Lately I’ve been thinking a lot about wealth. One of the most fascinating things to me about wealth is that it’s invisible. Oh, I know that a lot of times we THINK we can see it. We see someone driving an expensive SUV, a coworker who seems to spend part of every winter in the Caribbean, a friend who buys a house large enough to house an entire Haitian village, etc.
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In the moment, I know it seems like those people are wealthy. They’ve obviously purchased those items somehow, right? I’ve certainly seen the $60,000 SUV pull into the parking spot next to me (as I try to squeeze out of my well-used car without harming a single square centimeter of the expensive beast) and thought, “Sheesh. Must be nice.”
You Can’t Judge Wealth by First Impression
First impressions can often be wrong. One funny side note, a well-known story in our family is that of how Mr. CMF and I met. He was a classmate of mine in grad school. On one of the first days of class, I had a brief conversation/encounter with him and decided that I did not like him. I’m normally not like that- I usually have a “live and let live” philosophy with other people, and I really don’t usually rush to decide I don’t like someone. But the particular comment that he made that day really bugged me and caused me to immediately dislike him.
Obviously I got over it eventually. We’ve been married ten years now! But he holds an interesting distinction in my life, of being the only guy I’ve ever dated that I did not immediately like. That must have been the key, I guess.
Anyway, the point here is that first impressions can be wrong. 🙂
Just as my first impression of Mr. CMF was way off base (these days I think he’s pretty great, lol!) our impressions of others’ true wealth can be completely wrong too.
A Fascinating Encounter
A couple years ago I had a very interesting encounter with an old friend from high school, “Janet.” She’s a lawyer now, and her husband is also a lawyer. I hadn’t seen her in a few years.
In short order she had shared with me that she and her husband had recently bought her parents a house near them. “They’ve done so much for us, so we figured it was the least we could do.” I knew that her parents had recently gone through bankruptcy, so them needing a place to live made sense, but I was pretty floored to hear that she and her husband had bought her parents a house. I mean, who buys someone else a house??
I also knew that Janet graduated from school with six figure student loan debt, and that she must have some business loans from starting her law practice. But I figured they must be doing well so they can probably afford it. That made the next thing out her mouth even stranger.
Janet told me that she and her husband can’t afford furniture. As a matter of fact, they sleep on mattresses on the floor. WHAT?? I can’t even remember how I responded to her when she said that because I simply could not believe that she had just told me that they had recently purchased a home for her parents, yet they apparently could not afford furniture for their own home.
Anyone looking at this couple from the outside would probably make the assumption that they must be swimming in cash. Clearly that is not the case.
True Wealth is Not What You Think It Is
In my opinion, true wealth has absolutely nothing to do with the vehicle sitting in your driveway. It has nothing to do with where you live. It doesn’t even have anything to do with the last vacation you took. In my opinion, true wealth has to do with TIME.
Because when you drill it down, that’s why we all strive for financial freedom. We want the freedom to choose how we spend our time. If we hate our jobs, we want the freedom to be able to quit. True wealth can give you that.
The crazy thing is, if you spend all your money on expensive SUVs, expensive houses (or houses for other people!), or expensive vacations, you may continue to always be a slave to your job. I guess this is the classic example of the “Joneses.” As we all know, the Joneses do these things. 🙂 They have all the nice stuff and the trappings of a very expensive life- but time-wise, they are likely poor, without much in the way of true wealth. After all, it costs a lot of money to maintain a lifestyle like that! And if you start living like that as soon as you get your first job, it almost certainly means that you are sentencing yourself to the idea of working for many, many years.
The reason that so many of us strive for financial freedom is because what we really want is the freedom of TIME. We want to be able to choose how and where we spend our time. That could include working, traveling, volunteering, spending time with family, being a beach bum, etc. Anything! It doesn’t matter what you do. If you have created/saved/invested enough, then whatever your heart desires for your time could become a real possibility for you. THAT is true wealth.
True Wealth
True wealth is often invisible. As anyone who has ever read The Millionaire Next Door
True wealth is not what you think it is. Or rather, it’s not what most people think it is (after all, the awesome people reading this blog probably already have a good understanding of how to build true wealth, right?) And likewise, in order to get there we often have to abandon what other people think. Unfortunately, the double edged-sword of living in the age of the internet is that it can take “keeping up with the Joneses” to a new level via social media.
However, the internet has also brought with it many new and different ways to monitor true wealth and personal finances. Mr. CMF and I are not millionaires yet, but we are working hard on it and tracking our spending and net worth using the free tools available from online resource Personal Capital (review here). Knowledge is power, right?
Which brings us back to what you are doing here at this website today. By reading this personal finance blog (and others), you are taking steps to educate yourself and improve your financial future. Whether you are a millionaire already or are still dreaming of joining the Two Comma Club (which I recently heard it called and thought was pretty excellent), if you are educating yourself and taking steps to pay off your debt, save, and invest, you are on the right track.
After all, true wealth is not what you think it is. It’s better.
What steps are you currently taking (or have you taken) to improve your financial situation and grow your wealth, despite the Joneses? How do you handle the Joneses in your life?
P.S. If you liked this post, you might enjoy using our free Net Worth Calculation Template. Sign up now to receive each new post delivered to your inbox, and we will email you the template! Sign up here.
CMF’s favorite FREE money management tools!
Some of the best online tools out there for money management are at Personal Capital, and the awesome news is that they are all FREE! Cash flow tracker, 401(k) fee analyzer, investment checkup, net worth monitoring, and many more! I’m a net worth junkie, so the net worth monitor is my favorite. Check out my Personal Capital review here, or click here to check out all the awesome tools for yourself!
photo credit: voronin-76/Depositphotos.com
That is extremely generous of your friend, but sad they have to sleep on the floor. It seems like a lot of people who show outward signs of wealth are actually struggling in some way. At least, that’s what I’ve found personally.
Agreed! I think generosity is a valuable virtue- but if you take care of others before yourself, you may end up regretting it.
The Millionaire Next Door was such an eye opener for me! It really changed my perception of wealth. And it’s amazing how many high earners are living way beyond their means. You definitely can’t judge from a first impression!
Agreed. We own a copy of that book, and I read it at least once a year- usually whenever I am experiencing a case of the “wants!”
We have really strived for the whole $75k mark in which you reach max capacity of money happiness (so research says). After that, everything else is just extra. We are happy when we can travel, pay our bills, and go out to eat every other weekend. Anything more than that is excess, though I suspect it looks paltry (or expensive) when looked at from other’s perspectives.
I’ve heard of that $75k research. I love your comment about “Anything more than that is excess, though I suspect it looks paltry (or expensive) when looked at from other’s perspectives.” That is so true- I’m pretty sure that I’ve been seen as both cheap and “expensive” by others- it totally depends on what the item is and where our priorities lie. You definitely cannot judge a book by its cover.
I loved The Millionaire Next Door! The wealthiest people are often the ones you’d least expect!
I know, isn’t it funny? “Stealth wealth” all the way!!
I say the Joneses can stick it. Impressing others doesn’t make me happy. 🙂
Amen Brock!
I sometimes have to talk my husband down from Joneses-y stuff. But over the years, he’s gotten pretty good at losing interest in such things. Technology is his main weakness, though. He still lobbies for a smartphone from time to time. He’s on disability, and I work from home. Why do we need *any* kind of phone?! (Other than a prepaid for roadside assistance situations.)
But you’re right. The people who live quiet lives are far more likely to be financially stable than people with flashy everything. Everyone has one soft spot, somewhere that he/she feels that spending money gets significant value in life. The rest should just go to wealth-building.
My husband wants a Challenger. But he understands that our Civic will suffice until we’re more financially stable — and have a much larger down payment.
I understand where your hubby is coming from. We definitely have our list of wants too. In fact, sometimes it feels like the things on the list may never happen because we have been planning and waiting for so long to get our financial house in order. I keep reminding myself that getting our ducks in a row now will benefit us ten times over in the future when we are living completely debt-free, etc. But some days it’s harder than others 🙂
Dee,
Wow, that is true generosity by your friend. But, I am also floored to hear that they are literally living on the floor!!!
To me, true wealth includes a couple components: financial independence, having the ability to choose what you do with your time, and having the ability to choose where you will locate. Sounds like your friend didn’t really have any of these even though she and her husband were both lawyers.
One of the most startling things to me about some high income earners is that sometimes they may truly be living paycheck to paycheck. It’s like you go to school for so long and you start to feel like you deserve to buy all the things. But if you have a truckload of debt that came along with your pricey degree, getting out of debt and living frugally should probably be first priority until you get your financial house in order. Just like for everyone else 🙂
Great points! I have to say that I’m moving forward trying to make money in order to pay down my student loan debt. Only after that will I focus on building wealth. I think it’s an important first step for anyone who has aspirations of true wealth.
That’s awesome Natalie! However, you could definitely make the argument that by paying down your student loans, you are in fact building your wealth- since every dollar of debt paid down helps to improve your net worth.
Yes! I totally agree and in fact I wrote an article about this a month or so ago on a blog. Great post Dee!
Great minds think alike 😉
I love this post!
I completely agree that true wealth is breaking free from the mindset of working for a living, and being able to do what you truly desire from the bottom your heart.
As for your old friend and her husband, they may be earning a lot of money, but apparently they are spending even more that they cannot even afford furniture. Are they wealthy? Not in my book
“breaking free from the mindset” <-- love this, and great way to put it. I personally have found that our journey to financial success has much more to do with ignoring what the rest of society does than staying in that same mindset that I (and most of us) grew up in.
Excellent post! I’m following the buying time path. I remember family and friends making fun of me for not buying a nicer car, nicer house or nicer clothes and I actually felt something was wrong (even wondered why I’m so different, why I couldn’t relate to them)…now. I realize I don’t care for those things because I don’t value those things, I value you freedom.
Exactly! We got so many strange looks and comments from friends when we purchased our current home. It is fairly small and I guess not as nice as people expected us to live in. But we have loved this house because it has been fantastic for our finances! We have paid off a truckload of debt since living here because our expenses have been so low and we’ve had extra money because of it. It’s all about priorities 🙂
Interesting read! This is a great reminder to think about our true goals and why we strive to build wealth in the first place. Keeping our personal reasons in perspective is a good way to avoid the “Keeping up with the Joneses” trap.