Spending and Saving

How to Identify the Fake Rich From the Real Rich

According to Dictionary.com, rich is defined as “having wealth or great possessions; abundantly supplied with resources, means, or funds; wealthy”. That same definition also pops up as the first hit in Google when you search for “rich”.

So the first result in Google comes from Dictionary.com and the first sentence is “having wealth or great possessions”. I guess being rich means you have money and a ton of stuff, right? But what about the “fake rich”?

Now, the word “rich” can be defined many ways. It could mean you have health, a family, shelter, a job, money – whatever. For the purposes of this post, though, the word rich will relate exclusively to money.

How to spot a rich man or woman

Pretend you’ve never read The Millionaire Next Door, taken a class on finance, read a money blog, etc. Pretend you know nothing about money.

When you think of someone who is “rich” what do you see? Probably images of suits, fancy cars, or lavish mansions.

Obviously I know this isn’t what “rich” really means, but to some degree I do think society has programmed our brains to conjure up images like this when we think of rich and successful people.

While I think we all have a ton of work to do in debunking the common perceptions of “rich people”, here are a few thoughts I have about the fake rich that will help start the conversation (based on my own experiences):

What you will see about the fake rich

  1. They make good salaries. Fake rich people typically need to make good money in order to keep up their materialistic lifestyle. The fake rich people I know and have seen usually have very steady jobs that make them a good chunk of change.
  2. They don’t bother to save. And frankly don’t even know how. They’re too busy spending their income on “things” to worry about the future. I recently interacted with a fake rich person who isn’t far off from the “standard” retirement age, and just now realized they could easily survive one one income while saving the other. Think of all the time wasted!​
  3. They need validation. Fake rich people need you to comment on and care about their things – such as their home, their car, or their job. They’ll often talk about it in a way that prompts questions and discussion. This is their way of validating their own lifestyle choices.​
  4. They own expensive things. This is the easiest way for a person to make you think they’re rich. They lease a nice car, or buy rent the newest iPhone to show you. When you see this person with nice things, chances are your brain will tell you they have money at first glance. A fake rich I know bought a new iPhone, but then when the “s” model came out six months later, the once-new phone became a permanently docked music player, while they went out and bought the newer phone. Stupid.​
  5. They love to one-up others. This goes with the point above, but fake rich people really enjoy showing that they are doing better. Their job is better, their car is better, and their home is bigger. They won’t actually say these things, of course, but they’ll drop hints. A fake rich recently told me their wife went out to pick up a new laptop (you know, very casual shopping trip) and returned with the laptop AND a new watch. It was positioned as annoyance, but when I asked the cost of the watch, the person “didn’t know” or care. It couldn’t have been that big of a deal, and the best part was, I didn’t ask about either of these things – but they found a way to tell me.
  6. They have to dress a specific way. Another easy way to show someone you “have money” is to dress in expensive-looking clothes. A nice power suit always makes a person feel more important. My favorite is seeing women at a store like Target rocking a designer purse, sunglasses, and what seems to be a very expensive outfit, and they get into a Lexus that has “LEX” on the license plate (meaning it’s leased). I just laugh.​

What you won’t see about the fake rich

  1. They live paycheck to paycheck. How can a person who makes good money keep up with appearances, have a huge home, and still buy tons of new material items? They have to spend their money! They usually aren’t socking it away in savings, thus many fake rich people are living paycheck-to-paycheck.
  2. They’re often miserable. This comes from personal experience. As I laid out in one of my first stories about myself, my dad made really good money, but he lived a materialistic lifestyle. Although we had nice, new things all the time, he was unhappy. He worked a ton and I saw him on this constant cycle of earn-buy, earn-buy, earn-buy. It sucked.​
  3. They’re never quite satisfied. The fake rich always seem to want more. They have to have the newest, biggest, and best in order to show others how much money they (think) they have. This causes dissatisfaction on a regular basis. Can you imagine being constantly unsatisfied?​
  4. They envy others. This is one of my favorites, and it takes a keen eye or understanding of people to experience this, but to see a fake rich envy you is incredible. I was with a group last week, in which there were some fake rich, and I mentioned that I was planning to retire at a very early age. Many of these people laughed in my face, but I was the one who had the last laugh. While they’re slaving to pay for new cars, big homes, and material things, I am living frugally and loving it. I’ll be retired while they’re still working to keep up their lifestyle.

What about the REAL rich?

These people are much more difficult to spot. If you’ve read The Millionaire Next Door you know that real rich people live well below their means, drive modest used cars, and live in homes that are suitable for their needs.

They’re “normal” looking people and nearly impossible to pick out. From my interactions, the real rich are essentially the opposite of all of those things I listed above.

Real rich people are happy and do what they love, they don’t care what other people think of them, and they understand the value of saving.

Habits of the real rich

  1. They shop in bulk. That’s right – the real rich shop at warehouse stores like Costco, Sam’s club, and BJ’s. Even Google’s co-founder Sergey Brin still shops at Costco. Not only does shopping in bulk save on money, but it also saves on time – something a lot more valuable than money to most. You can also order bulk groceries and household items online with Boxed, which is gaining tons of popularity.
  2. They shop for sales. Although most rich people could afford to pay full price for just about anything, the truth is – most of them don’t. But shopping for sales doesn’t mean you have to skip the brand names that you love best. Premium outlet stores are a great place to find brand name items for way under market price. Research shows that rich people, on average, spend less than $2,500 annually on clothing. That would only be about 2 outfits if they were shopping in the high end full price markets.
  3. They use coupons. This may seem like a no-brainer, but couponing is great way to save money. According to business advisor Murray Newlands, an estimated 54% of affluent families use online coupons regularly. Not only can you get coupons online, but I’ve also shown my readers the benefits to getting free coupons by mail.
  4. They reuse what they already have. You don’t have to buy new clothes every season if what you have is still in good condition. Nor do you need to throw out household items that haven’t been used in a while. Many items can be repurposed to create something new. The real rich are always looking for new ways to use what they already have so they do not need to spend more money than necessary.
  5. They live below their means. So maybe you can afford a new BMW, but is it necessary? There are many other options that offer the same luxuries as expensive cars, but at a much lower price point. Maybe you can afford a 5-bedroom house. But if you have 3 people in your family, you need to ask yourself if 5 bedrooms is necessary. Take a note from some of the richest people in the world – Mark Zuckerberg, Tim Cook and Warren Buffett. They all live in modest homes.
  6. They avoid debt. Although this one may be easier said than done, the real rich like to avoid having any debt. This means they won’t take out loans for things like cars, and tend to shy away from credit cards. If you don’t have money in your bank to pay for it, then you don’t need it. Use cash instead, there are many benefits. With credit cards and high interest rates, you end up spending way more in the long run. And once you go into debt, it is a lot harder to get out.
  7. They make a savings plan and stick to it. The best way to save money is to not spend it. The most successful people start off with a savings plan and do what it takes to stick with it. Whether you want to put away $100 a month or $1,000 a month, you need make sure you meet your goals consistently. A great way to meet your goals is by creating a prosperity picture. Visualizing your goals can give you the motivation you need to succeed.

So how do the real rich stay rich? They simply live like ordinary people.

Remember, being frugal doesn’t mean being cheap. You can live frugally and still enjoy many things in life. You don’t have to live in a mansion and drive a million dollar sports car to live life a rich life.

As you can see, identifying a rich person isn’t always easy. Also, the ‘real rich’ don’t live like you’d typically think.

So take a few minutes to picture ‘rich’ in your mind. What do you see?

Now, how can we as a culture start to separate those myths and help the fake rich realize they’re not doing themselves any favors? Or can we? Or should we?​

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Last update on 2017-05-27 / Affiliate links / Images from Amazon Product Advertising API

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