Thinking-Rich.com

Most Americans define wealth in terms of material possessions, would you agree? We look at people in the nicest clothes, coolest cars and fanciest homes and think they must be rich.

But most of the time what we’re seeing is the visible result of a high-consumption mindset, not a true mindset of wealth. High consumption basically means having more than you need or at least paying more than you have to for the necessities of life.

Owning a car is a necessity for most Americans. We need reliable, comfortable and convenient transportation. When we decide that transportation needs to be a sleek, foreign sports car with heated leather seats, we’ve left the realm of necessity and entered the zone of luxury.

To be clear, I don’t consider luxury to be a bad thing. The desire for luxury is often one of the reasons we work so damn hard. But when luxury begins to threaten your bottom line it is no longer an enjoyable benefit of wealth. It becomes a detriment to maintaining a comfortable lifestyle.

The same concept applies to houses, clothes, the latest electronics and your basic ostentatious spending. None of these - with the possible exception of your home - do anything to increase your net worth. For the most part, they lose value the moment you take them off the showroom floor.

Again, I’m not against luxury. Life is best when you can achieve your desires. It’s simply that a true mindset of wealth is to also desire the things that will add to your bottom line. If your luxuries become actual, valuable investments, you’ve got the mindset down.

Wealthy people always spend with an eye on the return for their investment.

We need to keep in mind that the huge house comes with huge responsibilities and expenses. Having the estate in the swank hood means hiring landscapers instead of the kid down the street to maintain the grounds. Your mortgage goes up, as do your insurance rates, utility bills, property taxes, repair bills and security costs.

The window coverings that seemed plush in your former home will certainly seem ratty compared to the neighbors’ Louis Vuitton-designed draperies. And speaking of keeping up with the neighbors - it’s doubtful they’re living the stress-free, healthy lifestyle we want to include in our definition of true wealth. The pressure to keep up is the thing that keeps most of us down.

So buy with a mind to high return instead of high consumption. Wealth is more of an inward satisfaction and security than an outward appearance of big money.

In fact, most of those who revel in flaunting their “wealth” are deeply in debt or soon to be. And isn’t that what we’re doing our best to avoid now?

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