Being perceived as cheap by others is something which I have often experienced through my life.
If you decide you don’t want to go to an expensive restaurant, or you want to save some money, you’re labelled as being cheap. But, why? Does it really make you cheap?
Let’s discuss this viewpoint, and whether the general perception of what cheap is, is the correct viewpoint.
First of all, answer this question in your head. Would you rather be perceived to be a millionaire (but actually have barely any money in your bank), or perceived to be cheap (with a bank balance of $10,000,000)?
If someone were to ask me this question, I would definitely lean towards the larger bank balance. After all, this should stem from the ideology that you shouldn’t really care what others think.
What does it mean to be rich?
It is often presumed that when discussing wealth and riches, that people who are ‘rich’ have a high income job. Others may look towards the net worth of an individual overall.
Many investors would agree that income isn’t the best way to measure someone’s wealth. I would tend to agree with this, as there are many people who may be perceived as rich due to their income and the trinkets they purchase with it. But, in reality, their net worth is low as they have high liabilities to maintain those trinkets.
Expectations of wealth and riches change significantly depending on your personal circumstance. In a recent study of individuals, some felt as though once you were worth $1m you were rich, while others felt as though it was $10m or even more. That is because what you deemed to be excess riches will depend on your current situation. If you’re worth $10m, you probably look at the guy worth $100m as rich, not yourself.
The aforementioned issue is when there are people who appear to be rich, but actually have a very poor net worth due to their high liabilities. For example, if you own a Ferrari, but 90% of it is paid for with a loan. You can’t count the entire car as an asset. Unfortunately we live in a world where it is common to take out loans and payment plans to buy things we don’t need, to impress others who often don’t care.
How do you spot someone who is pretending to be rich?
I was once told a story about a mechanic which owned a garage in a pretty wealth town in the US. Some of his customers were billionaires, some were movie stars, and some were normal members of the public.
He described his customer base as either “Cash Rich” or “Card Rich”. What he meant by this is that some of his customers would pay for repair bills up to $1,000 in cash, cheque or debit card. While other customers would general use a credit card.
The difference between these two types of people is that the “Cash Rich” were normally driving relatively old, but reliable cars. While the “Card Rich” were generally driving brand new cars which had often been bought on, you guessed it, credit.
Often the “Card Rich” people were in jobs which they felt required them to look successful. High end retail or real estate, for example. They are faking success in an attempt to attract business. Even the way they dressed was different. The “Cash Rich” generally wearing plain clothes which served their purpose, while the “Card Rich” were dressed up in the latest designer clothes and preened to perfection.
So, the moral of the story here is that those who look like they’re trying to look rich, often aren’t as rich as they seem.
Why do so many wealthy individuals dress to look poor?
Many wealth individuals remain very modest when it comes to their wardrobe, with a lot of modern day wealth individuals choosing to wear pretty much the same outfit every day. The question is, why?
Many rich people have the mentality of prioritizing their money when it comes to clothing. Why spend £3,000 on a custom made suit, when you could buy one in the sale for £150, and take it to the tailor? Allowing the rich person to invest the remaining money into value creating ventures.
I always think of Warren Buffett as the OG wealth minimalist. He drives an old car and doesn’t wear any fancy clothes. Other’s may think of Steve Jobs, who would almost always be seen in dad shoes, washed out jeans and a black turtleneck.
A lesson should be taken from all of this. How often do you see a billionaire wearing very flashy jewelry and ostentatious clothes? Rarely. Take note.