Why Acting Rich Can Hinder You from Getting Rich
You know how they say you have to feel and be like what you want to be in order to make happen? Unfortunately, the power of positive thinking does not seem to apply to accumulating wealth and actually getting rich as the author of “Start Acting Rich… Start Living Like a Millionaire,” Thomas J. Stanley, has found.
In his book, Stanley makes a link between a person’s spending habits and the neighborhood or environment he resides in. According to him, people living in more modest neighborhoods tend to spend less than those living in million-dollar areas. Just as well, he found that people who tend to spend so they can look better off actually undermine their chances of getting rich – as this usually requires living below your means and investing what you’ve managed to set aside.
The correlation that Stanley points out makes sense. In fact, owning a house (or several houses for some) can significantly dent one’s finances as it usually entails other costs such as repair, maintenance, heating, and cooling. Other unforeseen costs also make it harder for people who live beyond what they earn to have enough for investments. He also points out that a person who has a million-dollar mortgage is rarely a millionaire.
Sadly, people who overspend in order to match the lifestyle of their peers soon find themselves underwater and unable to cope with their mounting credit card debt. Pressure to get rid of their debt in the shortest time possible can also contribute to them being at high risk for becoming a victim of debt reduction law center fraud.
Stanley’s findings also show that your current financial standing in your neighborhood also highly affects your children’s spending lifestyle and views regarding finances. Majority of the hyper consumers who participated in his survey claim that they grew up in neighborhoods where their family lived a lifestyle that was below average. This has apparently led them to eventually overcompensate to make up for their past.
Wealth accumulation does not have to begin with feeling or pretending to be rich. For example, avoiding the impulse to keep up with your neighbors can largely save you a lot of money and help you jumpstart your way to successful wealth building. Surrounding yourself with frugal people also enables you to acquire the same traits and maintain your spending within what you currently earn.
The one last thing you have to always remember, however, is that you absolutely do not have to look rich to be actually rich – all it should take are smart investments and careful spending.
According to him, people living in more modest neighborhoods tend to spend less and settle debts easier than those living in million-dollar areas.