We all use 2 words ‘Rich’, ‘Wealthy’ interchangeably to describe people who have a lot of money. Lets look at the below pictures and hold your thoughts. For a minute we will conclude that the guy in the first picture as filthy rich and second as a middle class person trying to meet ends. Cant blame us “what is exhibited will only be sold“, isnt it?
Society evaluate your wealth based on the car your drive, house you live in, watches you wear, the vacations you take, the corporate title you hold, the school your kids go to and so on. A person driving a $15,000 used car but owning assets worth $5 Million is considered broke whereas a person driving a $100,000 car and living in an expensive neighborhood but with a net worth of $150,000 is considered rich. Human beings are susceptible to social influence and validations from our evolutionary days and we will always strive to maintain a social identity.
I heard this funny quote somewhere recently, not sure who said it ““We buy things we don’t need with money we don’t have to impress people we don’t like.” There is a fundamental difference between what is perceived as wealth (external) and what is a true wealth (internal). People looking to get wealthy should understand why they need that wealth? is it for materialistic reasons or is it inner happiness? It might not be our natural wiring to seek the latter, but we can change our mindset through practice.
True wealth could be any of the following combinations in our life:
- Freedom to do the work we love everyday
- Ability to support causes that we really care about in the world
- Good house with a lot of loving family members
- Pursue new passions whenever we want like learning to sing, preparing for a hike, learning golf etc
- Great healthy body without illness (not six pack !!)
- Loving to travel around and create great memories
And it could be luxury cars or even houses, nothing wrong with that. But that has to be affordable well within your means. A person with a sound financial networth of $10 million can easily buy a $500,000 car might be perfectly ok. But for 95% of common people who do a job to make a living should prioritize being wealthy than trying to look rich. This means deferring gratitude and buying things when it is well within our means. Especially avoid taking debt to buy things to appear rich in front of the society. We sell our future by 20 or 30 years when we take debt to cover these expenses.
Let me recommend a great book for reading over weekend covering this topic in detail if you have not read already. Its called The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas Stanley and William Danko.