What nobody tells you about being rich

Real wealth is invisible. You can see what people spend money on (homes, cars, luxury items) but you can’t see what’s in their bank account. That makes it hard to separate reality from appearance. All you know about someone with a $100,000 car is that they have $100,000 less.

Money can’t make you happy. It won’t even make you feel rich. That boost you get from splashing out on material items? It fades pretty quickly. No matter what you buy, you'll get used to having it.

The one life-changing thing that money can buy is freedom. Wealth gives you better control of your time, allows you to live wherever you want, and retire or quit your job whenever you want.

There’s a paradox to owning something fancy, whether it’s an impressive house, car, jewelry, or clothes. Most people assume it automatically earns you admiration or respect. But that’s not the case...

The truth is that when people see someone with a flash car or a nice watch, they don’t really care about the owner. They’re just picturing what they would look like with it.

Long before Morgan Housel became a writer for the Wall Street Journal and author of The Psychology of Money, he worked as a valet at a luxury hotel in L.A. The sight of expensive cars impressed him at first – until he got to know their owners better…

One day, a guy who usually drove a Porsche turned up in a Honda. It turned out that he couldn’t afford the repayments on the sports car, so it got repossessed. When Housel realized that he was wealthier than the glitzy driver, his admiration turned to pity.

Real wealth is simply the difference between what you earn and what you spend. This is true whether you make $15,000 or $15m a year. You can’t control the stock market (or even your salary), but you can control your lifestyle and your spending habits.

If you’re not saving income, you’re not gaining wealth. Think of it like going to the gym. If you go eat a box of donuts after your workout, what was the point in exercising? This is why buying stuff and having money aren’t very compatible.

Bottom line: When someone says they dream of being a millionaire, usually they’re imagining spending a million dollars. The reality of actually having that amount of money – whether it’s saving or investing it – is a lot more boring. But the boring part is what makes you wealthy.