchase the latest Mercedez Benz or BMW, be content with a Honda Civic or Toyota Corolla. I get it, those cars don’t signal success. But who cares? The money you save on car payments can be used towards investments that will lead to actual success. By me saying this, I am not suggesting that it is wrong to purchase a luxury vehicle. My point is that it isn’t worth it if you can’t afford it. The five second feeling of prestige you get when you step into that car in a parking lot is not worth the $900 a month payment. This principle does not only apply to cars, but also to the home you purchase, the shoes you wear, the jewelry you put on, and the restaurants you frequent. All these things, while not bad in and of itself, can lead you down a debt death trap if you aren’t careful.
“But JP; I worked hard for my degree. I have a good job. I would like to reward myself with something nice for the work I put in”. Great! I want you to reward yourself with something nice. Believe me, I am not suggesting that you need to live like you are still in college once you’ve landed a good job. I’m only stating that if you spend your time projecting like you are a millionaire, you will never become a millionaire. Before you start buying expensive items, here are three things that I would suggest doing first. First, work aggressively to pay off the debt that you have with the good money you make. Second, direct a portion of your paycheck towards savings for the unexpected. Lastly invest another portion of your paycheck to build the wealth you’re going to need to live off on in the future. Until you do those three things, you are going to have to fight the inner pride that wants to project to people that you are successful. But, once you have done those things and are debt free, guess what you’ll have the luxury of being able to buy…anything you want. When you focus your energy, not on looking rich and successful, but on actually becoming rich and successful, guess what you’ll eventually be, rich and successful. But when you focus your energy on appearing rich, while accumulating a ton of debt, you will not attain the financial success you desire.
I readily admit that this thinking is counterintuitive to the culture we’ve been brought up in. When you watch TV or go on social media, it seems as though the most successful people also have a lot of nice things. When you think of those people you know around you that have nice jobs, you probably see them owning very nice things. So, it would appear that having very nice “stuff” did not prevent them from becoming wealthy. This is where I’m going to have to be like Dorothy in the “Wizard of Oz” and pull back the curtain to expose reality to you. I have been an advisor for nearly fourteen years, and during my tenure, I have had the pleasure of sitting down in a lot of different homes on appointments. There have been many times where, based on how nice the home looked, I assumed that the prospect also had great savings for retirement. Sometimes those assumptions were correct. Other times however, I learned that Mastercard and American Express was financing a lot of that lifestyle. There was a lot of debt behind that beautiful home. On the flip side, I have sat down with people in homes that you wouldn’t find on the cover of any magazine. When I opened their investment portfolio statements, they had a portfolio that ensured that they and their children were set up for life. Of those two scenarios, who would you rather be?
Author, Thomas Stanley wrote a book that chronicled people who were millionaires, and he titled the book, “The Millionaire Next Door”. When you read the book, what you discover is that the vast majority of millionaires weren’t living like the Kardashians. In fact, only a fraction of true millionaires actually lived that way. The majority of millionaires lived modestly. It was their humble and modest living that allowed them to accumulate the money that put them in millionaire status. Them living within their means actually enabled them to have wealth beyond their dreams.
Don’t be fooled into thinking that projecting a lifestyle will lead to success. It won’t. In fact, it will probably lead you down the opposite road. If you want to truly become wealthy, here is my advice: stop acting rich.