One of the best part time jobs I had while I was in college was being a valet.
You got to drive the cool cars. And with all the extra tips, I was making close to twice the minimum wage.
Also, you got free exercise from all the running.
Who needs a gym membership, right?
After parking so many BMWs and Mercedes, I got to wondering.
Man, how are these guys so rich?
They must be overflowing with money to be able to drive these cars.
I was only a naive 19 year old, so it wasn’t until years later I realized the irony behind many of these “supposedly” rich individuals.
At the time, I thought that being wealthy was what I saw on the surface. But life has taught me that oftentimes, real wealth is what we don’t see.
When I was 19 years old waiting at the valet station for my next customer, I honestly believed that every person that drove up in a luxury car was rich.
I mean, they sure looked the part.
Most were decked out with designer wear clothes I could never afford. Heading over to the fancy restaurants I had never stepped foot in. And most importantly, they gave the best tips.
Not knowing much about the world of personal finance and real wealth at the time. I made a judgement call based on what was in front of me at the time.
I couldn’t see their investment accounts or their checking accounts.
So I assumed they just had a lot of money if they could afford all these nice things. They sured looked financially successful in appearance.
True Wealth Is What You Don’t See
However, as I got older and learned some harsh lessons about money, I can only laugh at my naiveness.
I’ve made so many money mistakes in my twenties because of my wrong assumptions about wealth.
I seriously believed that being rich was about having nice things.
Maybe it was my pent up frustration at not being able to afford these things when I was younger.
Or my parents’ expectation that I needed to look successful after all the sacrifice they made in immigrating to the United States.
Who really knows, but the fact was that I bought into the myth that rich outward appearance represented financial success.
Who cared what our bank account said or what an investment was. Being rich was being able to valet my car, wear an Armani suit, dine at the finest restaurants and give big tips like a super cool guy.
But I learned after some harsh lessons that true wealth is actually what we don’t see.
Wealth is built when we don’t buy the expensive 7 series BMW. Or the Armani suit. Or dine at the fine Michelin restaurant.
Only when we have the self control to limit our purchases and invest that saved money, do we have any chance of building real wealth.
It’s ironic isn’t it?
In our modern capitalistic society, we equate someone’s real wealth with the image of what we believe is wealth.
Just look at people’s fancy cars and big homes. Our natural intuition, brainwashed by modern media, makes us intuitively believe that he or she has a lot of money.
Michael Jackson, The King of Pop who lived in a multimillion dollar ranch, was sadly broke and in a staggering amount of debt when he died in 2009. After all the money he made and the toys he had, who would have thought he was actually broke.
How about Nicholas Cage. Do you cringe at all the recent roles he has taken on. Well the reason he’s starting in all these direct to video movies is because he needs to pay off his debt. Once the darling of Hollywood, now desperate for money, he doesn’t care what role he takes on as long as it pays.
We’ll never understand why, but Nicholas once owned 15 homes. Ranging from a $25 million waterfront in Newport Beach to a $15.7 million countryside estate in Rhode Island.
Our primitive brains make us believe how wealthy Michael Jackson or Nicholas Cage was.
But when we unveil the curtain, we see that they weren’t wealthy at all. Instead, they were actually worse off than most of us, given all their millions of dollars of debt.
Contrast that with an individual like Sylvia Bloom.
If you’ve never heard of her, it’s because she didn’t want you to.
She was a simple legal secretary from Brooklyn, who worked for the same law firm for 67 years. Unknown to everyone, she quietly amassed a fortune and in her will, she left more than $8 million for college scholarships.
Despite her wealth, she lived in a modest rent-controlled apartment, took the subway to work and practiced frugality in her lifestyle. I mean, she could have lived on Park Avenue if she wanted to.
But instead, she built her wealth quietly and invisible to others over her 96 year life.
Looking Wealthy vs. Actually Being Wealthy
As Sylvia Bloom’s example shows, real sustainable wealth is almost invisible because it is actually money not spent.
It’s money that’s growing someone’s net worth by being invested in appreciating assets. And most often, you can’t see this.
Robert Kiyosaki is famous for writing a best selling book titled Rich Dad, Poor Dad.
The basic premise of the book is that, in order to become wealthy you should spend money on purchasing assets. Not liabilities.
Assets are anything that grows your net worth. It could be an investment in the stock market. Real estate or a business.
Liabilities are anything that takes money from your pockets. Pretty much all expenses. There are basic expenses that we all have in order to survive, but when too much liabilities prevent us from putting our money into appreciating assets, we aren’t getting any wealthier.
Robert talks about how his friend’s dad, the “rich dad,” didn’t look rich on surface, yet because he didn’t spend money on looking rich, rather spent his money on purchasing assets. In his case, real estate and businesses, he eventually became wealthy.
The only way to build wealth is not to spend the money you have. Especially on things that you think will make you look wealthy.
I’m not saying there aren’t wealthy people who don’t spend a lot of money on things. But even in those cases, those things that they purchased aren’t growing their net worth.
We could probably all agree that out of all wealthy people, Warren Buffett is probably one individual who could afford to buy real nice things. Think of a private jet. And it wouldn’t really impact his wealth that much.
But he dragged his feet in purchasing it because he couldn’t justify it financially. When he did finally get one, he named it “The Indefensible” because based on his wealth building habit, he could not defend his purchase in any way.
Wealth is built when people choose not to buy the overly expensive home, rather they buy the home they can afford.
It is built when people choose not to buy that car to impress people, rather a car to take him or her from point A to B.
And it is built when people read awesome personal finance content like this, rather than mindlessly watching cat videos.
Let’s Be Careful Who We Imitate
People are good at learning through imitation.
Ever since we were kids, we learned by watching others.
We learned how to brush our teeth by watching our parents do it.
Our own kids learn every day by watching our behaviors.
But because real wealth is actually invisible and it’s hard to differentiate between the real wealthy and those who look wealthy, we have to be extra careful when it comes to who we listen to and who we imitate.
Next time you see someone that you want to imitate or learn from, ask yourself the question.
Would a really wealthy person, who wants to save money to purchase appreciating assets, behave like that?
The world is filled with people who may look quite modest on surface, but are actually real wealthy. And also with people who may look like they have everything on surface, but are only one paycheck from bankruptcy.
Let’s be wise about who we take lessons from and don’t be like me, taking money lessons from rich looking guys at the valet.