Displays of wealth that disguise indebtedness

Thomas Stanley and William Danko’s excellent personal finance book The Millionaire Next Door is a book many readers turn to regularly for ideas and inspiration.

One of the most interesting themes in The Millionaire Next Door is the idea that you really can’t judge a book by its cover when it comes to personal wealth.

In fact, quite often, public displays of affluence disguise a debt-ridden under-accumulator of wealth, while many exceptional accumulators of wealth possess ordinary, often seemingly outdated things.

The under-accumulators of wealth focused on appearance, while the exceptional accumulators of wealth focused on how things functioned.

Thomas Stanley expands upon that single idea here in his new book Stop Acting Rich.

The premise of the book is simple: lasting wealth and happiness is rarely found through buying expensive things.

Throughout the book, Stanley relies on extensive research of people who have acquired financial security — much the same group as in The Millionaire Next Door — to illustrate and reinforce his points, painting a pretty convincing case of the actual buying habits one should adopt if one is seeking lasting personal wealth.

Stanley opens Stop Acting Rich by defining a group of people he calls “aspirationals” — people who choose to act like the super-rich, but don’t have the financial resources to truly back it up.

Truly exorbitant wealth

The “aspirationals” and the truly rich (people with truly exorbitant wealth) tend to spend a lot of money.

Stanley reviews these spending habits in detail here — think yachts, country clubs, cases of vintage wines, private jets, BMWs and the like.

To put it simply, “aspirationals” often have to sacrifice every dime they have to appear rich, leaving them incredibly vulnerable to losing everything.

What’s interesting is that this “aspirational” and “truly rich” phenomenon continues all the way down the money scale.

In many neighbourhoods, there are “aspirationals” — people who are pushing themselves into financial ruin to keep up appearances — and people who can actually afford to live there.

The solution to financial success is pretty simple – stop being an “aspirational.”