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Why showing off is a big reason why people don’t become rich

Rich lifestyle
Credit: Richard S

Wanting to show off is one of the biggest detractors from people’s wealth.

There are plenty of people in Australia that earn more than $100,000 a year but many of them are nowhere near as rich as they could be. I don’t mean that people should live like students, but wanting to show off and appear rich is stopping them from actually becoming rich.

Sadly, as a society we attach a huge amount of importance to how much money we have. People don’t really boast about how large their share portfolios are. Having $1 million of cash in the bank isn’t something to boast about with how low interest rates are.

So to display how much people earn, how much ‘societal worth’ people have, they buy expensive cars, expensive houses, go on holidays just for the Instagram pictures and so on. If people didn’t feel the need to show off how much they’re able to spend they’d actually have more wealth.

Of course, if people are spending less than they earn then they’re entitled to spend on whatever they want. They can go to Crown Resorts Ltd (ASX: CWN) as many times as they want, as many holidays through Webjet Limited (ASX: WEB) as they want, as many electronics from JB Hi-Fi Limited (ASX: JBH) as they want and so on.

There needs to be a balance between living your life now and the future. You’re fully entitled to spend some of your money on what makes you happy as long as it doesn’t take away from your long-term goals. 

I get much more satisfaction from seeing my portfolio grow and compound than the idea of buying high-end cars or other things along those lines.

If someone spends around $10,000 a year (including depreciation) on ostentatious displays of money then they’re missing out on more than half a million dollars if that money had been invested in shares instead and left there for 20 years. It’s up to you to decide what’s more important – both answers are okay!

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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