Most people are not very good at picking out of a crowd who has millions of dollars in wealth. The reason is very counter intuitive to us. We expect them to drive a BMW, wear fashionable clothes, have the latest gadgets and be condescending to all the poor people beneath them. I couple years ago I was no different. I envied the guy driving a brand new BMW M3 pulling into a 4 car garage connected to his 5000 square foot house. I assumed he has a lot of money in the bank. The fact is people that have the most wealth generally will look just like the rest of us, most drive regular used cars and wear jeans and normal looking T-shirts. They didn’t accumulate wealth by buying their daily coffee at Starbucks, driving expensive cars, or wearing the most expensive clothes and watches.
To pick one I see every day, most people assume when they see someone driving a nice brand new BMW, Mercedes or other luxury car that they are very well off. The fact is you can assume the vast majority of these people have very little wealth. They may make a lot of money each year but spend the vast majority of it and save very little. Many are living beyond their means, living on credit card debt and are on the verge of bankruptcy. It turns out if a person has a lot of wealth they will also understand the principles of money, they understand expensive cars loose a ton of money to depreciation, cost a lot to insure and that money is better off in other investments. Same goes for big expensive trucks, electronic gadgets and large houses. Houses should not depreciate but you will have a large mortgage, property tax, insurance and energy bills all to pay for several rooms you probably never use instead of putting into investments that earn you money. If they’re spending money on luxurious items like that, they probably aren’t saving any of it and the research has continued to back it up.
Some people are very materialistic, they will spend all of their money acquiring big houses, nice cars, jewelry, electronics and dining out. Credit cards allow them to go thousands or tens of thousands in debt in helping to worsen their psychological disorder. When their income raises they just buy more expensive things(like trading in a couple year old Ford for a new BMW).
Some people are very non materialistic, they’re often usually happier and enjoy the simpler things in life over materialistic possessions. Most materialistic people are very confused by this and assume we work hard and deprive ourselves when we don’t buy the newest iPad and ask questions like, “but don’t you miss giving up this and that”, “can’t take it with you” or “you have to live a little”. I’m perfectly happy with my 6 year old basic 720p TV, 9 year old car and small 1950’s house. I like brewing my own coffee, I enjoy cooking and I don’t mind working on my house or cars. I also don’t think I’m living less because I don’t have cable TV, a fancy car or big house. When I reach my goal I expect to live, experience and do more than the average person even dreams.
When you’re careful with money and don’t spend it all, you accumulate more wealth. The more you save, the more wealth you gain. Most people that learn this lesson end up never changing their habits even after they acquire millions or even billions. Warren Buffet still lives in a modest house even though he could afford something ridiculous, like a billion dollar mansion. Wealth is power and control over your life. Today’s Income is the vehicle you can use to get there.
If you really want to emulate rich people, you’ll stop buying frivolous expensive items, live a simpler life and remember to pity the next person you see driving that car you want, they probably went in debt up to their eye balls to get it.