The Wealth Illusion: Acting Rich vs. Being Rich

Updated: 2025

Wealth is an interesting topic for many of us.

Let’s be honest… there’s no mistaking a wealthy person, right?

Maybe they’re rolling around in a Lambo, or you drive past a monster-looking 8 bedroom waterfront mansion and think “Man, they must be loaded!”

Maybe it’s the guy in the shopping centre with his clunky gold jewellery on display and his slick shades on.  It could also be the Mum picking her kids up from school in a shiny new Range Rover.

We all tend to have the natural assumption, that because those things are expensive, these people must be just crapping out hundred-dollar-bills!

So is it true?  Well, it might be… I don’t know these people, I just made them up  🙂

While these people seem wealthy, it’s kinda hard to tell these days.  Let’s talk about why that is.

Common Beliefs About Wealth

People often spend time wondering how the wealthy came to be that way.

I spent a lot of time in my younger years thinking about it.

There are many common beliefs and assumptions people have. Maybe they had wealthy parents, or got lucky in business or just had a really high-paying job. Maybe they won lotto!

Whatever the reason, too many people think “it will never happen to us”. And there is definitely some truth to that statement.

Wealth doesn’t happen to us. For regular people like you and me, it’s an outcome that needs to be created by managing our finances a certain way and building strong money habits over the course of our lives.

Given the right choices, and a long enough period of time… wealth becomes inevitable.

It just takes some setting up to start the ball rolling. We need to make smart decisions about what we buy, how we spend and where we live.

Building wealth is a bit like building a house. You need strong foundations to start with, or the house won’t be stable and strong enough to survive the test of time.

Effectively, it’s the stuff you can’t see that’s important, in building a house… and building wealth!

Old School Wealth

If you step back for a moment, not much has changed.

The rich people of today, buy similar things to the rich people of the olden days. Big houses, cars, jewellery, luxurious travel, and other trappings of wealth.

But there’s a key difference. If we go back a few generations – say 70 years – people largely bought everything with cash. So it was pretty obvious who really had money and who didn’t.

The olden day wealthy people with their showy wheels, fancy suit and (less blingy) jewellery, actually had bought those possessions with real cash.

As a result, a wealthy person was easily recognised. It was simply obvious they had money, and they were respected for their level of achievement and success.

The funny part is, we still make the same assumptions today. Despite the financial world being vastly different, most people haven’t learned to question this assumption.

Modern Day Wealth

There’s been a real game-changer over the last 50 years or so, that has made the perception of wealth become pretty blurry. And that game-changer is credit.

In the olden days, th ere was no real credit for the masses. Most things were bought with cash. If you wanted something, you had to save up for it.

But now we can basically buy whatever the hell we like with the swipe of a credit card. We can sign up for one loan after another – big mortgage, personal loan, car loan – or use buy-now-pay-later schemes for a mountain of consumer goods.

Effectively, the guy flipping burgers at Maccas, has a decent chance of getting a car loan to buy himself a nice Mercedes.

And the girl working at Target can shop-till-she-drops, buying massive amounts of clothes and jewellery using a credit card. She can spend like a socialite, even though she’s not exactly earning the big bucks.

This is where it gets fuzzy. As our Macccas worker is rolling around in his Mercedes, he will get all the respect and approving glances the same as a wealthy olden-day gentleman. After all, he certainly looks rich, at least.

Here’s the problem: It’s all a charade!

But as long as he can afford his monthly debt repayments, he can maintain the illusion of wealth.

He’s just pretending to be rich… and it’s making him poorer.

Unfortunately, he may still get held up like a hero by his mates, because he looks the part. And that social status is why peoplel do these things in the first place. But when looked at objectively, it’s utter madness.

Two important points here…

1– By doing this, he will end up burning $100,000 of wealth he never had, during the status-seeking years of ownership.

2– In a sick piece of irony, by pretending to have wealth…he will never actually achieve real wealth.

So what’s the deal then? Who are the real wealthy people?

The 20-Year Wealth Study

One of the first books I read on the topic of wealth, was actually one of the best. The book is called “The Millionaire Next Door”, by Thomas Stanley and William Danko.*

Many of you will be familiar with this book, and if you haven’t read it, it’s definitely worth checking out.

The authors set out to discover the secrets of the wealthy people in America. And what they found was incredible. The millionaires they had studied, had quite a few things in common, which they lay out nicely in the book.

Most importantly, the study nails down some of the keys to wealth that I wholeheartedly agree with.

So what did they find about the millionaires they studied?

They’re frugal and live well below their means… meaning they know the power of saving. Most of all, they believe building financial independence is more important than displaying high social status.

They are dedicated to investing, using the magic of compounding to grow their wealth. The vast majority of them are self made, and teach their kids to be self-sufficient too.

At least one person in the house is a focused budgeter/spending tracker. In effect, they run their household finances like a business.

They live in average houses, drive moderately-priced second-hand cars, and wear inexpensive suits. Interestingly, they can be classified as ‘tight’ with their money.

What I found to be entertaining was, they also broke down the millionaires into nationality.

They found Russian and Scottish millionaires to be quite prominent amongst the ancestry groups of millionaires. Being from a Scottish background, I also had a giggle when they found that Scottish households were able to achieve higher levels of wealth with a lower income. Basically, they are super-frugal!

As the joke goes, copper wire was invented by two Scotsman fighting over a penny. One of my readers shared that with me a while ago and I thought it was great 😂

Anyway, the book has the power to change the average person’s perception of wealth. I came away with some important conclusions…

1– Being frugal and constantly investing is about the best way to achieve a large amount of wealth. Essentially, it’s a match made in heaven for multiplying money!

2– The people who are rich are probably not who you assume. Many wealthy people don’t live how you would expect, based on Instagram, reality TV, and online marketing.

There’s a sad aspect to all this though.

Fake it till you make it

Society is effectively encouraging each other to go deeper into debt, to outdo each other. And it’s just a downward spiral to nowhere.

A competition of who can look the richest, and always seeking more. More symbols of wealth to show off… luxury SUVs, exotic holidays, the fanciest restaurants.

All carefully recorded and displayed on social media of course… otherwise it doesn’t count!

There’s nothing wrong with any of these things. But the problem is, people are doing this by spending all their money, plus money they don’t even have. Which makes it impossible to actually get anywhere financially.

Ultimately, people are trying to prove how successful they are with this behaviour. The common theme is, it’s mostly just for recognition and a sense of approval.

Paradoxically, these people are often the most anxious and stressed. Because they get their self-esteem from outside sources, the constant need for approval gnaws away at their happiness.

Consciously or subconsciously, this is because people naturally want to elevate their social status, impress people and be respected. Apparently you do this, by going balls-deep into consumer debt and buying fancy shit? Does that take skill?

Signing credit card application forms, and taking out personal loans doesn’t seem like it deserves respect to me.

It seems like the most common groups doing this are: middle class folks pretending they’re rich, spoiled rich kids blowing their handouts and inheritance, or younger people with zero restraint and a YOLO attitude.

Sometimes it’s a bit dark because their financial strategy is to wait for their wealthy baby boomer parents to fall off the perch, so they see no point in saving.

Maybe that’s too harsh and cynical, but I think there’s some truth to it. I’ve heard several different younger people suggest that they’re pretty set because their parents own a couple of properties.

From riches to rags: A Perth Example

It wasn’t too long ago that people from all over Australia were cashing in on Perth’s mining boom. To some extent, it’s still going. There were young people earning in excess of $200k, and plenty of well qualified people earning more than that.

To the naked eye, these people were rich! They were rolling in cash at least. Of course, they went out and bought nice houses, new cars, boats, jet skis and still had enough left over for big nights out on the town.

As with all booms, it didn’t last forever.

As the downturn hit, there were numerous stories of these cashed-up miners, who ended up flat broke. With some of them even living in their car. Apparently the ‘mining downturn’ was to blame. Or was it their atrocious cashflow management that sabotaged their good fortune.

It’s now clear to many people that a high income is not the same as being rich.
In fact, you can have the highest paying job, the best lifestyle and lots of nice stuff, but if you have no real savings or investments, in reality, you are only a couple of missed paychecks from being broke.

As Morgan Housel put it, “If someone has expensive things, it doesn’t mean they have a lot of money, it means they’ve spent a lot of money” Which is basically the opposite of having money when you think about it!

To me, without a bulky savings account or some investments in the background, I would consider myself absolutely dirt poor and would need to fix it immediately!

What I’ve Learned

Here’s the reality: we are all in control of our own wealth.

Our future wealth is a result of all the choices we make today, and tomorrow… and the next day. It’s a sum of all the decisions we make. It’s not up to the government, your parents or your boss to improve your financial future.

Victimhood has become disturbingly popular in recent years. But that leads you absolutely nowhere. The most effective solution, regardless of circumstances, is to take control of your own financial situation today and do everything in your power to improve it.

Also, we shouldn’t be making decisions based on how we will be perceived and what others will think of us. We should be making decisions based on our long term goals of financial independence and the freedom we want in our life.

But not just financial freedom – the freedom to not need others to approve the way you live your life and the choices you make. Because remember, they’re probably broke as hell, playing a status-seeking game that will never be won.

Real Wealth is Deceiving

Next time you see people who look wealthy, stop and question your assumption if that is actually true.

As the saying goes, many people are Big Hat, No Cattle. In fact, this is spoken about in ‘The Millionaire Next Door’, with one Texan Millionaire saying “I don’t own big hats, but I have a lot of cattle.”

Many people look like they’re cashed up, but the chances are pretty slim, that they’re actually wealthy. It’s far more likely, the real wealthy people are the ones you don’t even notice. They don’t stand out at all, just quietly going about their business.

Now I respond differently if I see someone displaying the trappings of wealth. I get curious about the true state of affairs, given it’s likely they could just have more debt and less savings than a normal looking person.

The challenge of running your own race

Running your own race isn’t easy.

People are going to criticise you along the way. But it’s simply because your goals are different from the ‘act-rich’ crowd. As a result, you’re part of the minority, who think and act independently of the herd.

You don’t do things to fit in or please others. You’re happily doing your own thing, focused on your long-term goals, instead of chasing approval and instant gratification.

But don’t forget, and this is very important…. when you’ve built real wealth, you can THEN enjoy the fruits of your labour, like a real rich person. As I’ve said before, my philosophy is freedom before fancy shit. I think that’s by far the most empowering way to live.

And at least you’ll have the choice! The simple but rare ability to wait, until you actually have wealth to spend, is incredibly powerful. Critically, it’s the step that most people are unwilling to follow.

At the end of the day, we can spend all our money, and even money we don’t have, trying to act rich. This is the standard approach that many people take.

That might make us feel good in the short term. But it doesn’t change our life in any useful or meaningful way… and it comes at the cost of our freedom.

Alternatively, we can live frugally, spend our money on investments, and actually become rich. In the end, it’s a pretty simple choice…

You can focus on looking rich, or becoming rich. Which one will it be?

Thanks for reading! 

Here are some resources you may find useful on your wealth building journey:

Mortgage broker: My personal broker of 10 years is More Than Mortgages.  Highly rated and award winning, Deanna and her team been super helpful over the years and can assist with anything home loan related, including refinancing and debt recycling.

Sharesight: A great portfolio tracking tool for share investors, and free for up to 10 holdings.  It tracks all dividends, franking credits and capital gains, which is incredibly helpful at tax time.  Saves me a lot of time and headache!

My book: After 5 years and hundreds of articles and podcasts, I’ve distilled everything down into an easy to follow book.  Designed as a complete roadmap to achieving financial independence and retiring early in Australia.  Available in paperback, ebook, and audio.

Just so you know, if you choose to use these resources, this blog may receive a financial benefit at no extra cost to you.  Thanks in advance if you do.  And to be clear, I only ever recommend things I genuinely believe in.