As I write this, I am watching one of my favorite podcasts from YouTuber Steven Bartlett of the Youtube Channel Diary of a CEO and he is interviewing Author Morgan Housel who is a financial guru and wrote the book “the Psychology of Money.” As I watch and listen to the interview, Housel is explaining the difference of being rich and being wealthy which is something I have covered a bit, and it dawns on me I am still in the middle of people who want to impress through the things I have.

Maybe you can relate to this a bit, but I remember when I had absolutely nothing as I was rebuilding my life and I still felt pretty good, but I didn’t feel great. I was extremely thankful for my new apartment, and I didn’t have a personal vehicle yet, so I couldn’t just go out on a whim and spend money. I had very little in my apartment and I slept on an air mattress. I had very little in the way of clothing and shoes and most of my daily decisions were quite simple.

Although I still had the innate desire to impress people whom I did not even know and whom I would have no reason to impress, I think it was more about self-validation. I used Uber and or Lyft to get to and from work and I didn’t go out shopping or anything like that. I had maybe four to five pairs of shoes and a couple pairs of pants other than my uniform work pants. I had an empty bedroom because I slept on my air mattress in the living where my TV and only real entertainment came from.

Eventually, I had saved up enough money to put the down payment on my BMW and then everything changed. I started to go more places and spend more money even though I really didn’t need to because like I said I was pretty content. In hindsight, apparently, I wasn’t as content as I thought I was because I was out all of the time and eventually my savings dwindled, and my apartment and closet filled up with things that I wanted but didn’t truly need.

I have absolutely no regrets about it, and I am now slowing down, but I realize that most of the things I have aren’t inherently for me, but for me to impress others with how far I have come. I am extremely thankful for everything I have, and I know that I will acquire a lot more in the process of becoming wealthier, but I also know that I need to take time for some healthy introspection. It is so easy to get caught up in the desire to impress people with the things we have.

When I look at and think about true wealth, it is the person who has so much money that they absolutely are not trying to impress anyone anymore. Morgan Housel explains it like this and I have often thought about it the same way, there are some people who are rich or at least appear rich because they have really nice things, big house, fancy car, the things we often think of when we think rich. On the flip side the wealthy person may have a pretty nice house and might have a pretty decent car, but it’s not flashy, it’s not a Lambo or a Ferrari.

The funny thing is when you really start to dissect the lives of the two in contrast, most of the people who appear to be rich usually don’t own anything and are basically living paycheck to paycheck, they just make a lot of money. This person could lose it all very quickly if they lost their job, because everything they have is on loan or lease. The house, the car, the boat, it’s all financed, and they personally own very little.

The wealthy person in stark contrast is completely opposite. They own everything they have and they usually don’t have a job because they own the company as well. The truly wealthy person is usually quite diversified even though they may have most of their eggs in one basket, they have spread enough of their wealth around so that if there is a major downturn in the economy in any sector (real estate, stock market, or maybe their individual business sector) they will still be wealthy even though it may hurt, it won’t cripple them and it won’t change their lifestyle hardly at all.

I heard a clip while looking for a video to watch on YouTube recently and it was an interview with Kevin Bacon, where he was explaining basically exactly what I am talking about. On the outside, most people in Hollywood and famous athletes appear to be rich, but many of them are living paycheck to paycheck because they are rich, but they are not wealthy. They have no financial acumen, and they have no real plan for what they will do with their money once they earn it. It’s cliche, but “those who fail to plan, plan to fail.” Many famous athletes and actors and musicians have had more money than they needed to last them ten lifetimes and they still end up broke and/or bankrupt.

How is this? It is their need to impress coupled with their lack of education in financial matters. They could have educated themselves on what they could do with their money, but instead they bought things that had very little real value and they ended up having to sell most of it in their bankruptcies. It doesn’t get taught in school or at least not in-depth enough to really prepare people to succeed financially in life, but it can be learned easily by anyone in life, if they seek out the knowledge.

Once you can find some balance and you no longer need to impress people, this is the quintessential launching point to actually start building wealth.

As always, plant the seeds, water them or let others water them, and you will start to bear the fruit of your efforts.

-Founder Magbunga.com