The Difference Between Looking Rich and Being Rich

iStock_000016590826XSmallRecently, I’ve been giving a lot of thought to appearances. There have been two instances, recently, in which I have seen people I know desperately trying to look as though they are rich. One of them is throwing a lavish wedding that he can’t really afford, and the other is trying to figure out how to pay the bills that keep piling up without having to give up his expensive luxury SUV.

Both of them are stuck in the idea of looking rich, rather than worrying overmuch about whether or not they have true wealth. They have enough money to qualify for the debt required to meet their ideas of how their lives should look.

I’m going to write that again: They have enough money to qualify for the debt required to meet their ideas of how their lives should look.

Neither of them can actually afford what they are doing. They don’t have the money to pay for their expenses. From the outside, the casual observer would probably think that they are rich. One is having a wedding that will be the height of fashion, and the other has a nice house and the latest model luxury SUV. How could they not be rich?

The reality is that they only look rich to outside observers. It probably doesn’t occur to these outside observers, and probably not even to many of these men’s friends, that these guys aren’t rich. Their so-called wealth is actually debt.

When Image is More Important than Financial Security

For these men, the problem is that, to them, image is important — more important even than being financially secure. Being rich comes with a certain status in our society, and they like the idea of being looked up to for their wealth. And, of course, the wedding, the house, the clothes, the car, and other trappings are all indications of how much money they have.

Neither of these men is what most of us would call “poor.” They make good money. They have a little something set aside for retirement. They don’t even have bad credit. However, their resources aren’t such that they can afford all the things they spend their money on. Most months they live paycheck to paycheck, and when they want something extra, they borrow the money.

My friend with the SUV is worried about a drop in income, since he can’t really afford his lifestyle, but he doesn’t want to go through the pain involved to get back on track, probably selling his expensive house, and trading in the SUV for something a little more downscale. He’s afraid that his friends and family won’t think as much of him when he’s no longer “rich.” The friend throwing the wedding is trying to impress his bride’s family by showing them how “rich” he is.

In both cases, the drive is to maintain an image, and financial security isn’t important at all. They’d rather live as though they’re rich, and have others think they’re wealthy, than make changes. Unfortunately, that type of behavior is not financially sustainable. Eventually they’ll run out of credit, or something unexpected will strain their finances, and everything will come crashing down.

True Wealth: Live Within Your Means

Being truly rich isn’t about the things you have, or how you look to others. It’s about having financial security, and it’s about having actual assets, rather than using debt to buy things that look fine and fancy, but really just represent a drain on your resources.

In my mind, being rich doesn’t even have to do with a specific amount of money, or a type of car, or big house. To me, being truly wealthy is having enough for your needs and most of your wants, and spending time with the people you love in good health. I know people in my modest neighborhood who live within their means, and build their futures, who are wealthier than those who live in the “rich” section of town, in a big house.

Instead of concentrating on the trappings of what you think represents wealth, consider what truly makes you rich in your life. Do you really need — or even want — those things? Create the life you want, based on your own goals, and live within your means. You’ll find your wealth growing, and you won’t need to prove your worth to anyone.

What do you think?


The Difference Between Looking Rich and Being Rich — 35 Comments

  1. I think it is easy to get caught up in comparing yourself to your neighbours or friends but this doesn’t make you happy. Often when you start to spend less or lose the trappings of looking rich, you find real contentment.

    • I agree. Really, the only person you should be comparing yourself is to you. Are you making the progress you want to make as an individual and in your finances? That’s all that matters.

  2. Good post! It’s easy to get caught up in the felt need to spend money and have status symbols that make you look well to do. In the end, 99% of that stuff is just “stuff” and really hold no value. There’s something to be said for the millionaires who drive used cars or live in the same home for decades…I live 15 minutes from Buffett, so I am well aware of that. I think a big part of it is being content and living for the future and not for others.

    • We tend to think that “stuff” has the same value as money. However, we often forget that most of our things depreciate in value. So that stuff we have isn’t as good as having true wealth.

  3. Couldn’t agree more. Sometimes I wonder which part of my life/possessions is REALLY me and which part has been sold to me by marketers, family, friends, the Joneses… I’d like to think not much but it is easy to want things just because people have them.

    • Great point. Too often we get caught up in what we “should” have — according to society. Instead, we should be looking at what we really value and making sure our spending aligns with our priorities.

  4. Good stuff! It’s really important for us to live within our means and not to get too caught up buying things we don’t really need. The tendency to crave for things we see on other people or buy the latest stuff on the market forces us to live beyond our means so we need to learn not to buy on impulse and spend more time thinking if we really need them.

  5. I agree that true wealth comes from living within your means. It means you are emotionally secure and rich inside, where it counts. It has taken me YEARS to get there, because I too have lived beyond my means and still I have house envy, etc, but am learning. I know what I have earned in my life for me, it’s crap to others, but others don’t have to like it, I do. AND I DO finally like where I live and how I am living. I do love to look at nice houses and wonder why I didn’t end up there, but… that is normal I think. The difference now is that I can look and wonder, but I don’t rush out and buy something to make me feel better. I walk past the house, go home and sweep my little floor or light a candle and be happy with what I have. I am grateful and I am wealthy!

    • I think we all sometimes wonder “what if…” But it’s good to remember that no matter how much we have, someone else will always have more, and there is always more to be had. And if we make having more a goal, we’ll never reach — and never be content.

  6. I’m not concern at all about looking rich. I guess it depends on where you live and who your friends/colleagues are. My neighborhood is modest and nobody really care about keeping up with the Jones. I’d rather have financial security than look rich.

  7. More things just make for more clutter anyway. Living in the moment and being happy with what you have is good enough for me. I think being financially independent is the ultimate form of being rich and that’s what I’m attempting to accomplish. Buying stuff I don’t need to fit in with people I don’t care about shouldn’t be part of my plan.

  8. I feel a lot of people driving luxury cars really can’t afford them and just get them for the image it portrays. I definitely plan to accumulate wealth but I doubt you would be able to tell I am wealthy in the future because I wont be buying the luxury items most people associate with wealth.

  9. Great post! You have highlighted why so many are in financial trouble. There life is caught up in worrying about what other people think about them. This causes them to make faulty decisions with their money as they try to impress people. As you said, better to think on what makes you rich in your life.

  10. I live in southern California where too many people give the image of rich. The fancy cars, homes or clothes that are all financed. I have a high net worth, although you would never know it. I live modestly and I like it that way.

  11. The older I get the more I think it’s fun to look like I have less money than I do. I prefer to be “Joe regular guy.” People that try to punch up their wealth are annoying. Just be yourself instead of trying to impress me. (I’m impressed by zero payments and a cool looking tee shirt, so you’re probably barking up the wrong tree impressing me anyway….).

  12. I wrote a blog post once about my mate Mr.Money Bags and it’s true some people will stop at nothing, not even debt to look like they are living it up in the posh lifestyle. Some people spend more than they make, and pretend that it doesn’t matter and the line of credit builds and builds until it bursts at the seems and they say, “I don’t know what happen”. Come on, take your head out the sand and back into reality, no amount of “stuff” will keep a roof over your head and food on the table.

    • Well said. I think some people are addicted to spending. They just can’t seem to stop and they are unaware that they have a problem. Others just are in denial in thinking that they will always be able to find money when they need it somewhere – that credit won’t run out. Eventually it does though and then the happiness fades pretty fast.

  13. EXCELLENT post! Before my parents got divorced, my dad was REALLY into image and looking rich and happy. And if I undersatnd, he could actually cover the expenses with his big coproprate job, but of course, no one was happy. But we looked happy. Image and wanting to present ourselves to others in a certain way is a big thing for some people, man.

    I liked this idea a lot about what it means to actually be rich: “It’s about having financial security.” And that’s really what it is. It’s not at all about the stuff you have, it’s about financial security. Great point!

    • When you are trying to impress someone else all the time, it’s hard to be happy. Instead, you just need to improve yourself, and find your own version of wealth. Living someone else’s ideal, rather than your own, rarely ends well for you.

  14. Excellent points. The ability to qualify for payment is not rich, and then you get caught in the cycle, and keep taking on payments. I’ve been there and it’s much better to buy only what you need and can pay for without payments.

  15. Financial security is so much more important to me then things that people can see. Knowing that I have an emergency fund (something no one knows about but me) is what keeps me happy, not a fancy car or a big house.

  16. I see people trying to look rich all too often. The most common indicator of this is when people are constantly leasing cars, just so they can have a new car all the time. Leasing a car is not financially smart for the average homeowner. I don’t understand why people are so into looking rich that they drive their finances into the ground. Well, without people like that, there’d be no business for financial advisers.

  17. Miranda, an excellent piece! It’s alarming how collectively, ‘we’ as a society have become so addicted to consumerism and keeping up with appearances! The tenets of common sense, living within one’s means, delayed gratification and real contentment, all seem to be strange concepts in today’s world! I still think that financial literacy should be taught throughout the high school/university levels….people are graduating, smarter in their fields but more ignorant about how money really works (poor money sense)! Thanks again for such an insightful piece.

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