Wealth is What You Don’t See MONEY MATTERS
WITH DR. ANDREW LEE Dr. Andrew Lee is professor of English at Lee University. He also serves as a coordinator for Dave Ramsey’s Financial Peace University. He and his wife Esmerelda have three children.
I
n previous articles, I’ve briefly mentioned the difference
car.” In case you’re still not getting the message here, Housel
between “rich” (high income) and “wealthy” (high net
is even more blunt: “Wealth is the nice cars NOT purchased,
worth), and I’ve shared real life examples of how “rich”
the diamonds NOT bought, the clothes forgone, and the
and “wealthy” don’t always coincide. There are some
first-class upgrade declined.” Wealth is money not spent but
who earn high incomes (entertainers, athletes, doctors,
instead invested. Finally, Housel reminds us that “When most
executives) who aren’t wealthy because they spend the
people say they want to be a millionaire, what they might
money as fast as it comes in. Chapter nine of Morgan
actually mean is I’D LIKE TO SPEND A MILLION DOLLARS.
Housel’s new book The Psychology of Money (which I highly
And that is literally the opposite of being a millionaire.”
recommend), illustrates this paradox perfectly. Housel
When explaining wealth and investing to my students,
describes how music superstar Rhianna nearly went
I sometimes use an analogy of an electric “money tree.” The
bankrupt due to her lavish spending sprees, and then the
minute you start investing money (stock market, retirement
singer sued her financial advisor whom she blamed for
account, real estate, etc.) your money tree is “plugged in”
allowing her to spend so much money. Her financial advisor
and starts to grow more money. As long as you keep the
asked incredulously, “Was it really necessary to tell her that
money invested, the money tree keeps growing. But once the
if you spend money on things, you will end up with the
investments are withdrawn, the money tree is unplugged; it
things, and not the money?” This is very instructive indeed.
stops growing money, and the money starts disappearing as
In speaking of the difference between the appearance of
it is spent. Back to Housel’s point, nobody sees your “money
“rich” and the reality of real wealth, Housel writes, “We tend
tree” and likely nobody knows you have one, except for
to judge people based on what we can see . . . cars, homes,
your banker, accountant, or investment advisor. One of the
Instagram photos.” But we can’t see their bank accounts,
best-known examples of wealth being unseen was the life of
investments, or personal financial statements to know their
janitor and gas station attendant Ronald Read. Read made
true level of wealth. And appearances can be deceiving.
international news after his death at age 92 in 2016, when it
Years ago, Housel worked as a valet in Los Angeles, parking
was discovered that he had left $8 million to his local library
an enviable assortment of luxury cars, some costing well
and hospital in his will. Though he never earned much
over $100,000. But every so often, a regular customer
money during his lifetime, by regularly investing a significant
would arrive in a used economy car rather than their usual
amount of his income, his wealth grew to millions. Jeremiah
Lamborghini, and Housel later learned their dream car had
9:23 admonishes, “let not the rich boast of their riches” but
been repossessed for failure to make the car payment. Housel
rather boast about knowing the Lord. Personally, I’d like to
observes, “The only data point we have about the wealth of the person driving the Lamborghini is that he or she is $100,000 less wealthy than they were before they bought the
10 // January 2021
build wealth in order to give generously while I’m alive and can see the results of some of my gifts, and still be able to leave a legacy behind once I’m gone.
