Wealth Is What You Don’t See

A key takeaway from Morgan Housel’s “The Psychology of Money”

Last week, I read The Psychology of Money by Morgan Housel and I loved it. There are a lot of key takeaways from the book but I just want to share one; wealth is what you don’t see.

I’m young and frankly, I also have this urge to show off every expensive thing that I buy. It’s hard being in this era where we are so connected with each other. We can easily see each other’s lives. Instagram, is like a competition of who has the better life. We spend so much money on things that we cannot afford just for the sake of impressing people.

I see people my age showing off their luxury cars or changing their iPhone every time a new model comes out.

Most people do that because they want people to see how wealthy they are. It’s our instinct to judge people based on their appearances. That’s why people dress nicely when going to an interview so that they can give a good impression to the interviewer. The same goes for when you want to show people how rich you are or when you want to be respected by them.

You start spending so much money on unnecessary things.

Life experiences and lessons from the book

However, I agree with Housel, wealth is what you don’t see.

I know a guy — let’s call him J — who drives an expensive car. J always talks about his car. He is obsessed with it.

I talked to him about how he should invest some of his income. “Well, he can buy a fancy car, of course, he can invest, right? And it’s doesn’t require much to open an account”, that was what I thought.

Surprisingly, he can’t.

He said he doesn’t have money to invest because he has so many loans to pay. He took two personal loans to afford the lifestyle he currently has. I learned so much from this guy.

People compliment him when they see the car but they don’t see what’s the real story behind the car. It is not worth it to go broke impressing people.

At the end of the day, we are the ones who responsible for our life, not them so what’s the point of impressing them?

I know another person — let’s call her Claire — who is a secretary earning less income than J. But Claire is very disciplined with her money.

She knows the importance of investment. She has financial goals and she works so hard to make sure she achieves that.

Claire is getting richer because her money is working for her while J is still paying off his loans. She doesn’t have a fancy car like J. She’s just driving an old car.

Now, I’m asking you, who is the wealthiest between those two? Yes, you are correct. The answer is Claire.

Before you go broke impressing people, think again.

As Housel wrote in his book,

Wealth, in fact, is what you don’t see. It’s the cars not purchased. The diamonds not bought. The renovations postponed, the clothes forgone and the first-class upgrade declined. It’s assets in the bank that haven’t yet been converted into the stuff you see.