“Spending money to show people how much money you have is the fastest way to have less money.”

Why it was said

Housel makes this point in 'Wealth is What You Don't See', the ninth chapter of The Psychology of Money. The chapter argues that wealth is the money not spent, the savings and investments nobody can see, while the visible signs of money mostly show what someone has spent.

What it actually means

Wealth and the display of wealth pull in opposite directions. The car, the watch and the renovation are proof that money left an account; the balance that makes you secure never shows up in a photo. So spending to look rich directly shrinks the thing that would make you rich. Housel makes a related point elsewhere in the book: people who see an expensive car rarely admire the driver; they imagine themselves behind the wheel. The line is a useful check on motive. Spending on something you enjoy is a choice. Spending so that others will conclude something about you is paying for an impression that lasts less long than the money would have.

How to use it

1. 1Before a large purchase, ask whether you would still buy it if no one would ever see it.
2. 2Add up what you spent last month on things other people were meant to notice; that total is the cost of the audience.
3. 3Burak decides against leasing a new SUV to impress clients in Bursa and puts the 15,000 lira monthly payment into an investment account instead; his clients never ask what he drives.