The Wealth Illusion: Things Often Aren’t What They Seem


wealth illusionWealth is an interesting topic for many of us.

Let’s be honest… there’s no mistaking a wealthy person, right?

Maybe they’re rolling around in a Lambo, or you drive past a monster-looking 8 bedroom waterfront mansion and think “Man, they must be loaded!”

Maybe it’s the guy in the shopping centre with his clunky gold jewellery on display and his slick shades on.  It could also be the Mum picking her kids up from school in a shiny new Range Rover.

We all tend to have the natural assumption, that because those things are expensive, these people must be just crapping out hundred-dollar-bills!

So is it true?  Well, it might be… I don’t know these people, I just made them up  🙂

While these people seem wealthy, it’s kinda hard to tell these days.  Let’s look into the subject of wealth a bit more…


Common Beliefs About Wealth

People often spend time wondering how the wealthy came to be that way.  There are many common beliefs people hold about this.  Maybe they had wealthy parents, got lucky in business or they had a really high-paying job.  Did they win Lotto?

Whatever the reason, too many people think “it will never happen to us”.  And there is definitely some truth to that statement.

Wealth doesn’t happen to us.  For regular people like you and me, it’s often just an outcome achieved by living a certain way, and having strong money habits over the course of our lives.

Given the right choices, and a long enough period of time… wealth becomes inevitable.

It just takes some setting up to start the ball rolling.  We need to make smart decisions about what we buy, how we spend and where we live.

Building wealth is a bit like building a house.  As a result, you need strong foundations to start with, or the house won’t be stable and strong enough to survive the test of time.

Effectively, it’s the stuff you can’t see that’s important, in building a house… and building wealth!


Old School Wealth

Interestingly the rich people of today, buy similar things to the rich people of the olden days.  Houses, cars, jewellery, expensive trips, the latest gadgets and other trappings of wealth.

And if we go back 50+ years, people largely bought everything with cash.  Therefore, it was pretty obvious who really had money and who didn’t.

The olden day wealthy people driving around with their showy wheels, fancy suit and (less blingy) jewellery, actually had bought those possessions with real cash.

As a result, a wealthy person was easily recognised.  It was simply obvious they had money, and they were respected for their level of achievement and success.

The funny part is, we still make the same assumptions today.  Despite the financial world being vastly different, most people haven’t learned to question this assumption.


Modern Day Wealth

There’s been a real game-changer over the last 50 years, that has made the perception of wealth become pretty blurry.  And that game-changer is credit.

Unlike in the olden days, where there was no real credit for the masses, and most things were bought with cash… now we can basically buy whatever the hell we like with the swipe of a credit card, signing up for one loan after another, or using the buy-now-pay-later schemes for a mountain of consumer goods.

Effectively, the guy flipping burgers at Maccas, has a decent chance of getting a car loan to buy himself a nice Mercedes.  And the girl working at Target can shop-till-she-drops, buying massive amounts of clothes and jewellery on her credit card.  She can spend like a socialite, even though she’s not exactly earning the big bucks.

This is where it gets fuzzy.  As he’s rolling around in his Merc, he will get all the respect and approving glances the same as a wealthy olden-day gentlemen.  Well… he certainly looks rich, at least.


Here’s the problem for me…

It’s all a charade!

As long as he can afford his monthly debt repayments, he can maintain the illusion.

He’s just pretending to be rich… and it’s making him poorer.

Unfortunately, he still get’s held up like a hero by his mates, because he looks the part.  It is utter madness.  Never mind he will have blown way over 100k of wealth he never had, during the status-seeking years of ownership.

Ironically, by pretending to have wealth…he will never actually achieve real wealth.

So what’s the deal then?  Who are the real wealthy people?


The 20-Year Wealth Study

One of the first books I read on the topic of wealth, was actually one of the best.  The book is called “The Millionaire Next Door”, by Thomas Stanley and William Danko.*

Their goal was to discover the secrets of the wealthy in America.  And what they found was incredible.  The millionaires they had studied, had quite a few things in common, which they lay out nicely in the book.

Most importantly, the study nails down some of the keys to wealth that I wholeheartedly agree with.  Such as the following…

Key Wealth Traits of Millionaires Studied

They’re frugal and live well below their means… meaning they know the power of saving.

Most of all, they believe financial independence is more important than displaying high social status.

They are dedicated to investing, using the magic of compounding to grow their wealth.

The vast majority of them are self made, and teach their kids to be self-sufficient too.

At least one person in the house, is a focused budgeter/spending tracker, because small amounts add up. In effect, they run their household finances like a business.

They live in average houses, drive moderately-priced second-hand cars, and wear inexpensive suits.  Interestingly, they can be classified as ‘tight’ with their money.

What I found to be entertaining was, they also broke down the millionaires into nationality.  They found Russian and Scottish millionaires to be quite prominent amongst the ancestry groups.  Being from a Scottish background, I also had a giggle when they found that Scottish households were able to achieve higher levels of wealth with a lower income… in essence they are super-frugal 😉

Most of all, the book really changed my perception on wealth.  I came away with some conclusions.

Being frugal and constantly investing is about the best way to achieve a large amount of wealth.  Essentially, it’s a match made in heaven for multiplying money!

And essentially, they aren’t the people you assume are rich.  Most millionaires don’t live how you would expect, from watching so called ‘Reality’ television.


Fake Rich

Here is the sad part.  Society is effectively encouraging each other to go deeper into debt, to outdo each other.  And it’s all a big sham!

A competition of who can look the richest, and always seeking more.  More symbols of wealth to show off… SUVs, elaborate holidays, the hottest restaurants.  All carefully recorded and displayed on social media… just in case you miss it 😉

Ultimately, people are trying to prove how successful they are with this behaviour.  The common theme is, it’s all just for recognition and a sense of approval.

Paradoxically, these people are often the most anxious and stressed.  Because they get their self-esteem from outside sources, the constant need for approval gnaws away at their happiness.

Consciously or subconsciously, this is because people naturally want to elevate their social status, impress people and be respected.  Apparently you do this, by going balls-deep into consumer debt and buying fancy shit?  Does that take skill?

Signing credit card application forms, and taking out personal loans doesn’t seem like it deserves respect to me.

It appears as though it’s either the middle class who are pretending they’re rich, spoilt rich kids blowing their handouts and inheritance, or younger generations with no restraint.  Because their financial strategy is to wait for their relatively wealthy baby boomer parents to fall off their perch, they see no point in saving.

Maybe that’s too harsh and cynical, but that’s how I see it.

Bully Syndrome

Just as a bully needs to project their power onto others, to make up for their feelings of inadequacy, some people feel the need to project wealth and status (whether they have it or not), to make up for their feelings of inferiority and insignificance.

Without using these things as part of their identity, they feel weak and unimportant.


Rich to Broke – A Perth Example

It wasn’t too long ago, that guys and gals from all over Australia, were cashing in on Perth’s mining boom.  There were young people earning in excess of 200k, and plenty of well qualified people earning more than that.  To the naked eye, these people were rich!

Simply put, they were rolling in cash.  They had nice houses, new cars, boats, jet skis and enough left over for big nights on the town.  As with all booms, it didn’t last forever.

Since the end of the boom, there’s been numerous stories of these cashed-up mining workers, who are now dead broke… some of them even living in their car.  Apparently the ‘mining downturn’ is to blame.

Their atrocious cashflow management has sabotaged their good fortune.  It’s now clear to many people that a high income is not the same as being rich.

Broke Folk

In fact, you can have the highest paying job, the best lifestyle and lots of nice stuff, but if you have no real savings or investments… in reality, you are only a couple of missed paychecks from being broke.

To me, without a bulky savings account or some investments in the background, I would consider myself broke!


What I’ve Learned About Wealth

We are all in control of our own wealth.

Our future wealth is a result of all the choices we make today, and tomorrow… and the next day.  It’s a sum of all the decisions we make.  It’s not up to the government, your parents or your boss.

Don’t be another victim having a whinge.  Take control of your own financial situation today.

Also, we shouldn’t be making decisions based on how we will be perceived and what others will think of us.  We should be making decisions based on our long term goals of financial independence and the freedom we want in our life.

Most of all, freedom really means having the freedom from giving a shit what other’s think of you, their opinion of how you spend and the way you live.  Because remember, they’re probably broke as hell, playing the status-seeking game that will never be won.

There’s always a newer car, a bigger house, a more exotic holiday.  It’s tiring just thinking about it.  I don’t know how the pretenders do it!


Real Wealth is Deceiving.

Next time you see some seemingly wealthy people, stop yourself from assuming they actually have any wealth at all.

My favourite saying to sum this up is – Big Hat, No Cattle.  This is spoken about in ‘The Millionaire Next Door’, with a Texan Millionaire saying “I don’t own big hats, but I have a lot of cattle.”

Many people look like they’re cashed up, but the chances are pretty slim, that they’re actually wealthy.  It’s far more likely, the real wealthy people are the ones you don’t even notice.  They don’t stand out at all, just quietly going about their business.

I respond differently now, if I see someone displaying the trappings of wealth.  I get curious about the true state of affairs, given that it’s more likely they just have more consumption-related debt than the average person.

Interestingly, since every third person seemingly has a new SUV in our capital cities, I just assume they’re all broke!


Run Your Own Race

Since you’re walking your own path here, people are going to criticise you on your journey to early retirement.  That’s OK.  We’re playing a very different game to the ‘act-rich’ crowd.

As a result, you’re part of a small group of people, who thinks and acts independently.  You don’t do things to fit in or please others, you’re happily doing your own thing, focusing on your long-term goals, instead of seeking approval and instant gratification 🙂

Don’t forget, when you’ve built real wealth, you can then enjoy the fruits of your labour, like a real rich person.  Although, you may find, like us, your material desires melt away over the years.

At least you will have the choice.  The simple but rare ability to wait, until you actually have wealth to spend, is incredibly powerful.

Critically, it’s the step that most people are unwilling to follow.


Final Thoughts

Look, we can spend all our money, and money we don’t have, trying to look rich.  We may feel good in the short term, but it doesn’t change our life in any meaningful way, and offers no freedom in the long term.

Alternatively, we can live frugally, spend our money on investments, and actually be rich.

In the end, it’s a pretty simple choice.  You can focus on looking rich… or being rich.

Which would you rather be?



* I managed to find a PDF version of The Millionaire Next Door here.  Have a read, if you haven’t already.  It’s an interesting and eye-opening book.


Note – Apologies if this article is more of a rant… than an actual article 😉
I feel better now.  And besides, I was on a roll.

The aim of this post was to let readers know they should not be discouraged from saving, when they see others who look wealthy, but in all likelihood, are just in debt.



  1. Keep writing mate, I love reading your blogs. And I especially appreciate the link to the book.

    I have personally always had that misconception – you see people spending big, you assume they are rich:).


    1. Thanks a lot buddy. Please keep reading them 🙂

      It’s such a common misconception, I had to write about it. This post was maybe a bit harsh, but it’s my blog, and I felt like having a rant!

  2. I loved reading The millionaire next door – such an eye opening book. Even before I read it, I always felt that truly rich people were quite often humble and down to earth people. While the ones who were showy and flaunting of the wealths were quite often the wannabes and laden with debt. That’s what my parents used to say a lot!

  3. Indeed, one trick for when you feel the need to upgrade something without a real need is to look at the current object doing that job and think of how well it did the job when you bought it (before the novelty wore off). Perhaps you will realise that it is just the advertising exec trying to push your “want” button rather than you exercising your “need” button.

    1. That’s a great tip BlindSquirrel! I tend to follow the old school “if it ain’t broke, don’t fix it” mentality. If something still does the job, I couldn’t care less about the ‘latest’ or ‘improved’ version of it. And for things I don’t own… well my life is fine without them, so I don’t need them at all 🙂 People just incorrectly assume new is better, and fancier is better.

  4. I wrote something similar about going broke trying to impress people. It is insidious actually, it doesn’t only happen on the large things you mentioned like cars and fancy clothes, but even small things where peer pressure kicks in to join the group.

    Contrary to most, I actually think of a gigantic mountain of debt when I see a fancy car.

    1. Ha! Pat we think the same. The flashier people are, I just assume the more indebted/broke they are lol, cos really, who buys a car with cash these days!
      Peer pressure is a killer, brings most people unstuck as they give-in to blend with their friends. Good point!

  5. The Scots are oft associated with the Jews as being thrifty

    Do you know how the Scots invented copper wire? Two Scotsmen were fighting over a penny :o)

    There’s also this; When Scotland Was Jewish

    Re: Wealth I know Rich Looking Poor People, Poor Looking Rich People, Rich Looking Rich People and Poor Looking Poor People, sometimes things are what they seem. People can and do pay for a car with cash, why have a depreciating asset accruing interest.

    1. Hahah I like that joke!

      Yes it’s true, sometimes things are exactly as you say. But I think it’s fair to say in general, most people are not paying cash for the 30-50k SUVs we see rolling around our cities. And the average aussie (that I know) would roll their eyes when you mention a depreciating asset and compound interest 😉

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