Are You Trying to Appear Richer than You Are?

by Miranda Marquit · 11 comments

One of the most important lessons learned from books like The Millionaire Next Door is that you might be surprised at who is wealthy. Indeed, the point of the book is that many of the people we think of as “ordinary” might actually be millionaires. However, they don’t look like what our idea of a millionaire should be.

And that’s an important concept to grasp as you live a frugal lifestyle. Instead of trying to look at though you have more money than you do, you should be striving to live within your means, and live as though you have less than you do.

Whom are You Trying to Impress?

Before you make a purchase, it’s a good idea to stop and ask yourself why you want it. In many cases, the reason might actually be that you are trying to impress someone — not that you need it, or that it truly believe it will substantially increase your quality of life or  your enjoyment of life.

Our society places a high value on the status symbols that go with wealth. As result, many of us try to appear as though we are just as wealthy — just as “good” — as everyone around us. We often refer to this phenomenon as “keeping up with the Joneses.”

Sadly, this type of mindset actually results in widespread debt. A lot of this has to do with the fact that there is a lot of posing going on. You see that someone has something, and you think that you “should” have it as well; you don’t want others to think that you aren’t “rich enough” to afford the same things. The especially disappointing part is that you might be keeping up with someone who can’t afford those things, either. Chances are, the Joneses are buying on credit to appear richer than they are. So you are really just keeping up with their debt! (In debt? Here are 6 steps to take in order to get out.)

Don’t Compare Yourself to Others

Rather than comparing yourself to others, compare yourself to yourself. If you want to use credit cards as part of a frugal lifestyle to earn points, that’s fine as long as you can pay of the card each month. For example, many people successfully use a 0% balance transfer credit card to shrink their debt. However, using the credit card to buy something because you think that you “should” have it because so-and-so down the block has one is folly. For one thing, your neighbor might have gone into debt to pay for it! And, even if he or she hasn’t, what does it matter?

Consider your own priorities and your own preferences. Nearly everyone in our neighborhood has a TV that is at least 50″. Ours, though, is 32″. Watching on a big TV just isn’t a priority for us, and we don’t feel like we need to rush out and buy a TV, just so it matches in size with our friends’. On the other hand, we like Mac computers. (Here’s are some good MacMall coupons.) So, we would rather spend a little more on our computers, and keep the smaller TV. Our neighbors, though, might have different priorities. And that’s just fine.

Bottom Line

Your spending needs to be based on you. Rather than buying items to look richer than you are and racking up debt, be content with what you have and focus on purchasing the items that are most important to you. You might not look “rich”, but you will have true wealth.

Bonus Tip:

You can seriously cut your Internet and TV costs. Find a Verizon FiOS promotion code here and you might be able to spend less every month.

{ 11 comments… read them below or add one }

fritz December 10, 2011 at 9:10 pm

People should act mature and act their real status.

Shaun May 14, 2012 at 10:47 am

This is wonderful! Great article. I completely agree. I used to be incredibly materialistic, and spent every dime I earned trying to appear more successful than I was. Now, for about two years, I’ve been doing the opposite, and it’s amazing how positive the impacts can be. 🙂

lepakking July 5, 2012 at 12:50 pm

Fools die everyday. Sometimes more, sometimes less. People are social creatures like Aristotle said for fear of being a god or a beast so with social standards everyone seem to keep up or shape up for they imagine and exaggerate their self-believed needs to be more of the same.

Those commoners often provide good and interesting comedy fillers whenever they assume themselves as merchants or even kings.

K July 11, 2012 at 2:31 pm

I have two credit cards that I try to pay with them as many things as I can from my daily expenses. This includes electric bills, daycare, gas, phone, anything that I can pay by credit card. I pay the complete balance at the end of each month, so I never pay any interest, and I get on average about $150 cash back every 3 months. It also helps me get an idea of what my monthly expenses are in total. But you have to have the right mindset in order not to get carried away. I never use credit cards to buy something I can not afford. I use it so I don’t have to risk paying overdraft fees in between pay checks, it is easier to dispute unauthorized charges if ever a victim of theft, and I easily can keep track of which months I have let myself go on the spending by looking at my total credit bill for the month, since that includes almost all my expenses, with few exception for things that don’t accept credit card payment.

Ace July 27, 2012 at 10:11 am

Very nice article! I get made fun of a lot because I make good money in an IT dept, but yet I still have a flip phone, drive an average car, and don’t waste my money on things I don’t need. Little do my friends know, that while they may have the gratification of nice things now, I will more than likely retire years before them and enjoy the money I have socked away.

Moira Monney August 6, 2012 at 6:52 am

Great article, I completely agree. It’s amazing how we look at the possessions of some people and think “wow, they must have a lot of money” – very often, what they actually have is a lot of debt…
@K – very interesting comment, I’ll have a look into whether this is possible with my credit card, too. The issue here in the UK is that lots of companies actually charge you more when you say you’d like to pay by credit card – is that not the case wherever you are based?

Ee Teck Ee December 9, 2012 at 5:44 pm

My problem is not in trying to keep up with the Joneses. There is no need to. We never meet each other. My problem is in trying to keep up with those who are trying to keep up with the Joneses. You see, I am surrounded by them.

Bernard Muhwezi December 17, 2012 at 3:38 am

Dear Ee Teck Ee(what an interesting name!!!!). I just thought that you should realize that trying to keep up with those that are trying to keep up with the Joneses means that you too are trying to keep up with the Joneses!! Simple and pure logic. Just like all runners in a race who are trying to overtake each other; they’ll all be trying to be no.1. You could as well be the Joneses for all I know. LOL!!!

selena February 28, 2013 at 8:45 pm

i couldn’t agree more: just buy the thing YOU want and don’t get carried away by the idea that your friends and neighbors might have more expensive stuff. if you all earn roughly the same salary but have different hobby’s and interests than it’s only to be expected that one person has a nicer tv, while the other has the newest computer and a third one splurges on his garden, etc.
if all the people in a community constantly try to impress each other than their ratrace will eventually end in high debts for everyone involved, and nobody particularly happy. that’s all just simple game theory.

selena February 28, 2013 at 9:00 pm

@moira
same in the netherlands. a lot of bussinesses don’t even accept credit-cards, and the ones who do will ask for extra money.

but it seems that in the usa debit-cards are very problematic. you constantly have to keep track of what you purchase or you’ll be hit with overdraft fees that are through the roof (waaaay higher than the 2%/month interest i’d have to pay on a negative balance). if you want to withdraw money from an atm you need to pay up to a dollar in transaction-costs. etc.

rationally speaking: if you can ‘earn’ money by using a credit card than obviously that money has to come from somewhere. either because you paid for it yourself with fees and interest, or because other customers paid for your rewards with their fees and interest-payments. these are the only 2 options (if the shopkeeper paid for your reward than that still means he must have raised his prices to finance that, so you paid for it yourself)

Mike October 11, 2013 at 8:46 pm

One of my best friends, whom I have known for 35 years since we were freshmen in high school, does not seem to get the idea of not living beyond your means, he bought a brand new $28,000.00 truck in his name for his brother-in-law because he brother in law works as laborer in the construction industry, one day the brother in law got arrested for drunk driving, wrecked the truck and was deported, suddenly Joe is having to make the $600.00 a month truck payments, when his wife saw that he was driving a new car, she had to get a new car too and bought herself a new Chrysler 200 for $20,000.00 Joe and Betty live in apartment because they lost their home back in 2007 because they had bought their house with an ARM Mortgage and according to Joe, nobody explained to what an ARM was and he nor Betty sought out anyone that know to help explain the difference between a Fixed rate and Arm Mortgage!! A couple of years after they lost their house, Betty signed up for a timeshare at her job and she thinks it is a great investment that they can pass on to their adopted daughter. They will have to pay $2500 a year for 10 years for the time year. Joe and Betty seem to think that because they have a timeshare, that it makes them a cut above those who live in the same apartment complex and their friends. This year, Joe and Betty were in a financial bind because they were behind on their car payments because last year when they went to Florida for their vacation using their timeshare, they took out a payday loan to cover the airfares, rental cars and tickets to Disneyland, Universal Studio. Although the payday loan was only for $1200.00, it had an interest rate of about 250% that shot up to about 400 to 500% and they had to use all of their tax return this year to payoff that damn loan. I told Joe about Consumer Credit Counseling and luckily he took my advice and sought CCC’s advice. When I suggested to Joe that he sell the damn truck and timeshare, he would not even listen to me. Joe is a good man with no vice but he has no willpower to stand up to Betty and say enough is enough, we have to stop pretending to be the Joneses!! I myself drive a soon to be 10 year old, Nissan Frontier with almost 150,000 miles on it.

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