This Content Is Only For Subscribers
If you see a Ferrari driving around, you might intuitively assume the owner of the car is rich, even if you are not paying much attention to them. But as I got to know some of these people I realized that was not always the case. Many are mediocre successes who spent a huge percentage of their paycheck on a car.
Someone driving a $1000000 car might be wealthy. But the only data pint you have about their wealth is that they have $100,000 less than they did before they bought the car. That is all you know about them.
We tend to judge wealth by what we see, because that is the information we have in fort of us. We cannot see people’s bank account or brokerage statements. So we rely on outward appearances to gauge financial success.
Wealth is the nice cars not purchased. The diamonds not bought. The watches not worn, the clothes forgone and the first class upgrade declined. Wealth if financial assets that have not yet been converted into the stuff you see.
That is not how we think about wealth, because you cannot contextualize what you cannot see.
Singer Rihanna really went bankrupt after overspending and sued her financial advisory. Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?
The only way to be wealth is to not spend the money that you do have. It is not just the only way to accumulate wealth, it is the very dentition of wealth.
Wealth is hidden. It is income not spent. Wealth is an opting not yet taken to buy something later. Its value lies in offering you options, flexibility and growth to one day purchase more stuff than you could right now.
The problem for any of us is that it is easy to find rich role models. It is harder to find wealthy ones because by definition their success is more hidden.
There are, off course, wealthy people who also spend a lot of money on stuff. But even in those cases what we see is their richness, not their wealth. We see the cars they chose to buy and perhaps the school they choose to send their kids to. We do not see the saving, retirement accounts or investment portfolios.
I think most people, deep down, went to be wealthy. They want freedom and flexibility which is what financial assets not yet spent can give you. But it is so ingrained in us that to have money is to spend money that we do not get to see the restraint it takes to actually be wealthy. And since we cannot see it, it is hard to learn about it.
