Invisible Wealth Is More Important Than Visible Debt


Despite the painfully obvious reality that what you buy does not accurately reflect how much you may or may not have in the bank, what you own will more often than not encourage people to come to certain conclusions about your wealth (or lack thereof).

People will frequently make guesses about your income and wealth based on:

  • the home you live in
  • the car you drive
  • the clothes you wear
  • the vacations you take

… and very often these guesses will be WRONG!

Our consumptive culture is so focused on money in the context of what it can buy. If you’re not buying the right thing or enough of it, people will assume you don’t have any money. This is misleading! If you’ve managed to put away over $25,000 for retirement, it means you have not spent that $25,000 elsewhere. However, the absence of a new car or a lavish wedding communicates to outsiders that you don’t have $25,000 in the first place!

I wish we lived in a world that rewarded thrift and frugality (or at least one that didn’t immediately equate material possessions with financial success) but unfortunately, we don’t. Instead, it’s up to you to make peace with reality: if you’re doing things right with your money, you’ll probably look like you don’t have very much of it!

Invisible wealth is more important than visible debt

This occurred to me when someone commented on my 30 Financial Milestones You Need To Reach By Age 30 post, asking why owning a home wasn’t on the list. I thought it was painfully obvious: owning a house doesn’t mean you’re good with money!

Financial responsibility can’t and shouldn’t be measured by possessions

The error in equating homeownership with financial success deserves a post on its own. But I will say that acquiring the huge debt of mortgage does not deserve a pat on the back the way saving for retirement or sticking to a budget does.

When someone purchases a house, all you see is the house. You don’t know if they paid with cash in full or barely scraped together the minimum 5% downpayment. It’s hard to see if their scrimping to meet mortgage payments or if the obligation is barely making a dent in their disposable income.

We think the house communicates financial savvy, but it could be the opposite. All we see is the house, and make the potentially false assumption that if they successfully overcame the hurdles to acquire it, they must have their money under control.

Nobody will know how good you are with money

Ever since I changed my attitude and focused on saving money instead of spending every cent that came in, I’ve been mistaken for having less money than I do. A year ago, when my student loan debt was just about gone and I was considering buying a car. I was considering some higher-end vehicles when one of my friends encouraged me to get something “within my budget, like a Mazda 3”. Not only are Mazdas the vehicles I hate most on earth, but I was grossing around $7,000 per month!

I had a budget to accommodate almost any car I wanted, but no one could tell because I wasn’t an obvious spender. My biggest crimes were dining out and going on one vacation per year. In a world where most people make spending decisions based on their credit card limits, my behavior didn’t look excessive.

Sticking to an aggressive debt repayment or savings plan will be more challenging because you won’t receive any outside encouragement for your financial responsibility. People will congratulate you on buying a home and they’ll ooh and ah over designer clothes, but no one is going to know if you have a $0 balance on your credit card statements or have managed to hit $100,000 in savings.

If you’re doing things wrong, your biggest financial milestones will be buying a house or a nice car, and everyone will see them. But if you’re doing things right, your biggest financial achievements will be totally invisible to the outside world.

No one will know when you are debt-free or hit $1 million in retirement savings. So strive for invisible wealth! Don’t worry about the fancy cars and houses, they don’t signify financial success. They might even just be very visible debt!

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17 Comments. Leave new

  • This is so true. I strive to be very similar to my parents in this regard. They are well-off, and people know they’re not exactly struggling financially, but no one knows (myself including) exactly how awesome they’ve done for themselves (though I do know better than others).

    I remember someone asking them when my parents were about 50 and 54 when they’d be done paying off their mortgage because the person asking just assumed everyone had a mortgage. My Mom just responded that they didn’t have a mortgage any longer. She didn’t rub salt in the wound by saying that it had been gone for over ten years.

    • that’s amazing!! But it’s true: everyone just assumes mortgages are forever and everyone has a payment. It’s too bad there’s not a socially acceptable way to brag about serious financial milestones!

  • Some of my friends think I’m cheap because I “only” spent ~$350k on my condo :/ Most of my friends are buying much more expensive places than that. I don’t understand why they want that much debt, but I’m working really hard to just be happy for them and tell them how nice their house is 🙂

    I tell people when they’re concerned I took out an adjustable rate mortgage that I figured I could probably afford whatever payment it reset to, wasn’t sure if I would stay more than 5 years, and if all else failed, I would probably have enough assets that I could pay it off one the rate reset, so it seemed worthwhile to get the lower rate for a few years. What they don’t know is that I should own my place free and clear in the next couple of years.

    • I think a lot of people spend for show, particularly with housing. They say they want their own home and it’s an investment, blah blah blah, but so much of it is just showing off!

      You’re always killing it on net worth updates. I love following your blog!

  • Preach! People do often make assumptions about lifestyles based on all the things you mentioned. I think people tend to think I am constantly broke, just because of my nonprofit salary — little do they know I am aggressively paying off debt and choosing to live this way. I’m glad having a house wasn’t on your list, because I really don’t think houses are great investments.

    • Right?? In some places I think buying a home is a good idea but with the way the market is in most of Canada’s major cities it’s just crazy right now =p props to you for maxing out a non-profit salary!

  • So true that looks can be deceiving. I think the new rule of thumb should be that if someone looks like they have nothing, they probably have more than the person who looks like they have everything. But then again, who cares. No more Jonesing for me!

  • Why do you hate Mazdas? I know this was not the point of the post, but now I’m curious.

  • This is a really good reminder. I bring my lunch to work every day and people think I’m “too cheap” to eat out. Then when I mentioned I’m going on a trip overseas they wonder where I “got all the money”.

    I actually owned a brand new Mazda 3 for a few years and eventually sold it when I moved into the city. Some people definitely saw that as a step backwards thinking I could no longer afford it, but it was actually a giant step forwards because now I have WAY more money to make debt payments.

  • Agreed! My dad taught me that lesson when I was a kid. I asked him “Dad why don’t we have a new car like _____’s parents?” He said to me “because this car works just fine and we don’t need a new one. You never know, someone may have a Mercedes Benz but they cannot afford their house.”

    I always remind myself now outward displays of wealth aren’t true representations of an individual’s status.

  • Whew…why so much hate for the Mazdas?!!

  • Absolutely love this! #TeamStealthWealth


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