What do you think about the person driving an expensive car?

Do you think “Wow, that guy is cool!” Or do you think “Wow, if I had that car everyone would think I am cool!”

I bet it’s the latter.

It is a sort of paradox of human nature. People buy expensive things to show off to others, but other people see that wealth as a marker for them to aspire to – not the person behind it.

You can see this at any income level. From the person who rents rims to put on their car to the CEO who loves the opportunity to show off his private jet. (In fact, there is a market to rent parked private jets for 10-15 minutes so that people can take selfies for social media. Do you think those people have one thought for how cool the actual owner of the jet is?)

Don’t take what I say the wrong way. The pursuit of a better life is crucial for your happiness. The happiest people on the planet are the ones who are always evaluating and improving themselves and their situation in life. (The unhappy are often busy evaluating and judging others.)

What I mean to say is that true admiration from other people doesn’t come from what you own, it comes from your character. You will garner vastly more respect from other people by being friendly, intelligent, humble, and ethical than by having fancy things.

Warren Buffett is a perfect example of this in action.

He could afford to show off his wealth at the highest level of ostentatious display yet he drives a 2014 Cadillac XTS ($70,000 when new), lives in the same house he bought in 1958, and buys his breakfast from McDonald’s.

Back to my first question about an expensive car. In the absence of other knowledge about a person, we judge wealth by what we see. People don’t walk around with their net worth projected above their heads like they are in the video game The Sims.

Since we don’t see those number we can only surmise that they had $300,000 to spend on a new Ferrari and now have $300,000 less than they did before and therefore are rich because they did so. Or at least that is our first assumption. This is the modern world after all, and the modern world has become an expert at assisting people to fake it until they make it – for a monthly payment, of course.

So yes, faking it can allow someone a taste for a cut of your future monthly cash flow. It can allow someone to pretend to be wealthy long enough for them to show off to their friends on social media.

But wealth is what you don’t see. It’s the big home not purchased. The expensive car not bought. The nights out forgone, the monthly payments declined. Wealth is assets purchased that you don’t personally use. It is growing investments and investments that pay you to own them, like the dividend or rental payment that hits your bank account.

But the normal person doesn’t think about wealth like that because they don’t see what they can’t see.

If you spend your money on stuff, you get stuff instead of money. So when most people say they want to become a multi-millionaire they mean that they want to spend millions of dollars on stuff.

Which is the exact opposite way to become a millionaire.

But there is also another layer of wealth, ‘real’ wealth. Real wealth is owning your time instead of being forced to work to survive. It comes once you have built up enough assets to live off of them indefinitely. That’s why I am in deep pursuit of financial independence.

But that does come at the cost of not displaying my wealth by being surrounded by fancy stuff. However, that’s a cost I can happily live with.

P.S.

You might just think I am someone who never experienced either side of this mindset. But I have. I used to live in a mansion in Hawai’i. I drove a kickass Dodge Challenger.

Did anyone care? Did anyone think I was cool because of that?

Nope.

That stuff doesn’t matter. But I sure was paying a heck of a lot of my cash flow each month to keep up those appearances.

I gave up caring about all those symbols of money and instead focus on becoming financially free. To own my time, my life.

Here is where I wrote about all that, with pictures.