"Spending money to show people how much money you have is the fastest way to have less money."
We humans are visual creatures. We judge everything by what we see. If we see a man driving a Porsche, we say, "He is rich." If we see a woman posting photos from a 5-star hotel in Dubai, we say, "She is wealthy."
But Chapter 9 of The Psychology of Money teaches us a secret that changes everything: Wealth is what you don't see.
There is a massive difference between being "Rich" and being "Wealthy". Most Indians spend their entire lives chasing "Richness" and end up broke, never realizing that "Wealth" was waiting for them in the opposite direction.
1. The 1 Crore Salary vs. The 1 Crore Savings
Let's define the terms clearly because schools never taught us this.
RICH (Current Income): Rich is visible. It is the current income. It is the money you spend. When you see a person driving a ₹50 Lakh car, the only thing you know for sure is that they have ₹50 Lakh less in their bank account (or they have a huge loan).
WEALTHY (Net Worth): Wealth is hidden. It is income not spent. It is the cars you didn't buy. The diamonds you didn't wear. The First Class upgrades you declined. Wealth is an option not yet taken.
2. The "Audi on EMI" Syndrome
In India, we have a dangerous disease called "Log Kya Kahenge" (What will people say?).
Imagine two neighbors in Mumbai:
Mr. Sharma (The Rich)
He earns ₹3 Lakhs a month. He drives an Audi (EMI), lives in a rented posh flat, and parties every weekend. He looks successful. But if he loses his job tomorrow, he will be on the road in 3 months because he has zero assets.
Mr. Verma (The Wealthy)
He also earns ₹3 Lakhs a month. But he drives a modest Honda City. He lives in his own house. He invests ₹1.5 Lakhs every month in Mutual Funds and Real Estate. No one notices him. But he has ₹5 Crores in assets. He is financially free.
The Lesson: Do you want to look rich (Sharma) or be wealthy (Verma)? You can't be both.
3. Wealth is Like Dieting
Morgan Housel gives a perfect analogy. Weight loss is hard because it requires you to NOT eat food. You have to say "No" to the burger.
Wealth creation is hard because it requires you to NOT spend money. You have to say "No" to the new iPhone 16 when your iPhone 13 is working fine.
It is easier to exercise (work hard/earn money) than to diet (save money). That is why we have many high-earning people who are financially obese (broke).
4. High Income is Not Wealth
Singer Rihanna nearly went bankrupt in 2009. Boxer Mike Tyson earned $300 million and still went bankrupt. How?
Because they were Rich (High Income), but they were not Wealthy (High Net Worth). They spent as fast as they earned.
Wealth is the gap between your Ego and your Income. If you can keep your ego low while your income grows, you will become wealthy. If your ego grows with your income, you will stay poor forever.
Key Takeaways
- Wealth is Hidden: Don't envy the man with the big car. Envy the man with the freedom to quit his job.
- Suppress Your Ego: Spending money to show people how much money you have is the fastest way to have less money.
- Focus on Net Worth: Stop tracking your salary. Start tracking your Net Worth (Assets - Liabilities).
Frequently Asked Questions (FAQ)
Q1: How do I calculate my Net Worth?
A: It is simple: (Total Assets like Cash, Gold, Stocks, House) MINUS (Total Loans). If the number is positive and growing, you are becoming wealthy.
Q2: Can I never buy luxury things?
A: You can, but only from your passive income, not your active salary. Let your assets buy your luxuries.
Q3: Why is "Stealth Wealth" becoming popular?
A: Because in a world of social media showing off, having hidden wealth gives you peace, security, and true freedom.
Up next: Chapter 10 – Save Money (You don't need a reason to save).
📚 Credit & Disclaimer:
This post is a summary based on the bestseller "The Psychology of Money" by Morgan Housel.
Comments: