Updated on 09.25.09

Do You Want to Appear Rich? Or Do You Want to Be Rich?

Trent Hamm

Unless your last name is Rockefeller or Vanderbilt or Gates or Ellison or Buffett, you probably can’t be both.

Many, many people choose to appear rich. This usually means buying a house you can’t really afford, cars you can’t really afford, and all sorts of electronic devices and jewelry and other items that you can’t really afford. Outwardly, you appear to have lots of money, but you’re actually sinking in a giant pile of debt, barely able to keep your head above water.

In this case, the appearance of affluence doesn’t equal financial independence. Instead, it equals a huge amount of financial dependence. People in such situations depend on their employer for steady employment. They depend on their continued good health. They depend on minimizing major unexpected events – a transmission failure can be devastating. They depend on a reasonably strong credit rating while they juggle all of the debt.

That’s far from financial independence. But from the outside, it does look good.

These are the people who have a nice house and nice cars but seem not to have high paying careers. Do they have it all? Maybe at a glance, but the stress is intense. They’re constantly walking a high wire. If someone loses a job or the car’s transmission fails or a child gets devastatingly sick, the whole thing falls apart. And it’s scary. Most of the time, people who appear rich do all they can to pretend such things can’t possibly happen to them, but late at night, they know such things certainly can happen to them – and they worry. A lot.

A big part of the focus tends to be short term happiness and impressing other people – but long term happiness and enjoying yourself takes a big back seat. Fake it until you make it? Only if you’re bringing something more to the table – and that “something more” comes through without lots of superficial elements to impress others.

Trust me, I’ve been there. It can be fun in the short term, but over the long haul, you realize how many opportunities in life you’re missing.

On the other hand, one can choose to be rich. From my perspective, being rich means being as financially independent as possible – almost no life events can impact your situation – and being surrounded by the things you care the most about.

Yes, this has one disadvantage over appearing rich: you don’t get lots of shiny things whenever you want them. But it comes with tons of additional advantages.

You’re not tied to your job for purposes of compensation. If you hate your job, quit and find something you don’t hate. The money isn’t the constraint.

You’re not buried in bills. Each month, you don’t have to pay much at all out in required bills.

You don’t have tons of different things that need constant care and maintenance. You’re not cleaning a 6,000 square foot house. You’re not caring for five different cars. You’re not keeping up an immaculately landscaped yard. Sure, if you’re passionate about one of these, you can chase it – but if you don’t care, there’s no need to have them or maintain them at all.

You don’t have “friends” that constantly judge you based on the stuff you have.

You don’t worry about having enough money when you retire.

In the end, it comes back to one simple question: do you want to appear rich, or do you want to be rich?

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  1. Moneymonk says:

    Sounds like Stanley’s new book “Stop Acting Rich”

  2. spaces says:

    I want to appear classy and be secure. A big new house in a new suburb with new cars begets neither.

  3. katie says:

    I don’t see a problem with wanting both, as long as you realize that the latter scenario is better way of getting the money you need to appear rich :)

    But I wholeheartedly agree with your sketch of the first group of people. In many cases, I have known people who have lots of nice stuff but lots of fat credit card balances.

  4. Georgia S says:

    “If someone loses a job or the car’s transmission fails or a child gets devastatingly sick, the whole thing falls apart.”

    I agree that a decent-sized emergency fund could get you through replacing your transmission, or several months without a job. But if your child comes down with cancer or something equivalently terrible, I think it’s pretty much impossible that you’d have enough money socked away to cover the bills (unless you’re Bill Gates, a Rockefeller, etc.).

  5. I was going to mention that this reminds me of Thomas J. Stanley’s new book as well – stop acting rich. It really is an epidemic in this country – people wanting to appear like they have it all, that they’re wealthy. In the end they’re just acting like they’re wealthy – when people who in fact are wealthy often don’t have gratuitous displays of wealth – quite the opposite.

  6. Jimmy says:

    I think this also ties into one of the basics of having a high net worth. Which is that poor people buy depreciating assets like cars, houses, toys and stuff. And rich people buy appreciating assets like stocks, bonds and businesses.

    I think I read that in Stanley’s “Millionaire Next Door” if I’m not mistaken,

    Like Trent says, on the outside the poor people look like they are very rich with all that stuff and the truly rich do not.

    Quite the oxymoron if you ask me.

    Me? I’ll stick to appreciating assets thank you.

  7. Elizabeth says:

    Thanks for an inspiring read…so true in this world.

  8. When people are asked the question, “what would you do if you won a million dollars?”, most will launch into a description of their dream car almost on instinct.

    My though has always been that if I were to win a million dollars, I’d drive the crappiest car I could because…

    1) With a million dollars put away and invested, I wouln’t need a hot car to be “legitimate”,

    2) I’d drop out of the need to impress others game,

    3) I wouldn’t want anyone to know that I’m rich, and

    4) With a million dollars, the last thing I’d want to do is to be around a bunch of people who are trying to one up each other with what they have.

    I guess you could say I’m in the prefer to be rich, don’t care about appearing rich camp.

  9. “You’re not caring for five different cars.”

    No, but I’d sure like to be! :P My husband was just telling me tonight how awkward it is when new guys in his shop ask what his payments are for his car. Um…. She’s paid off, and has been for over two years now.

    In fact, the only car we owe money on is the 19 year old Nissan we have. I’m working on building some credit, so…. It’ll be paid off soon enough, my goal was to have the $2.5k loan down to $1.5k at the end of this year, six months into the loan. So far, it seems I’m on track to do that, plus some.

    Seems that having two paid off cars, plus one soon to be paid off car is enough to make us seem rich to some. (Doesn’t help I guess that the paid off two are sports cars, and so is the third in a way.) I don’t see why people want to seem so rich anyhow — all we get is stupid people’s jealousy…. They can’t seem to get over how we live our lives. I especially can’t figure it out when we don’t do anything intrusive on others or try to tell them how to live their lives, yet we’re treated like we’re horrible.

    Of course, there’s one thing about our cars — they’re for US, not for YOU. I don’t care what you think of my cars, my girls make me super happy and that’s all that matters. (Well, that and the fact that we can afford them. Loan and all.) Sorry, I’m probably harping on the same thing here, but it still irks me that it’s so automatically assumed that a nice car is for impressing people…..

    I mean, rich for me is having a small closet full of quality garments that’ll last me years, so I don’t have to keep buying good high quality clothing so that I can go racing on the weekends. :) And live in a tiny house with a huge garage. With lots of cars and plenty of room for the various projects I’d like, a la RX-7 (~$3k for car + rebuild) and 240/260/280Z (~$3k for car + restoration). But nice clothes, yes please. While I don’t care if I appear super rich, I don’t want to dress like a schmuck either.

  10. Well said.

    This philosophy has been repeated again and again.

    But your way of telling this specific story should ring true for many – may even convince some to look in the mirror.

  11. Tyler Karaszewski says:

    Neither, really. I want to live near the ocean, to have time to surf and sail, to go for bike rides, to lie in the sun, and to watch sea otters with my wife.

    Money makes life easier, but it’s not my goal. Neither is the appearance of money. I could look a lot richer than I do if that’s what I cared about.

    I make a six figure salary and I live in a one bedroom, rented house. I have other more important things to focus on.

  12. kristine says:

    I want neither. I just want enough, and peace of mind.

  13. Shevy says:

    @Georgia S
    “But if your child comes down with cancer or something equivalently terrible, I think it’s pretty much impossible that you’d have enough money socked away to cover the bills (unless you’re Bill Gates, a Rockefeller, etc.).”

    That’s why the US desperately *needs* a decent health care program. If, G-d forbid, a child is born here in BC with cancer you can spend the next 18 years going to Children’s and having chemo and radiation and surgery and a bone marrow transplant and whatever else needs to be done and It. Doesn’t. Cost. A. Penny. (other than the $108/family/month premium that all BC families pay). Money should *never* be an issue when a child is sick!

    As for “appearing rich”, I don’t need to have all the bells and whistles, but I want the things that are important to me (whether they’re generally popular or something that noone else has even heard of). And why would I want to have anything I *don’t* care about? What a waste of money and time that is.

    So, my kids have all gone to private religious schools (because that’s a non-negotiable requirement), but I’ve lived in tiny places and I’m still wearing classic clothes I bought back more than 20 years ago (*not* the trendy fluorescent stuff that comes to mind when you think of the 80s). In fact, I still have stuff from high school, back in the 70’s. And I own 1,000s of books but I’ve never had a professional manicure and I can’t remember the last time I paid more than $15 for a haircut (which I get every 3 or 4 years). Different people will make very different choices.

  14. Daniel says:

    The other irony of “appearing rich” is that you make yourself into a more visible target! Better to steal the Lexus (or the wallet of the guy who’s *in* the Lexus–at least there will be lots of credit cards in there). Likewise, it’s a lot less likely that your ten-year-old pickup truck will get vandalized, and even if it happened you probably wouldn’t notice anyway. :)

    This also holds for legal liability too. Who would sue the regular person in a modest car or the modest home? Naturally most people in our culture assume that person can’t possibly have significant money.

    Casual Kitchen

  15. deRuiter says:

    Great post Trent! That fascinating book, “The Millionaire Next Door” agrees with you and so do I. The “Old Money” rich look is one a lady can achieve on a budget. Old money women wear classic clothes and keep them forever. You can buy that type and fine quality of clothing at yard sales in rich neighborhoods, upscale resale stores, and on ebay, all from people who bought the stuff to “look rich” and then discard it after one or two wearings. Have the clothing tailored perfectly so that you look rich when you’re wearing the outfits. My outfits represent more money in the tailoring than the purchase! I know, I know, it’s shallow (mea culpa!), but it’s fun to be a guest to a ritzy Long Island wedding and be photographed more than the bride and groom by paparatzi who murmur, “I know you’re SOMEONE!” as they envision selling the photos once they figure out WHO I AM! Life’s supposed to be fun, and you can have a lot of fun while being thrifty!

  16. Penny says:

    Folks think my husband and I live an “austere” lifestyle because we don’t have money. We live according to our values, by keeping old cars until they fall apart (my truck is twelve years old), buying second hand clothes (a form of recycling and supporting work programs), cooking at home (my food tastes better and isn’t chemical laden), and buying food in bulk (a hundred pounds of beans are coming in next week).

    We know what is important to us, and what other people think or hold value in just isn’t something we find important. I guess it’s knowing your own values and ideologies, because we will pay the $4.00/lb for a quarter of a grassfed, actually free range cow, even though we could get the equivalent for far less. We’ve been known to buy artisanal cheese for $16/lb.

    It is all about personal values, as explored in “Your Money or Your Life”. If we won a huge sum of money, we would live quite the same, only we’d buy a huge piece of property in VT and a new-to-us pickup bigger than the one I have.

  17. buck says:

    very well presented article.does make you think!!
    keep it up

  18. kirstie says:

    So insurance policies wouldn’t cover things like childhood cancer in the US? wow.

    Aside from medical bills there would be additional costs in this situation such as parents missing work and travel for treatment.

  19. Georgia S says:

    It’s not that insurance wouldn’t cover ANYTHING, just that the costs would/could still be outrageous.

  20. Michelle says:

    Great post. Another way people try to “appear rich” is by keeping loads of credit cards. In reality, too many credit cards will hurt you in the long run, decreasing your credit score.

  21. Little House says:

    I haven’t read Stanley’s book, but I wonder if television has created the idea of appearing rich? Before television became a standard in every house, did people care if others thought they were rich? I’m just curious. My guess is that the media has pumped this notion in to our heads.

    -Little House

  22. Sandy says:

    Also the pre-exisisting condition factor may be at play…not a cancer story, but I met a woman who was pregnant, and her husband’s insurance kicked in after 90 days of employment. She was deemed to be 3 DAYS pregnant on the 90th day of his employment, and the policy wouldn’t cover her or the baby. A wretched system that would let that happen, if you ask me.

  23. Steven says:

    The other day I was in Council Bluffs, Iowa visiting my cousin. We decided while we were out and about to stop by the local Dairy Queen for a treat.

    We walked in the store and the only customer in the place was Warren Buffett. He was sitting alone, in a booth, eating an ice cream cone and he seemed to really being enjoying himself. He was wearing a cap, polo shirt, and tan khaki pants.

    When he finished his Dairy Queen, he walked outside, got behind the wheel of his used black Lincoln town car and drove off.

    When you don’t have to worry about where your next Dairy Queen is coming from, now that’s rich!

  24. Fiona says:

    In our town there are lots of half million dollar houses all crammed on lots the size of postage stamps. I never understood the desire to live there, but they were clearly popular. Then a friend who is a realtor pointed something out to me: most of these very expensive houses had cheap blinds that were never opened. She said many of them were almost empty inside because people had liked the idea of the big houses (appearing rich) but couldn’t afford to furnish them.

  25. MelodyO says:

    Great post! My husband and I are in our 40s, and we’ve always lived frugally, often to the bemusement of our family and friends. Guess what? This stuff actually works. We’re in a great financial position and our days of struggling are far behind us. We have friends who are older than us with no savings, credit card debt…and all the toys you can name. He just got laid off this week, too. Yikes!

    Here’s a question for your mailbag, Trent. We have two daughters aged 11 and 14, and this is the advice I always give them: if you want to get rich there are four ways to do it. Start a business, invest in mutual funds, buy property, or become a professional. Their father and I have done three of those four to really make sure we have our bases covered (we’re not professionals). Do you agree with my advice?

  26. Andy says:

    I want to live richly towards God by serving other people.

  27. David says:

    I think it’s hilarious that the ad accompanying this post in my RSS feed is for “Rich Matchmaking – International Matchmaker – Select Introductions, Upscale Clients”. Snort.

    If I won $1mn, I’d do little different except have my old Volvo completely restored to new condition, because I love that car, and buy a little house on a nice patch of land.

  28. Rosa says:

    There is a lot of value in looking middle class, though – it helps you get a job, it makes people treat you better (including police, and strangers), etc.

    It’s not the rich people’s lifestyle that has ballooned, these last 20 years – it’s the middle-class professionals indebting themselves into giant houses and multiple cars and fancy clothes. And not fitting in with *those* people, especially on the stuff they can see, has measurable negative effects.

    Me, I was raised middle class – i’ve got the dialect/accent, I’ve got the cultural background to blend. But when I was 22, 24, being able to put together a “professional” wardrobe on a pittance was a real issue.

  29. Ashley says:

    Daniel (#14)…GREAT post! Appearing rich can be a lightening rod for unexpected consequences.

  30. I see these “wanna-be” rich people all the time, and lots live in my neighborhood. I live in a subdivision of very modest townhomes, and it is just laughable to see the Porsches and the other sports cars in the driveways.

    And the people in stores who roll out wads of cash–I really laugh at them. Actually, I feel sorry for them because they’re just advertising themselves to get robbed.

    I’d much rather prefer to “be” rich.

  31. “it is just laughable to see the Porsches and the other sports cars in the driveways.”

    You, sir, are missing out.

    I’m sorry, when again was a Porsche unaffordable? Hm? Pray tell, I might be insane then for wanting a Ferrari. Apparently Porsches are out of reach for everyone. Or could you even tell a Cayman from a Carrera? (The price differences can be astronomical, but I last saw an ’06 Cayman S for $35k. Sorry, is that unaffordable and expensive?)

    I laugh more when I see people who HAVE to have that f’ing huge SUV. It costs more than most of those Porsches you see, I bet.

    But that’s okay, keep telling yourself that… Maybe they can afford it, just have a smaller home and the Porsche. I’ll take a picture someday so you can laugh at me, I guess. That’s how I plan on living my life.

    So… Why again is having a sports car a crime? I own two. I’m 21. I know, that makes me ridiculously rich and snobby and careless and all that….. (But I’m curious, “other sports cars”? Like what?)

    And yes, it’s my nerve. o_o I’m sick of attitudes like this and being treated like crap by people who want to think I live a life I can’t afford, because my priority is in the driveway and not a bunch of numbers on a computer screen. Money’s a means to an end, I’m gonna enjoy my life…

  32. Shevy says:

    Hmm, I’m not going to slam people for owning a Porsche or restoring old Mustangs or whatever, if it’s their true passion.

    One of the big problems with cars, however, is that many of the folks you see driving those Escalades, Hummers, Lexus (Lexi?), even those Porsches, etc. don’t own them. They’re leasing them because having the right “look” is so important. And when there’s a newer, richer, trendier car they’ll return the current one and lease the newer, trendier one.

    That would be one of the things I categorize as a waste of time and money.

  33. Matt says:



    I have to agree with you 100% And of course, Most “Millionaires Next Door” have this view.

    This goes right along with another article that you did about “Stop Trying To Impress People.”

    Want to be broke? Just Fake it till you Make it!

  34. I am well enough off to be retired.
    I am rich with health and the love of my family.

    Before I was retired all I wanted was money, from the lottery or working.

    Now it’s just not having to work, the prize is mine.

  35. Patrick says:

    I agree with most of these comments but on the flip side there’s something worth mentioning. Studies show that most people’s financial status matches that of their friends and peers and spending on a higher level to “show off” is sometimes an attempt at fitting in with a higher class of income generating people. Getting invitations to their parties, clubs, and networks… something the mail room clerk that dresses in kmart jeans that drives the old truck doesn’t always get — even if he’s a genius at being frugal. This can open doors to getting boosted to that level — once the networking is in place. We all know the higher income class typically has more hiring/referral power. So then in this case maybe a $$$ jacket, shoes, & watch or purse might just be an investment in a type of networking, right?

  36. deRuiter says:

    Read “The Millionaire next Door” and borrow the book from the library, don’t buy!

  37. Annie says:

    I love this post. I agree that there are lots of people out there that appear to be rich and really they are not. It’s a shame they rely on their credit cards for material poessions. I also know of people that make it ok with modest salaries that have nice things. Either way, i try to get to know them before i make a fast judgemnt whether they are fake or if they truly are nice people that just value quality. Sometimes you just like nice things and find ways to afford it. What i don’t like, and i see this with my friends is if you drive a nicer car or have nicer clothes etc… they think when you go out to dinner that you have topay more since they have a cheaper car and modest clothes. I totally disagree with this. I dont’ think your friends should expect more from you just becasue your stuff is a little nicer.

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