Updated on 05.19.11

The Danger of the Rich Act

Trent Hamm

Dinner With My Family will return next week.

Right now, I am in (arguably) the best financial shape of my life. I’ve paid off all of my debts except for my mortgage and I’ve got a healthy amount in savings as well. Each month, I’m bringing in more than I’m spending.

Many families in this situation might find themselves eyeing more expensive things. Why not go to the nicer restaurant? Why not buy that thing you’ve had an eye on? Why not go on an expensive vacation?

I call this the “rich act,” and it’s usually a no-win proposition. I know from experience how it can end up costing you desperately. When I was a young professional, enjoying the largest amount of income I’d ever known, I played the “rich act.” I bought expensive things. I went to expensive restaurants. I went on expensive trips.

The worst consequence of that “rich act” was that I wound up in financial trouble. As I accelerated my lifestyle, it became very easy to accelerate it more and more until I found myself outstripping what I was actually earning.

Beyond that, though, I stopped enjoying many of the simple things I’d enjoyed my whole life. This turned out to be the worst consequence of all.

For example, I took the “rich act” into food. I didn’t make much food at home and, when I did, I was constantly trying to make something “amazing.” On the other hand, back in the old days, I would be extremely happy with a bowl of simple soup and a simple sandwich – delicious, quick, inexpensive comfort food.

Another example: I took the “rich act” into my enjoyment of music. Rather than really enjoying an album and listening to it dozens of times (as I did in college), I’d buy CDs, listen to them once, and then move on to another one. Rather than enjoying the music, I enjoyed being a music snob and a collector.

That “rich act” not only cost me financially, but it took me away from many things that I enjoyed when I wasn’t affluent. Those things didn’t change at all: the enjoyment of listening to a familiar album and discovering more of the subtleties, the challenge of reading a difficult book, the pleasure of a simple meal made at home, the joy of eating a meal at an old familiar restaurant, and so on.

Today, I find myself spending time on the things that I spent time on when I wasn’t making a cent. I’ll spend a few hours reading an engrossing or challenging book from the library. I’ll make a great meal with ingredients that only cost a few dollars. I’ll put a familiar album on the stereo and let the music chase me around the house as I clean. I’ll go for a walk in the bright sun and enjoy the fresh air. I’ll play an old familiar board game with an old familiar friend. I’ll spend my summer “vacation” staying at someone’s house or pitching a tent in a state park.

Just because you make $100,000 a year doesn’t mean that the things that brought you pleasure when you made peanuts stop bringing you pleasure. Don’t walk away from the meals you loved, the old friends you’ve made, the dive restaurants you’ve enjoyed, or the simple pleasures that you could dive deeply into.

Money doesn’t change who you are or what you enjoy. If you allow it to do so, you end up feeling empty and trapped. If you feel like you’ve lost touch with those earlier pleasures, make an effort to get right back in touch with them.

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  1. Kathryn Fenner says:

    I, too, played the “rich act,” especially as a young lawyer. You are quite right–but you left out another pitfall of the “rich act”– a lot expensive things also cost many times more to maintain–my BMW cost about three times as much to repair as my Toyota, and my wafer-thin Baume et Mercier watch cost more than $100 for a new battery!! (They called it “servicing” and it had to be sent away for it–and the thin battery didn’t last nearly as long as a regular one, either) Some things, like a nice pen, may be worth the extra expense of refills–which often cost more than several packs of cheapo pens–either for the environmental impact, or because they are so much nicer to use that you get a lot of enjoyment out of them. I just don’t think a lot of things are in that category.

  2. Jen says:

    Thank you for writing this Trent. It’s funny. I was in huge financial trouble when I found your blog. It was my 26th birthday, and I was in a pile of consumer debt I incurred as a result of trying to convince myself I was rich. I read the entire blog over the next couple of days, and I slowly changed my habits. Hard work coupled with a few well-timed raises resulted in no more debt and far more surplus income than I ever had before. Then it started….For the first time in years I started buying food at work instead of bringing my own. I began socializing more, and it’s wonderful being able to buy my friends better wedding gifts and take a faster easier option even though it’s more expensive. I wish I could say I was spending consciously, but I’m not. I’m nowhere near being in debt, but I could be saving more than I am.

    This article just really hit home. Do you have any tips for avoiding this backslide? So many things about myself changed positively when I began this journey, and I’d hate to think I’m in danger of losing these attributes which mean a lot more to me than the money I know I’m wasting.

  3. Becky says:

    I liked this article.

    For me the easiest way to not start “acting rich” is to keep the same friends. If my friends shop at Goodwill, I tend to as well, even if I can afford to buy new.

    The hardest thing is actually the same – when my friends make more money, and *they* start “acting rich.” Now, I could not care less how my friends spend their money — if they enjoy fine restaurants, more power to them. But friends’ spending habits do tend to rub off. I have never dumped a friend because they started making more money. But I have spent less time with some friends because I could not keep up with their new pace of life.

    The good thing is, I’ve been blessed with friends who’ve been around for the long haul. It’s amazing how many ups and downs people go through over the course of time. From student potlucks to young-professional meals at the hottest downtown tapas place, back to “we’re saving for a house” or “paying medical bills” potlucks again.

  4. valleycat1 says:

    If by the rich game Trent means reverting to old unsustainable habits, then I agree. But once you’ve trained yourself to be responsible with money, there’s no reason not to make reasonable upgrades to your lifestyle.

    Jen – if you aren’t getting into more debt than you want to be in, then you’re doing fine. If you feel you could be saving more, then figure what it is you want to be saving for, get that money into savings as soon as your pay goes into your account, and then live on the rest.

    I personally went more frugal as we paid down debts and met some financial goals, but never had the intent to spend the rest of our lives shopping thrift stores, making do with a computer that barely works, never going out to eat, agonizing over every purchase decision, etc.

  5. Mary Kay says:

    Since becoming ore frugal after reading Your Money r Your Life and the Tightwad Gazette about thirtten years ago we have lieved fairly frugally. My husband’s income has gone up but about the only thing we spend a lot more on is charitable contributions. Hubby’s is going to receive a significant raise in the fall but I don’t anticipate spending a lot more. We’ll just keep on keeping on. We are happy with living that way and feel that we are being good role models for our high schooler.

  6. Johanna says:

    valleycat1 just said most of what I wanted to say.

    When I started my current job, my salary was three times what it had been just two years earlier (when I was a grad student). I kept living what was essentially a grad-student lifestyle for a long time, mostly because I was terrified that if I eased up on my penny pinching even a little bit, I’d start spending left and right and I’d be unable to stop myself.

    It’s only recently that I’ve started feeling a little more relaxed about spending. Part of it was realizing that I was saving so much money and I had no idea what I was saving for. Another part was realizing that my fear of spending centered around a worry that I would someday have to live on $20K/year again, which is actually fairly unlikely.

    @Jen: In addition to figuring out what you’re saving for, also start by figuring out how much you can afford to spend each month. Maybe it would make you feel better to switch to all (or mostly) cash for your day-to-day spending, so that you withdraw a certain amount at the beginning of the month, and when it’s gone, it’s gone. You need to give yourself permission to spend some amount of money on fun/unnecessary things – if you’re just trying to save as much as you can and spend as little as you can, then any purchase at all will make you feel guilty, and that’s no way to live.

  7. Kai says:

    It depends on what your goals are. If your goal is to accumulate as much wealth as you can and pass it on to your kids, then you shouldn’t spend more than the minimum.
    If your goal is something far off and expensive (like your large house in the country), then you should keep everything else down.
    But upgrading your spending a little is not necessarily ‘playing rich’. If you’re going on an expensive European vacation because you figure that’s what people with money do, that’s dumb. If you’re going on a big trip that costs a lot of money because it’s something you’ve wanted to do and just not been able to afford until now, that’s great. The fact that you enjoy your big trip doesn’t mean you won’t still enjoy camping trips near home afterwards.

  8. Gretchen says:

    It’s okay to like nice things/experiences as long as you have the money.

  9. Jamie says:

    I like this post a lot, and I also like the reader’s comments. I recently moved in with my boyfriend, which will be saving me $400/month (a big save for my income bracket), and this week I caught myself debating about how to spend all that new money. Uh– bad move, Jamie!

    Jen: How I keep myself from spending my extra income is that I have a checking account that I use for paying bills only, and I have a checking account (with ING) that I use for daily needs– food, fun, household needs, etc. Every week a sum of money automatically transfers into my ING account, and that amount sustains me for the week, keeping me within my intended means. Yep, I give myself an allowance! But it is wonderful at the end of each month to see how much is left in that first account, and I always shift the remainder over to my various long-term savings accounts.

  10. Maureen says:

    If your income increases you can afford to spend more and still live within your means.

    There is nothing wrong with enjoying the fruits of your labour as long as you don’t go overboard. Having a budget (or spending plan) can help with this.

    So why not dine at a nice restaurant, or go on a nice vacation? Just make sure you are doing so responsibly.

  11. Dee says:

    I’m with Maureen.

    There’s nothing wrong with spending more, as you get more. The problem comes when (like today’s Get Rich Slowly post about the materialistic woman) you are spending money you don’t have!

    What’s the point of earning more money, and working harder, just to live at the same level you started?

  12. con says:

    As the comments from readers have stated and what most PF blogs state is always the same over and over… spend less than you make whatever that takes. If you need to cut back to have this happen, cut back. If you can’t cut back any more, get more income if you can. Have an emergency fund, save for retirement, pay your bills, then do whatever you want with what’s left. Be it nice vacations, eating out, buying Tide detergent, etc. Nothing wrong with the “Rich Act” as long as you can afford it.

    For those who have cut back on everything and cannot make extra income for various reasons (and there are many), my heart goes out to you. You really don’t need money to feel rich. I think that comes with being confident and comfortable in your own skin.

  13. Nate says:

    Nice points here. I agree too many people get caught up in the “Rich Act” and unfortunately far too often it is people who don’t have the money but want to look richer than they really are.

  14. Steven says:

    “Rich Act”?

    What if the things that bring you joy cost money…lots of it? Not everyone enjoys Campbell’s Soup. Not everyone is happy pitching a tent in a State Park for their vacation.

    How does one define “rich” and who’s to be the judge of that? Would a coach flight to a tropical island and a stay in a $30 a night hotel be considered “rich”? If I were to show you photos of some of the most beautiful places I’ve ever been, you might say I’m “acting rich” but I spend a lot of my “real life” cutting costs so that I can afford a coach ticket to spend a week in a cheap hotel in some of the most amazing places on Earth.

    Others will stay across the street for $500 a night. That would pay for two weeks at the places I stay. If they can afford that, are they “playing rich” or just enjoying the fruits of their labors? I might look at them and laugh at how wasteful they’re being with their money because I can see/do all the same things as them outside of the hotel, but then again, they might be laughing at me because I can see light through the crack in my door, or because my shower leaks all over the floor. It’s a matter of priorities. I prefer to be cheap, but someone like you will call it “playing rich” as you have repeatedly done towards travel.

    If travel isn’t your thing, fine. Other bloggers love travel like it’s some sort of virtue. It’s just a matter of perspective. You sing the praises of your affordable meals, but I’ve yet to see one that I’d cook myself as they look pretty boring and uninspiring. Again, it’s a matter of perspective.

    And really, what’s the point in being frugal if you aren’t able to indulge yourself every now and again? It’s important to stop being so concerned about where every penny is spent once in a while. How can you enjoy life if you’re always concerning yourself about money?

  15. Ricardo says:

    I really think that your lifestyle should depend on your income. The first basic rule is to not spend more than you earn. The second, which depends on the first, is build assets to ensure your financial tranquility. That said, I allow myself some rich Acts as buying a good camera, an ereader and even a new car. I said new but not necessarily expensive. The truth is that sometimes in life you have to spend some money to live some experience (on things that attract you) that can succeed or not, for example, take lessons in Mandarin or piano. What I mean is, balance is always the key word. Between rich and poor act, the middle way is always the best way.

  16. Ricardo says:

    If you are a financially responsible person, do not forget to also enjoy the pleasures of life, both free and those that cost money. Here in Brazil the news this week was about a boy of 26 years who worked all day, every day, including weekends, and was attending college at night. He collected some money, took his passport and was going to travel as a tourist in Europe in a month. He worked hard, saved everything and was not having any fun. Ironically he told a friend: “I have plans for the future, the only problem is if I die tomorrow.” He was robbed twice on a bus and decided to buy an armored car. His father told him: “Do not forget, your car is armored, you do not.” As he was leaving college he saw a bad guy stealing his car, he reacted and the bad guy shot him dead.

  17. tentaculistic says:

    Yes! It’s so easy to get caught in the “rich act” and think you’re impressing people, when you can get caught in a web of debt. Plus people bond over shared hardship, like strategizing over how to pay medical bills or cheering each other on for meeting a goal,so going for impressing people can get in the way of making a real connection. Which no question, some people just want to feel bigger and better, but I think most of us want to connect. The rich act can really get in the way.

  18. Amy H. says:

    “Just because you make $100,000 a year doesn’t mean that the things that brought you pleasure when you made peanuts stop bringing you pleasure.”

    I’m not sure I agree with this. Once I was able to afford to buy organic milk and Odwalla orange juice, drinking non-organic milk and Minute Maid orange juice definitely stopped giving me pleasure — even though it used to! Honestly, some more expensive things really do just taste better. I still get $1.75 tacos from the taco truck, because they’re amazing (which may be more your point). But I don’t buy Minute Rice any more, even though it used to be my after-school comfort food (along with a can of Campbell’s soup).

  19. Jon says:

    I think that we all go through cycles in our lives. When my wife and I were first married, without children, we enjoyed dining out, shopping for gourmet cheeses and wine, and traveling at the drop of a hat. For the twenty plus years we were raising our kids, we sacrificed that brand of fun in order to make sure that our kids had what they needed, got opportunities to develop and grow, go to college – all the usual stuff. Now that the kids are self-sufficient and successful, we once more are able to enjoy travel, fine dining, and indulge ourselves with purchasing nicer things that we couldn’t afford for a long time. We’re able to do this and still achieve our savings goals.
    Could we accelerate those savings by not spending so much now? Of course, but we’ve chosen to enjoy the fruits of working hard while we’re still young and fit enough to play hard, too.

  20. Johanna says:

    Some other commenters have touched on this, but: By calling it “the rich act,” you’re confusing two similar-looking but very different things: Buying expensive things because they’re what you genuinely want, and buying expensive things because you want to impress other people, or because you think it’s what’s expected of you when you make a certain amount of money.

    If you really are just putting on an act, then yes, that’s dangerous. (What’s the phrase, “spending money you don’t have on things you don’t want to impress people you don’t like”?) But if you’re spending on stuff that you truly want and value, well, there’s nothing wrong with wanting and valuing stuff that costs money. Even a lot of money. And if you can afford to spend that money without sacrificing anything that you want and value even more, then there’s nothing wrong with that either.

  21. kristine says:

    They used to call this “ape-ing the ways of the rich”. When you hear it said that way, it is much less appealing. Weddings and children’s parties are an excellent example of how the middle class sometimes “apes the way of rich folk.” Ill-afforded ostentation used to be considered vulgar, embarrassing, and acting like a fool- today it is celebrated and encouraged. First by advertisers, now by peers. It has not uplifted anyone, just caused stress, debt, guilt, and a host of other negatives.

  22. SLCCOM says:

    I have never understood why people want to “impress” strangers. Who cares? Many of these people are folks you would have no respect for and have no desire to spend any time with. When someone passes me going 100 MPH in their hotsh*t little red sports car, they impress me, all right. What scum! They think they have the right to endanger everyone’s lives!

    The only people I want to impress are people whom I respect. And then the only way I can impress them is with my conduct. If they are impressed by material things, by fancy houses and expensive cars, I have no respect for them, as I have no respect for shallow people.

    Stay true to your values. If your values include expensive cars, go for it.(But you better not pass me at 100 MPH…) Keep people you respect in your life, and unload the others. This will keep you for ape-ing the ways of the rich.

  23. AniVee says:

    I’m with @14 Steven – Travel, especially budget travel, is not “Acting Rich” – and, if you can afford it without borrowing or financing, I don’t see why it has to be “budget”, either.

    It is worth all the little economies that one goes through (after covering the basics, having a reserve emergency fund, paying all debts and saving for retirement) to be able to visit far-away places where people are different but interesting, food is surprising and often delicious, behavior and values are also different, and everything you see and hear makes you reflect on your own home, your own country and your own life…

    All the “frugalista” tricks for living below your means suddenly become well worth it when you see the Taj Majal or the Temples of Agrigento or Halong Bay or whatever has caught your imagination – and if you can take a child or two or an adolescent with you, you may open their eyes to all the interesting things in the world beyond Disney World and Miley Cyrus …

    I DON’T believe in going into debt for travel, but I do believe it can change your life. And I hope to continue to do it now, not later. The way I see it, Rome may be eternal, but I am not.

  24. Annie says:

    I personaly think if you can afford to drive a BMW and wear nice clothes you should do it. People shouldn’t assume you are rich and noone should think you are playing the rich act either. They should mind their business and respect you for what you like and how you carry yourselves. Even if your playing the rich act, it means you value high level things and you are trying to afford it somehow. I see a big difference between a toyota and a BMW and if you don’t see it or feel it, then you shouldn’t be driving it. I am so over people acting like “oh she likes expensive things she is a wanna be”, i don’t think so, i just like nice things that weren’t made by 1 dollar a day chineese workers that make things that aren’t worth putting in your home. Sorry i am a snob. I think being frugal is great, but not when it comes to cars or food or clothes. the cheap clothes just make your life for clutter and the cheap food just makes you unhealthier and i don’t trust manafacturers out there that sell cheapo food/cars out there to help people. I think it is a rip off with junk products that aren’t made the right way. Onother thing is, i don’t think people that live frugal that save money is RICH either, i think they are forced to live that way because they don’t make enough to afford everything and live out loud.

  25. Julia says:

    Great article, Trent.

    This quote jumped out at me: “Just because you make $100,000 a year doesn’t mean that the things that brought you pleasure when you made peanuts stop bringing you pleasure”

    Over the last couple years I’ve been so depressed I’ve forgotted what used to bring me joy. But when I was “rich” I bought a lot of books – I just didn’t read them. I’ve finally started going to the library and reading more. With only 3 weeks before a book is due back, I only check out books I will actually read. That’s way better than buying them and letting them sit on a shelf. I’ve read more in the last month than I have in the last year & I’m starting to enjoy it again.

  26. Julia says:

    I don’t think this is against people who like nice things. Most of the people I’ve seen comments from on any of these posts seem to have a high value on quality. It’s about people who spend money on things they can’t afford because they’re trying to pretend they can afford them.

    Also, I don’t think cooking at home is “cheap” or “low quality” – yet it seems to be the single frugal lifestyle change that has the greatest impact. It doesn’t require much skill to get higher quality food at home than what you’ll get at most restaraunts. I occasionally eat the “cheap” fast food, and I agree that the quality is crap. I can make higher quality food at home and it costs less. I’m doing it to be frugal and yet I’m not sacrificing quality.

    I agree with you about “cheap” cars, clothes & food. But being frugal is about spending on quality when it matters, and not spending money just to spend money.

    One example is thrift stores. If you were to shop at a thrift store you would probably find some things that meet your standard of quality and some things that do not. Don’t buy the things that don’t. The things that do were probably purchased by somebody who was playing rich, worn once or twice, and tossed after they bought more clothes. They spent money on quality, where they didn’t need quality because they only wore the item once or twice. Now somebody who shops at that Thriftstore can benefit from it. That’s the idea behind that frugal activity. It’s not necessarily sacrificing quality.

    You did make one statement that I find quite ignorant: “don’t think people that live frugal that save money is RICH either, i think they are forced to live that way because they don’t make enough to afford everything and live out loud.”

    I make 65K a year, have no kids, and nothing at all preventing me from moving to a more expensive area where I can make even more. I’m only 30K in debt – including my car and student loans. I can easily “live out loud” and take 10-20 years to pay off that debt. I choose to live frugally and pay it off in 2. After that, with my current living expenses (which could be less) I’ll have at least $2000 EVERY MONTH to put towards all the travelling I want to do. Or I could work for about 4-5 months a year and take the other 7-8 months off and live on savings (without sacrificing my retirement or emergency fund). How’s that for “living out loud”. I’m frugal because I want to spend my money on me, not on stuff.

  27. Some of the comments seem to be from rich folks. Why not share some with the unfortunate. Why should you guys act so selfish. Would you still donate if it was not tax deductible?

  28. Ginger says:

    I agree with #21, in regards to “apeing the rich”. The middle class expects so much more, travel, eating out etc. that once was for the rich and complains about the cost. Why do so many people have coach bags? What is wrong with a cheap bag? I will spurge some but I think people have forgotten that the middle class did not used to have as much as we expect these days.

  29. Annie says:

    I wasn’t trying to be ignorant. I have family members that say they are rich because they eat the same food every day every week and wear the same clothes year after year. They also drive old cars and make fun of people with newer cars etc. It’s just from personal experience, it’s not to offend others out there. I love to cook at home, i actually eat more fruits and veggies when i do my own cooking. I mean no harm when i write, i love all kinds of people, i just don’t want them to judge me or make comments about my lifestyle without evaluating their own.

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