Last week, an old friend called to meet for lunch. I suggested we try a comfortable mid-priced place with a patio, but she insisted on one of the nicest restaurants in town. Arriving, I couldn’t help but notice that her car was worth about double mine. She was dressed from head to toe in designer clothes and sported a pair of sunglasses I suspected cost so much that I’d be far too nervous to wear them. I was surprised to see how much money she’d apparently made, and mentioned it when we sat down.
“My students would love to know your secret,” I said. “You’re obviously doing really well. That’s fantastic.”
She sat back and sighed. For the first time since we’d met, I saw how tired she appeared.
“My secret,” she laughed, “is that I’m in over my head. That’s why I wanted to meet you. I’ve got to get my sanity back. The credit card debt is killing me.”
Needless to say, I was shocked. Nothing that I saw in front of me was the truth.
I understand the desire to appear successful. It’s important to project a confident image with our peers and potential clients. But spending money that we don’t have only makes things worse. Here’s how:
- Overspending adds stress. I once had a colleague tell me that he bought expensive cars that he couldn’t afford because it drove him to work harder every day. He barely survived a heart attack at 39 years old. Coincidence? I doubt it.
- Image maintenance is expensive. You can’t appear to have lots of money one day and then return to the “average guy” look. People will think you’re a failure. Instead, overspending forces you to protect the image. It becomes increasingly important to spend more and more.
- Items that make you appear rich aren’t actually assets. Fashion styles change with the seasons. Car models evolve. Immediately after you purchase any of these items they’re worth less money. Even a home, as I’ve written about previously, isn’t the wonderful appreciating asset it’s purported to be. After maintenance costs, insurance and tax payments, an average home builds value slowly.
Acting like we’re rich when we aren’t is a lifelong road to nowhere. Energy spent looking good for friends and colleagues could be spent on true building blocks to wealth. At first glance, we may think that people will notice our “look” and trust us with projects that will build wealth quickly enough to mask the fact that we’ve been faking it all along. How many times has that worked for anyone else?
I can’t remember a single time I’ve seen someone fake their way to greatness. A better path is to take the time to build a strong foundation that will secure your financial future.
Will you look rich if you forget about using short cuts? Not at all. Will you appear successful? I don’t know. There are so many people pretending to be something they aren’t that it’s impossible to know if the “trick” of looking wealthy will make people think you’re actually successful.
Of course, you’re reading this blog, which means you’re much more interested in a firm financial footing than a quick fix. Here are some upsides to a firm foundation:
1) No pretending. Although you won’t necessarily talk about your financial situation with people, you won’t have to remember to act in a way that isn’t truthful. I often think of the Abraham Lincoln quote: “No man has a good enough memory to be a successful liar.”
2) You can focus on your craft. Rather than worrying about being something you aren’t, and keeping up with rising expectations of what you “should be,” you can spend all of your energy on honing your skills.
3) Firm foundation. Sure, it’s difficult at the beginning, but once you have a solid debt plan, emergency fund and budget, you’ll have the confidence that when something goes wrong, you’ll have resources to turn to and a plan of action.
Ultimately, paying down debt and building reserves gives you a quiet confidence that spending wildly can never achieve. If you study truly wealthy people, you’ll find that very few feel the need to flaunt their riches. By staying true to your personal financial system and working diligently on your craft, real financial security can be yours.