We all have friends that love to buy the finer things in life. They drive nice cars, live in a big house, and when they dine out they always go to the expensive places with the trendy eats. In short, they live a high dollar lifestyle where they love to display their wealth for everyone around them to see.
The thing is, quite often those same people who are living the high-consumption lifestyle are the same ones who are struggling to get by with huge mortgages, large car payments and home equity loans. Even if they’ve got relatively high incomes far too often they live beyond their means.
Time To Stop Acting Rich
In his book “Stop Acting Rich“, Thomas J. Stanley talks about how far too often we are substituting a life of actual wealth creation, for one where wealth is only an illusion.
Ours is a culture of hyperconsumerism. Not only can and do we buy nearly anything (except for the truly outrageously expensive), but we seem to have come to believe that we can and should have it all and that who we are is dependent on the ability to live in the right neighborhoods, with appropriately sized homes filled with brand-name appliances, with prestige cars parked in the driveway with expensive golf bags and clubs in the trunk and so on. And so we spend.
We spend to excess, and attempt to display a persona to those around us that says “I’m successful”. The problem is, most of the world’s millionaires aren’t living a high consumption lifestyle with all the expensive trappings. In fact, most of them have become wealthy because they are able to live below their means, and live less “flashy” lives.
You can act rich or actually become rich. Few of us will ever be able to do both, and we certainly won’t bet rich by acting the part before we have the financial resources with which to pay for la dolce vita.
We live in a time when it has never been easier to act rich than to actually become rich, even with the devastation of the financial crisis. At the end of the day, not only are we bad actors because it is simply impossible for us to keep up with the glittering rich (if we buy one expensive, prestige car, they buy 20), but we are terribly misguided and ill informed about how millionaires really spend and what they actually buy. Instead of focusing on millionaires generally, we are enamored with the few glitteringly rich people.
Know first who you are, then adorn yourself accordingly – Euripides
We fool ourselves, and think that we can emulate the glittering rich lifestyles of the rich and famous – before we have the income to match – and afford the lifestyle.
If we truly want to be wealthy, we have to life below our means, and live a lifestyle that allows us to build wealth.
How Do Millionaires Spend?
When Stanley actually surveyed millionaires in his studies he found that they as a group were much more frugal than most people might think.
Let’s look at how real millionaires spend their money and what they pay for goods and services. Real millionaires pay about $16 for a haircut at a traditional barbershop… Only 5.7 percent of millionaires surveyed nationally paid $1000 or more for their most recently acquired suit… The watch he wears every day was purchased at a Wal-Mart store for $15..
Real millionaires don’t mind spending money, but they also know about buying things that give you good value. They don’t splurge on things they don’t want or need, and instead they save their money, invest, save and give. They also find greater pleasure in enjoying things that don’t cost money. Spending time with family, enjoying the outdoors, and working hard at their chosen profession.
So what’s the conclusion that we can draw from how real millionaires live? That the truly wealthy in this country aren’t the ones we see around us driving the expensive cars, or living in the 10,000 square foot homes. Those people are more than likely over-extended and in a hole. The truly wealthy are those that don’t have to flaunt it. They drive cars that have good value, and homes that are in the 300,000 dollar range. They became wealthy by living frugally, saving and investing the income that they created. They’re the ones I hope to emulate as I go on my own journey towards wealth.
Do you know people who live beyond their means and appear wealthy on the surface? Do you know someone who is truly wealthy? What do you think about the ideas of appearing wealthy vs. actually being wealthy? Tell us your thoughts in the comments!