How to Tell If Someone’s Actually Rich or Just Faking It

One of the most disturbing financial realities in America is that the vast majority of people who look rich — people who live in upper-class neighborhoods, drive luxury vehicles, have country-club memberships — are actually as poor as your average lower-class worker. Both live paycheck to paycheck, both have nothing saved for a rainy day, and both live in fear of losing their job.

And on the flip side, there are many rich people scattered around who don’t look rich at all — multimillionaires who live in $150,000 homes and drive Honda Accords, highly wealthy professionals who wear secondhand suits and clip coupons, and fabulously rich people whose idea of a good time is visiting their local library.

Most of the people who look rich are poor, while actual rich people live in stealth mode.

We think people who look rich are rich because in America, we’re taught to equate “riches” and “wealth” with fabulously high levels of consumption. In America, the expectation is that if you have a lot of money, you’re going to be using that money to fly first-class on your luxurious European vacation, buy jet-skis, and wear a $6,000 watch on your wrist.

But guess what? Buying those first-class flights, vacations, jet-skis, and $6,000 watches costs a lot of fucking money.

The first rule of money is, if you spend it, you don’t have it. All those schmucks who spent their money on vacations and jet skis no longer have any money, and now they’re just poor people with jet skis, living paycheck to paycheck like everyone else. The jet skis and watches are an illusion; they advertise wealth and riches their owners just don’t have.

I used to know a guy we’ll call Dave. Real wealthy people are like Dave. Dave was in his early thirties and had no college education. Dave was a factory worker at a Wal-Mart distribution center. His job was basically to take boxes from one place and move them to another place all day long. He was employed full-time and was paid around $25,000 a year.

Dave was the epitome of frugal. Dave lived with his parents, wore clothes that were ten years old, drove a fifteen-year-old car that he repaired himself, ate meals at home whenever possible, and made frequent use of his local library. While he looked out-of-date in his mid-2000’s cargo shorts, he was quite educated and well-spoken.

Dave also had shitloads of money in the stock market. I never learned the exact number, but I suspect it was somewhere around $70,000.

In less than ten years, he’d saved more on his minimum-wage salary than most of the parents I knew in my upper-middle-class childhood area. He carefully studied the stock market, making strategic long-term investments. He took advantage of corporate 401k-matching programs. He took all the money he saved on rent and utilities and invested it directly into the stock market.

There is not a single shred of doubt in my mind — I know Dave will be a millionaire someday.

Dave is not interested in status symbols or making people think he’s wealthy. Like most people pursuing real riches, he’s interested in financial independence, that wonderful state where you don’t have to depend on anything or anyone else to have money. Financial independence enables people to do things like take long sabbaticals or retire early so they can spend their time doing what they want to do, not what they have to do to earn money.

These high-class poor people who buy luxury products and status symbols are, in a very literal way, slaves.

• They are enslaved to fashion. Every time fashions change, they are forced to go buy something new to update their collection.
• They are enslaved to comfort. They feel they must have the 4-way-heated-adjustable seats in their car or they will be too uncomfortable. They must have first-class flights because they couldn’t possibly stand being crowded into an economy flight.
• They are enslaved to the expectations of others. If for some reason they feel that others are looking at them and not seeing a rich, fashionable, successful person, they need to go buy something new to make sure everyone keeps thinking that.

It’s kind of sad, really. People who are so emotionally attached to the idea of being wealthy that they spend all their money on luxury products will never be wealthy, while people who have freed themselves of worry about what others will say or think are much more likely to end up as members of the millionaire club.

Time to fulfill the promise of this article. How can you tell someone who’s really rich from someone who’s faking it?

Someone who’s really rich will probably drive a regular person's car. They will probably own a regular person’s home. They will probably have a regular person’s education, eat at regular people’s restaurants, and live regular people’s lives. If anything, they may seem poorer than their neighbors, what with their odd fascination in finding great deals on used cars and always shopping at their local Goodwill. Their favorite hobbies will be free and thoughtful; they are likely to enjoy activities like fishing, reading, learning new things online, and enjoying nature. Last but not least, they will have a curiously deep knowledge of investments and investment practices. They’ll always be prepared for a conversation about investment strategy. They may admit they “have some money in the stock market,” but they’ll never let on just how much.

Someone who’s just faking it will be concerned with fashion. They will take great pride in looking good, “being on point,” wearing fashionable clothes, and staying in season. They will lust after car brands like Teslas, Mercedes, BMW, and Porsche. One of their hobbies will be to stoke the flames of desire in themselves by doing things like “window shopping” and “researching products” online. They will be very concerned with living in a “good area,” one populated by people like executives, managers, and the like. The idea of living in a middle-class neighborhood with teachers and construction workers puts them off. Most tellingly, they will know shockingly little about budgeting, spending plans, investment strategy, or retirement accounts.

Before you can become wealthy, you need to make sure you’re chasing the right kind of wealth. Are you chasing the status symbols that make people think you’re wealthy, like a Tesla and a luxury downtown apartment? Or are you chasing financial independence and freedom, regardless of what anyone else thinks about it?

To me, the right choice is obvious. I only get one life; I’m not going to spend it working my ass off just so I can have some shiny piece of metal, fancy rock, or overpriced cotton. These aren’t the things that matter.

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