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Written by: Corey Janoff 

When my brother lived in Austin, Texas, he introduced me to the term, The $30,000 Millionaire. Some guy rolled up to the bar we were at in a nice car, to which I observed, “That guy has a nice car.”   

“He’s probably some $30,000 millionaire,” my brother replied.   

“What’s that?” I asked.

“$30,000 millionaires are dudes who make $30k/year but try to give off the appearance that they are rich.  They wear a fake Rolex, max out their credit cards, rent a nice car to drop them off at a bar, order bottle service, and blow their entire paycheck on a night out.” 

Maybe it isn’t fair to judge someone based on appearance.  The guy who exudes wealth may actually be broke.  Just like the guy in a stained t-shirt and basketball shorts may actually be super-rich (see Adam Sandler). To that point, gauging someone’s wealth based on appearance is very difficult because wealth is what you don’t see. 

If you see someone with a $140,000 Audi S8 in their driveway, it says absolutely nothing about their overall net worth.  All you know about them is that they now have $140,000 less than they did before they bought that car.  Heck, you don’t even know if they bought the car!  Maybe it’s leased, or maybe their parents bought it for them.   

There are examples of all show and no go everywhere, even non-monetary ones that may be easier to relate to for some people.  For instance, there are many parallels between exercise and personal finance.   

An example my fellow pandemic Peloton purchasers can relate to is how Peloton keeps a running tally of your total workouts/rides.  They even send you a T-shirt when you complete your 100th bike ride!  I will be doing a class, and the instructor always gives a few shoutouts to people who hit milestones. “So-and-so: 100 rides.  So-and-so 500 rides!  So-and-so 1,600 rides!!! Way to go!” 

Meanwhile, I’m sitting there thinking, how the heck does someone do 1,600 rides?  Even if you ride the bike 5 days a week, 52 weeks a year, it would take over six years to complete 1,600 rides!  Have these people had their bikes for that long? 

Then I realize you can do multiple rides in a day, and it is quite easy, actually.  You can do a 5-minute warmup ride, a 30-minute class, and a 5-minute cool-down ride.  That counts as three rides.  Heck, you could game the system even further and do two 15-minute classes instead of one 30 minutes one, and now you are credited with four rides that day!  Coupled with the 5-minute warmup and cool-down rides, it only took you 40 minutes!  However, does someone who does those four “rides” get more exercise than someone who does one 45-minute ride?  Likely not, even though the stats show they did four rides to your one.   

More isn’t necessarily better, but that’s beside the point.  The point is the outward appearance can be misleading.   

What is Wealth? 

In financial terms, wealth is the sum of all your assets (stuff you own) minus your liabilities (debts).  This net figure is called your net worth.  It’s a simple, easy way to understand how to stand financially.  I’m a huge fan of using your net worth to track your financial progress over time.   

Some people may judge their financial success based on how big their house is or how many nice cars they have.  Of course, I want you to have those things, but if you owe money on them all, it’s all smoke and mirrors.  What do you own?  What do you owe?  What’s leftover?  Use that as a benchmark of your financial success.  

The problem is, it’s hard to emulate because we can’t visually see examples of someone’s net worth (their true wealth) regularly.  Having a high net worth literally means you didn’t buy stuff with your money.  You saved it instead.  Nobody is posting photos to Instagram of their checking account balance.  

We tend to emulate what we can see.  If we see our neighbors and friends buying new cars and expensive houses, we want to do the same.  When people ask, “Are doctors rich?” the answer is often, “Not as much as they should be given their incomes.”   

Having a high income does not equate to wealth if you spend all of your income.  That’s why saving and investing at least 20% of your gross income for your future is crucial if you want to build wealth and maintain your lifestyle throughout retirement.   

Check out: Retirement Savings Targets by Age to see if you’re on track! 

Stealth Wealth 

A growing trend among people pursuing financial independence is the concept of stealth wealth. The idea is wealth you don’t see.  A large net worth with a modest house and car is a great example of this. 

One might argue that buying an expensive home is an asset that will appreciate over time.  Is your primary residence an investment, though?  I would argue it is more of an expense. As any homeowner knows, owning and maintaining a home over time is expensive.  I could point to a dozen other investments out there that will likely end up more profitable for you in the long run (no guarantees, of course).   

There are many benefits to stealth wealth.  Societal expectations for you are lower if people don’t know you are wealthy.  You aren’t expected to pick up the tab at dinner.  People don’t hit you up regularly for investments in business ventures or charitable causes if they don’t know you are wealthy.  You can keep driving a car that’s 10+ years old. No need to upgrade your golf clubs every couple of years.   

On the other side of the coin, if you give off the appearance of wealth, it can be financially and emotionally stressful living up to those expectations!  People will ask you for money.  You’re expected to drive the fancy car, live in the big house, go on nice vacations and stay inexpensive hotels.  If you don’t actually have the money to maintain that appearance and lifestyle, that can be challenging!  This is why many professional athletes and celebrities go bankrupt.   

Practice stealth wealth.  Make it a game.  Try to increase your savings rate every year.  See how large you can grow your money stack in your 401k, Backdoor Roth IRA, and brokerage account.  The larger your taxable brokerage account, the more beneficial tax-loss harvesting will reduce your tax exposure over time.   

If you’re on a healthy track for financial independence, avoiding burnout at work is more likely, and you’ll be able to work on your own terms sooner.  

Related: On FIRE with Physician on FIRE 

Of course, there is a balance to everything.  If you are overly frugal and have tunnel vision on stealth wealth and financial independence, or FIRE, that’s probably not healthy.  Enjoy life a little bit, in moderation, of course.   

In Summary 

Wealth is what you don’t see.  Outward displays of “wealth” may look cool, but they generally aren’t a sign of real wealth—quite the opposite in most cases.  Money spent is money that isn’t saved.  #OpportunityCost.   If you’re not already tracking your net worth, start doing so.  You can download a net worth template from our website to get you started.  Use that as a benchmark of your financial progress.  Update it annually or every six months, and you’ll be amazed how significant your progress is if you make saving and paying down debt a priority over buying things.

As singer, Rihanna, once learned, if you spend money on things, you will end up with things and not money.

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