There’s a huge difference in trying to look rich versus being rich. The term “rich” is subjective and we can argue over exactly what that means. I really love the definition of rich that Jen Sincero gives in her book, You are a Badass at Making Money.
“RICH = Able to afford all of the things and experiences required to fully experience your most authentic life.”
Our current culture is obsessed with the outward appearance of wealth and success. Media fills our feeds with the latest celebrity endorsed products that will make our lives complete. Credit card companies gladly extend our limits to buy the things that allow us to look rich, even when we’re living paycheck to paycheck. Unfortunately, people with paychecks large and small fall into this trap.
The truth is that there’s no way to tell if a person is truly financially successful by looking at them.
The other day, I interviewed two men who run entrepreneurial training programs for minorities to combat poverty in their respective cities: Allen Woods of Mortar Cincinnati and Anthony Watkins of Launch Chattanooga. We were discussing this phenomenon of people at all income levels who ruin their financial health by trying to look rich. Anthony related a story of a guy who just bought fancy rims for his car, and then had the nerve to hit him up for loan because he needed grocery money to buy his kids some milk. And don’t think this only happens in the inner city or suburbs, because it’s even worse at the country club!
Seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year, according to a 2017 report from CareerBuilder.
Years ago, I worked with a guy, we’ll call him “Jake,” who earned a high income but had almost no net worth. Jake looked rich. His McMansion backed up to the golf course. He drove an Escalade and wore designer clothes and shoes. In fact, he bought the best things money could buy.
Yes, his income was high, but Jake spent the bank’s money because he’d already blown through his own. Every single thing he “owned” came with a monthly payment. On more than one occasion, Jake asked for an advance on his commission so he could pay his bills. This guy was making twice my income, but likely had one-tenth my net worth! Trying to look rich will make you poor, and it wouldn’t surprise me if Jake eventually ends up in bankruptcy court.
Trying To Look Rich versus Being Rich:
People who are trying to look rich buy things that decrease in value. People who are rich (or want to be rich) buy things that increase in value or provide positive cash flow.
People who are trying look rich get their worth from the approval of others. Financially healthy people have a strong sense of self-worth that’s not dependent upon the whims of other people.
People who are trying to look rich are always living on the edge financially with little to no money in savings. The rich know that saved money will allow them to comfortably handle emergencies and seize opportunities to invest.
People who are trying to look rich accumulate debt for impulse purchases and non-necessities, like vacations and designer clothes. Those who are financially wise exercise patience to save up the money and wait for the right deal.
People who are trying to look rich are “all about me.” They are wrapped up in themselves and their possessions. Financially healthy people have the resources to help others and support causes and charities close to their hearts.