Save. Spend. Splurge.

The Real Difference between the Rich & the Poor: A Visual

I see a lot of these posts about rich versus poor, and many of them are very simple, showing two people, usually with the same income, and talking about their spending habits.

Something like how being rich just means spending less:

  • Mindy & Gina both earn $50K a year.
  • Mindy lives on $20K.
  • Gina spends $50K.
  • Mindy saves $30K and ends up rich in 30 years.

Or another one where they shame spending habits:

  • Lisa and Brianna both earn $50K a year.
  • Lisa doesn’t buy any designer anything, lives frugally, house hacks & takes the bus.
  • Brianna drives a car, likes designer handbags, eats out with her friends weekly and is in a nice condo.
  • Lisa ends up a millionaire in 30 years due to all of her savings by not succumbing to looking rich and impressing others, because she shuns all designer goods and luxury products as it’s all just marketing she doesn’t want to pay for.

So I thought I’d take a shot at one of my own……

The whole picture isn’t what someone is wearing. Someone can be rich, rocking a completely designer outfit, and someone can be poor in the exact same look.

Maybe the difference is the one who is rich, bought everything secondhand, or finds ways to scrimp in parts of her budget, and splurge in others.

Maybe the one who is poor, bought everything at retail instead, which I can tell you from personal experience adds up to a lot of money if you like nice things.

I only recently got into designer secondhand goods in the past year or so, but 90%, rather than the 20% I was doing before, and I am more focused on lesser quantities of things, but higher brand names with better resale value & to be classic pieces to wear.

What a lot of these graphics tend to not point out is your starting point, maybe this visual will help:

This isn’t applicable to everyone obviously, the point is that there are DIFFERENT STARTING LINES for everyone. Everyone has a different story and just because you made it to the same spot as someone else, doesn’t mean you know their story of how they got there.

I wrote a little bit about how being poor doesn’t automatically mean you’re lazy, or any of these stereotypical things – yes, SOME poor people are like that, but not all of them are like that.

Growing up with food, shelter, clothing – all of this is what I have taken for granted, and my son has definitely taken for granted (he always wants to know what we are going to eat next!), and sometimes we should take a step back and be grateful for how far we have come and where we started.

Ahh.. now we are onto what most people in the personal finance community consider to be the bane of the reason why everyone is poor.

I don’t disagree with any of it – I did all of the Rich Person’s actions, and I am trying to encourage people to do things like invest, negotiate the fk out of life, and LEARN how to be financially independent.

ALL OF THIS is what we should all do to reach the path of wealth, regardless of what we earn and where we started. We have to all start somewhere and try.

I definitely did not know anything about money management, nor did I set any money goals and I did think that money management it was boring, but after I realized I had to take charge of my life, I transformed overnight.

I realized a few things about myself, namely that I loved to shop a little too much, and that I had to set a real focus for my money which at the time was to dig myself out of $60K of student debt.

When I finally got out of debt, that’s when I started to relax a little on my money. I didn’t actually feel totally relaxed until I became financially independent and didn’t need my career any more to pay the bills. I still budgeted in luxuries (many actually!), but this time, with my money goals completed and my future secured, first and foremost.

What I think we may forget is that not everyone who spends on designer items, is necessarily poor. You don’t even know how they got them – maybe they were passed down as heirlooms, or gifts, or perhaps they got them secondhand, or saved for years to be able to finally own their dream, coveted bag.

In the same vein, not everyone who is poor, acts the same way either, especially if we consider their starting points in life.

The one thing I will say plagues me from time to time, is this comparison game I play with myself against others. I have to catch myself to stop feeling like a failure sometimes (YES!) when I see other super dynamic, younger people really do amazing things.

What they do, doesn’t take away from what I have accomplished and am doing right now, and they are on a path that is different from where I started, as well as making different choices in life.

All of this means it is THEIR story, not mine, and mine is pretty great as-is.

Sometimes, having it all in terms of just financial assets, isn’t the answer. You can be extremely rich, and just as unhappy for various reasons.

Of course, having your basic needs met is the most important – once you are in a safe situation with a decent income that allows for some fun luxuries and so on, it can be detrimental to push yourself to the brink of exhaustion just to have more just to have more ‘toys’, a bigger house, a fancy car…all of which I think is the main lesson to take away from many of the personal finance lessons that are being pushed out there.

The point is to find a BALANCE … for YOU.

And finally, the only thing that matters is what people can’t see. Not only your integrity, your personality, mannerisms, and so on, but also what’s in your bank accounts and investment accounts, your savings rates, and so on.

All of this, is generally personal information unless you choose to share it (I do, but only anonymously) and to focus on your situation, not someone else’s.

If you meet a stranger, you can’t tell at first glance what their numbers are – are they deep in debt? Or are they healthily solvent? You don’t and can’t know, no matter what they’re driving or wearing. No one walks around with their net worths floating over their heads.

P.S. Want to read more about this?

Here are even more reasons why the rich and poor are where they are.

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