Updated on 09.19.14

Financial Success Isn’t About Stuff

Trent Hamm

Money success fame glamour by Evan Prodromou on Flickr!Yesterday, I was reading a largely spot-on article over at Steve Pavlina’s blog with the rather New Age-y title How to Raise Your Financial Vibration. Once the spiritual aspects of the article are stripped away, the basic idea is pretty clear and sensible: if you want to be successful in an area, set clear stepping stone goals along the way that demonstrate some level of success and keep away from people who don’t believe that you can do it.

Here’s an example. Let’s say you’re making $35K as an administrative assistant, but you dream of making $70K by working in middle management. Instead of just dreaming about it, do it. Figure out what education you need to get there, get started on taking little steps right now, and make it happen.

One key part of Pavlina’s article is his suggestion to start thinking about the framework you’ll need to support your lifestyle after you make your desired changes. So, in the above example, you might want to do things like start building connections with the people that would likely be your peers after you get your education, so that you have your foot in the door in the field when the time comes.

That completely makes sense to me. However, Pavlina takes it in a bit of a different direction:

Make a list of other changes you’ll implement as more money begins to flow into your life, such as upgrading your computer, overhauling your wardrobe, taking a nice vacation, or buying more organic produce. Imagine that those things are becoming part of your daily routine. Implement those changes when you can afford to.

Every single life change suggested here involves spending more money. In other words, the view of success that’s presented in the article is having a new computer, having stellar vacations, having sharp clothes, and buying organic foods.

In my eyes, this is a blatant example of putting the cart before the horse, and it’s a trap that so many people fall into as they’re finding their way down the road to success.

Here’s another way to think about it. If your salary doubled tomorrow, what is the first thing you’d do? In Pavlina’s world – and in far too many people’s world – the first response is to head out and start buying stuff.

There’s one big problem with that, though. As soon as you start buying more expensive stuff and settle into a more expensive life pattern, your “standard” expenses go up. You now require more money than you did before to maintain your basic lifestyle.

Before you know it, even with your raise, you’re right back where you were before – barely making ends meet, wondering how on earth you’re ever going to retire, and so on. The only difference is now you have more stuff.

I like to take a different approach.

My Approach to Financial Success

Being rich or successful is never measured in the amount of stuff you have

It’s measured in the amount of security you have and the amount of freedom you have from the worries of day to day life.

Some might argue that the trappings of success are key to making you feel successful For me at least, I rarely feel more successful than when I see my investment balances going up because of my contributions or when I see an opportunity to really make someone else’s life more successful through a helping hand delivered by my knowledge or a connection that I have.

Let’s jump back to the person who just doubled their salary – from $35K to $70K. Let’s look at two different people who did just that.

One person might choose to start living large. They buy a new car. They buy all new clothes. They buy a spectacular new computer. They go on some fabulous trips. They dump a bunch of money into a kitchen remodel and some landscaping. And, before you know it, that person is right back where they were before, barely making ends meet and plotting how to earn even more.

Another person might take a different route. They instead bump up their retirement contributions to 10% of their salary. They buy a few new clothes for the office, but don’t upgrade their wardrobe. Instead, they build a big emergency fund and start investing for the future. A few years down the road, that person has a nice, fat emergency fund and the beginnings of a strong investment portfolio.

Now, suddenly, the business closes up shop. One person is going to panic and go into emergency job search mode, calling around desperate for work, anything to keep their lifestyle chugging along. The other person shrugs their shoulders and decides it’s time to start that small business they’ve always dreamed about.

Who’s more successful: the person with lots of stuff running around in a panic, or the person living their dream?

In short, the trappings of true success aren’t in your closet.

The Key Parts of a Financially Successful Life

1. A strong emergency fund

They have the liquid cash to deal with any crisis that comes along and also enough cash to take advantage of any great opportunities, too.

2. Investments for a big future dream

They’ve also got investments for their future – perhaps for retirement, or perhaps for another dream that they’re planning for. This is their “walk away” money – and that “walk away” date might come sooner than you think.

3. A lot of healthy, strong relationships with a wide variety of people

They know a lot of people from all walks of life – all social strata, all income levels, and a wide variety of professions and interests. They know people at city hall and people on the factory floor, too.

4. A worthwhile body of knowledge

They know their stuff and have valuable knowledge to contribute to many situations.

5. A good work ethic

They know that working hard is the real key to success, and they practice that knowledge, too. Laziness isn’t part of the equation – they’re known for producing, not for just being there with a shiny new suit.

6. A positive attitude

They believe that good things are bound to happen in the future if they keep their nose to the grindstone and work hard at it.

7. A sharing attitude

They’re willing to share what they know and help you when you need it.

If you want to build a framework for success in your life, THOSE are the things you should be chasing. Those are the elements of a truly successful life – and building them doesn’t require you to empty out your bank account and fill your home with a bunch of clutter.

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  1. Trent,
    This is the age old example of Be-Do-Have. There is a school of thought out there that says that if you “live the life you dream of that it will eventually come to fruition”.
    While this makes some sense if you don’t leave out the part about working your tail off to get there, it certainly contributes to the materialistic society that we have.
    I also measure my success by security, but my security comes in the form of time. By “time” I mean that I am amassing cash flow to the point that it replaces the earned income from my employment at which time I will have sucessfully financed the “rest” of my time.

  2. Onaclov2000 says:

    You repeatedly bring up the point that if you can’t live within your means now when you are making more money you are probably going to be doing the same thing, like I read in the tightwad gazette, if you’re acceptable limit is 20 minutes late, it doesn’t matter if daylight savings changes you’re still going to be 20 minutes late, if you’re making 30K a year and can’t make it, making 70K won’t help either cause you’ll just spend more.

    Kudos, you need to keep driving that point home to people.

  3. Matt says:

    I think that most people would be very happy somewhere between your two examples. While personally I would like to save up as much as possible I would also like to enjoy some of my hard earned money now. I’m not suggesting that going out and living it up is the answer but there is no reason not to treat yourself to some new clothes or a nice trip. The key is to ensure you’re saving money and that nothing goes on borrowed money. If you’re doing this then enjoying a better lifestyle isn’t really that bad a thing.

  4. Johanna says:

    It is true that stuff is not the best measure of success. But when you get right down to it, the only thing money is good for is buying stuff. You can buy more stuff now, or you can put it in the bank so that you have the option of buying more stuff in the future. Or you can do some of each. But those are pretty much your only options.

  5. Kevin says:

    I agree with you Trent, I get great satisfaction seeing my net worth hit new benchmarks when I look at my monthly report in Quicken. In the past I would have probably went out and bought “stuff”, but that’s when I was young and didn’t know any better. I used to treat myself at least once every couple months – using credit cards of course, but now I can’t remember the last “big” purchase I made just because I wanted something.

  6. David says:

    @Johana: Money can buy you time. If you spend all your money this year on “needs” and “wants”, you have to work the same amount next year. If I only spend on my “needs” this year (o.k., maybe a want or two along the way), then I don’t have to work as much next year. What do I do instead? Play…read…volunteer…veg out…

    If you truly have nothing better to do with your time than work (and for some lucky people that is true), or if you value stuff over free-time (and some very happily make this choice), then you are correct. Stuff now or stuff later–no difference.

    But, if you do value time outside of work more than stuff, then you can “buy” that, too.

  7. plonkee says:

    On the other hand, there’s something to be said for trying to live the life that you want (whilst remaining firmly within your budget). If I need to buy new furniture, it may as well suit my own tastes as not. Or, why not buy great quality clothes (but less of them). Or eat organic food before you’re rich.

    If I ever become *rich* I plan to work only part-time. For now, I’m mimicking that as best I can by taking all of my leave, etc and not selling it back to the company. That’s cost me in the region of £550 ($1100?) this year, but I reckon it’s a good buy.

  8. Eden says:

    I think the referenced article was on the right track, but definitely fell short by focusing on material things.

    If you only want to get ahead to buy more stuff you’ll never be satisfied with your life.

  9. Ray says:

    This happened to me. I got a substantial increase in income recently. It feels good to see my savings going up so quickly! Our expenses have gone up, no doubt, but our saving rate has gone wayyy up in percentage, thanks to this increase.

  10. These are really good points. Friends of mine love having ‘stuff’ so people look at them and think they are successful. I like having technology because its fun…i don’t care if people think I am successful.
    Success to me is having a good family

  11. Nate says:

    Johanna couldn’t be more wrong. Money can be used not just to buy stuff but also to make more money. You’re not limited to just spending it or keeping it in the bank. Put that money to work. Invest!

  12. Ben says:

    Having read Steve Pavlina’s article and thinking about it, one of my readings of the paragraph that you highlighted is that upgrading/overhauling items like computers and clothing – it’s a way of not returning to one’s previous ways after making changes.

    Ultimately though it comes down to what financial success means to oneself. Financial success to me wouldn’t lead to accumulating “stuff.” Instead it would allow me to enjoy activities that bring a sense of joy to my life. Expensive slick threads and a fancy watch wouldn’t make me any happier than I am now. Daytrips with my family to explore the state that I live in, and going to farmers’ markets, would make me happy.

  13. David Finch says:

    “Stuff” is great! However, if that’s all more money means, “stuff” will get old fast. Money is only a tool.

    More money for me would allow me to do more of the same things I’m already doing. Spend more family time, travel, launch more business ventures etc. Being able to do more of this is living the dream.

  14. steve says:

    Right on, Trent, I agree with you absolutely. Watching my bank balance go up and, with it, my financial flexibility and life options, is much more pleasing to me than buying the outward trappings of success.

  15. Todd A says:

    Prioritization. Instead of the 2 new cars, the ski-boat sitting outside, and the 2 international vacations each year, maybe concentrate on one priority. Maybe even a 2nd priority. But, then, let someone else buy the rest.

    There a some things I would love to have, that I’m sure I could get financed to buy, and that would basically just add stress to my life. More is just more at some point.

  16. PetMom says:

    I agree, it’s not about stuff. Working hard, striving for more, and obtaining financial success are all noble efforts. But it has to have a greater purpose. Is it financial freedom for you and your family, contributing to society, aiding the poor?

    Unfortunately, his article seems to be about climbing the financial ladder of success and not really caring about how you get there. The last paragraph of section 5 seems to be reverse Noblesse Oblige. You have a million dollars in the bank and somehow it’s because you contributed so much to society that society now owes you? Someone whose income stagnates is lazy and selfish? Good Lord, has this man thought of the countless thousands who work for modest salaries to help the impoverished or assist those who are less fortunate (oh, he thinks they’re lazy and selfish for taking too much from society and being in debt). We can all name lots of obscenely rich celebrities who have done nothing to benefit society, and in some cases have drained public resources with their illegal activities. Certainly they are not owed more just because they have millions in the bank. And surely those who are stuck in the vicious cycle of poverty are not to be left behind because they no longer fit into your new financial equilibrium.

    I also though it interesting that he closes the article talking about how money wasn’t the reward, but it’s the loving connections to people whose lives were made better by his presence. Apparently it’s not the friends he dumped back in step 3 as he was climbing his financial ladder of success. But his book will be released on October 15th so we can all get it and help him feel that he has made a valuable “deposit” to society and he’s owed more money!

    I feel the need to go donate some money to charity now. That is the debt I owe society for having the good fortune of education, a steady job, good health, and personal financial freedom – regardless of how much is or isn’t in my bank account.

  17. Jarod says:

    I’ve been to many conventions and I swear hey pep talk you and you leave wanting to spend the gobs of money you can potentially earn.

    I think it wise to be frugal with much and be happy rather than wasteful with your wealth and always stressed out with lots of debt!

  18. Aggie says:

    One of the points I find interesting in this article and the last is the discussion of clothing, watches and jewelry/material goods for the need of one’s job. I feel these are a MUST for certain jobs and I’ll tell you why.

    How would you feel to go to the doctor’s office to find him wearing dirty overalls and covered in tattoos? How would you feel to go to your bank and find the vice president wearing jeans and a tshirt? How would you feel to pick up your child from school, and the teacher is wearing daisy duke shorts, flip flops and a halter top with no bra?

    We all hope and pray that the professionals we depend on daily have their personal act together. We hope that our surgeons have enough money so they aren’t thinking about how to pay off the loan shark while they’ve got us cut open on the table. We hope our accountant can keep his personal finances in order well enough that he won’t steal from us. We hope that our school teachers are nice people who are clean and neat mentally, spiritually and socially.

    So I can understand exactly what this guy is trying to say about looking the part before getting there… BUT… these suggestions about clearance clothes racks at retailers isn’t cutting corners enough. Sorry.. but I’ll never set foot in a mall. Their idea of clearance is still way farther than what I’m willing to spend.

    I say go to the local thrift and get a nice suit that fits well, or one that is a year or two old and still in fashion that can be taken to an alteration shop and be custom tailored to fit. No one pulls your collar down to look at the label or sneaks into your pants to see who your tailor is. I shop K-mart a lot for disposable fashions–things that are in season for a year or maybe two, or things that I know will get stained. (I’m a teacher)

    Get a sewing machine and learn to put darts into your shirts and skirts/pants if you don’t like paying for alterations. A cheap 9.00 shirt will look like a custom tailored one for 15 minutes worth of sewing.

    And jewelry– forget wearing trendy baubles when one or two or three really good expensive pieces will last you a life time and make wonderful heirlooms to your family. A lot of people judge you more on your jewelry and watches than on your shirt, tie and pants. I’ve worn 4.99 used sun dresses from thrift stores with really good jewelry and no one ever notices. They’re too busy gawking at the bling.

    A 500.00 suit looks nice.. but if you’re wearing a cheap 15.00 timex with it.. people are going to notice something is off.

  19. You hit the nail right! People are caught in rat race when they spend more after getting that huge salary. I guess it will always happen because people are generally not content with what they have. There’s always this hidden desire to get more and to achieve more.

    I do believe once you master the control of these desire, then you can achieve your financial goal of having a better life.

  20. Battra92 says:

    The expensive clothes can come back to bite you in the butt for some job interviews. For example where I work (a utility company) we needed a team leader and of the applicants one came in dressed in an expensive suit and really looked like he was worth six figures a year (which we weren’t paying) and the woman who was dressed like your average office worker got the job.

    He also had an expensive watch that we joked cost more than my entire outfit ($10 Puritan trousers from Wally World, $10 shirt at Penny’s and $30 black Sketchers shoes at the Shoe Dept. plus figure maybe a couple dollars for socks and underwear if that) Heck, I could set up my entire wardrobe for work (5 pairs of slacks, 1 pair of Jeans for BizCasFri and maybe 5 or 6 shirts from the clearance racks at Pennys and Sears) for probably what he paid for that suit, shoes, watch and tie.

  21. FruGal says:

    Great post. It’s so true that as income increases, lifestyles adjust. There are some great tips here.

  22. I’ve been a loyal reader of both Pavlina and the Simple Dollar for few years now. While I gain tons of value from both sites, they are also VERY different. I think this post shows the clash between Steve and Trent’s world views.

    In Steve’s world, money is just a way to mark the contribution a person makes to society. And yes, he does believe that a baseball player who makes $10,000,000 adds more value than a social worker who makes $40,000 – in part this is because of the number of people each reaches. Trent (obviously) is much more into buckling down and pulling yourself up by your bootstraps. In my opinion, these are both valid world views.

    From my reading, Steve was not implying that you should spend money as fast as you can. He was suggesting that you take steps to live your ideal lifestyle in small increments as a way of accelerating your mindset. For example, if you envision a day when you can purchase all organic foods (which it seems that Trent aspires to), you can start by buying a few organic items and gradually increasing that ratio as your income increases. By doing this, you’ll better position yourself to be “worthy” to receive the amount of money you need to eat 100% organic.

    I don’t think this is much different from the popular advice to dress for the next job you’d like to have. It’s just a way to keep moving in the direction of your dreams.

  23. Anna says:

    Battra92, how do you know for sure that it was the guy’s expensive clothing that disqualified him? Were you a fly on the wall at the interview (or maybe you conducted it, in which case my apologies). Is is possible that the woman with more average clothing was better qualified?

  24. Mary Ellen says:

    My husband and I are in our early 60’s and retired about 8 months ago. We chose financial independence over material showmanship a long time ago – using your money to make money is so much fun and over 35 years it really pays off. I worked for several wealthy people thru out my career and learned from watching them. It seems that the people without money are the ones trying to impress everyone and people with REAL money could care less what other people think – in fact they prefer to keep a low profile and so do I.

  25. reverend tom says:

    On the work ethic and positive attitude point, isn’t that a little optimistic?

    It seems to completely overlook all the people who spend their entire lives working as hard as they can, producing as much as they can, completely convinced that they will be rewarded, while all the while their boss is reaping the benefit and the hard worker gets fired at 55 because they can get a guy right out of college for less than half the price who’ll happily work himself into the same fate while he shops at the WalMart where the old hard worker is forced to work because no one will hire somebody so close to retirement age.

    Just saying, it seems a little unrealistically optimistic.

  26. Battra92 says:

    I was at the interview along with a few others and that was the round table discussion. It wasn’t what disqualified him per se, but it was more the impression that he wanted too much money based on his previous employers.

  27. Johanna says:

    Okay, Nate, but once you’ve used your money to make more money, and used that money to make even more money, what are you going to do with it?

    “He who dies with the most toys wins” makes no sense, but “He who dies with the biggest emergency fund (or the biggest overall investment portfolio)” makes even less sense. Toys, at least, can bring you some enjoyment. Money that you’re not spending doesn’t even do that, unless you like rolling around in it Scrooge McDuck style.

    I’m not saying that everyone should spend every penny they make on toys and ignore things like retirement and emergency savings. But once you’re saving adequately for those things, find some things that you want to buy, and buy them. There’s nothing wrong with that.

  28. shalom says:

    Johnanna, I totally agree!

  29. Sally says:

    I agree w/Johanna (#18) – if you are taking care of your financial “stuff” and acting responsibily – what is the harm in having some material “stuff”? Also, has anyone really thought about “money”? In this day of direct deposit, debit cards, credit cards, on-line banking – money is really just numbers and most of us want to have more numbers/figures in OUR column….really think about huge numbers – like the deficit or what Oprah “earns” in a year…..what does millions of dollars actually look like? Would it fill up an automobile, a house??? Just pondering….

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