This week I re-read bits of The Psychology of Money by Morgan Housel.
I've raved about the book quite a bit and that is only because it really is worth every cent in my opinion. Today, I will share another small excerpt from the book. Most of the lines are directly lifted from the book.
Wealth is what you don't see
Housel says, someone driving a $100,000 car might be wealthy. But the only data point we have about their wealth is that they have $100,000 less than they did before they bought the car. He goes on to say, "wealth is financial assets that haven’t yet been converted into the stuff you see.”
This struck a chord with me.
Housel reminds us that when people say they want to be millionaires, what it really means is that they want to spend a million dollars. Spending a million dollars is “literally the opposite of being a millionaire.”
What's the difference between being wealthy and being rich?
- People who live in big homes and drive fancy cars are rich. People with big incomes are rich. They display the fact that they are rich.
- Wealth is hidden. Wealth is income that is saved, not spent. Wealth is optionality, flexibility and growth. Wealth is the ability to purchase stuff if you needed to.
That's some food for thought for the week.
Until next time,
If you enjoyed the read, you may enjoy this too:
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