the journey to True wealth isn't about showing off the possessions that you have but it's more about embracing the virtues of modesty and humility we live in a world that often values appearances especially on social media but if you're able to stay grounded and keep a low profile your bank account and your net worth will grow very fast there are five reasons why I think looking poor is important and starting with number one today the fact that it simplifies your life and to illustrate how Simplicity will actually make you richer imagine for a second that
somebody gifts you a Lamborghini for a moment you're really stoked you now get to show off this amazing car and you get all the respect that comes with owning a super car but then after driving around for let's say a month or two you realize something the cost to ensure a Lamborghini is five times more than it cost to ensure your standard car you need to fill it up with premium gas when you go to the station and the tires cost a fortune to replace every time you get an annual service it costs you upwards
of $1,500 to $2,000 and don't get me started on those certain replacement parts you might have to wait months for those to come in and all of these issues arose even though you got the Lamborghini for free you didn't even actually have to pay for it in the first place which I will get to in a second now what I just described is actually a psychological phenomenon called the dero effect named after a French philosopher Dennis dero in his 1769 essay he actually recounts that he has gifted a beautiful Scarlet Red dressing gown that eventually
puts him into debt and that's because to him after he received the red gown everything else that he owned kind of paled in comparison he went on to replace all of his POS possessions like his chair his desk and his wardrobe and that eventually put him into debt he famously stated that quote the poor man may take his ease without thinking of appearances but the rich man is always under a strain in other words uh More Money More Problems this is why looking poor is important in my opinion not only does it simplify your life
it also allows you to enjoy the possessions that you do have and often times if we're grateful with the stuff that we have already the happier that we are going to be and from a financial perspective every time you add on a recurring cost to your life say an expensive car payment that adds on to the day-to-day stress that you undergo to ensure that you can make that payment when your month-to-month expenses get too high this might actually chain you to the job that you do have and if you don't enjoy your job in particular
this could be a bad thing your potential opportunities might be also limited you may never experiment with entrepreneurship and you might even be too anxious to look for a new job all because you need to ensure that you have enough money to pay all your bills if you intentionally choose to live a modest life instead that gives you a bunch of of flexibility and a ton of Peace of Mind reason number two why looking poor is important is that well it's simply cheaper because you aren't worried about buying a new designer shirt or getting a
fancier car or buying the latest iPhone whenever it comes out you have more money to invest save and also spend it on investing in yourself the problem with many Americans is that whenever something new and shiny comes out they go and buy it immediately how many people do you know that have a completely adequate iPhone but they want to upgrade it because the newest one has a cool new feature that they learned about in the most recent keynote by Apple a recent survey showed that 65% of Americans are living paycheck to paycheck so if you
really want to avoid this situation having the cheapest lifestyle possible will help you mitigate that risk it's at a bare minimum I think a step in the right direction if you aren't being tempted by the newest or latest and greatest item that comes on the market and that way with those extra savings you can save for the things that really matter in life for example the Scotty Cameron putter Napa California I'm just kidding don't do that it's just a joke but for example the things that really could matter are an emergency fund worth 3 to
6 months of your living expenses saved up perhaps you could start a retirement account or you could spend it on things intentionally that will fulfill you for example maybe you save $500 a month by keeping a low profile after one year you have $6,000 which now you can use to either invest in yourself perhaps you enroll yourself into more education and that eventually makes you way more money later on or an extra $6,000 every year invested into the S&P 500 can be well worth over $500,000 25 years which could be a huge difference for you
and your life if you're willing to forgo some of the material possessions dayto day reason number three that looking poor is important is that it invites the right people into your life a common problem that affects those that appear rich or portray a certain lifestyle is that the wrong type of person wants to be your friend or the wrong type of person will have an expectation of you so I remember a time that I was living in Hong Kong for a few months and I was 24 years old at this time I found myself going
out one night with a bunch of expats and one of them in particular let's call him Tom was from London and you could just tell he loved the lavish Lifestyle on one night out in particular he really wanted to buy a table at a local Club he wanted to go to a five-star restaurant before the club all while flaunting his new gold Rolex and the worst part was was that he expected all the people in the friend group to actually keep up with him that means when I was randomly invited to hang out with this
group he expected me to be okay with splitting the cost of the table at the nightclub or the fancy dinner which would have amounted to well over $500 just for that night and I'm 24 at this time I'm unemployed between jobs it's not like I have a ton of money to spare so I politely declined I just went home and I called it a night so I could avoid all of that but then I was thinking to myself what was the point of it all it's possible that many of the other expats in that group
wanted to keep up with Tom so as a consequence they all ponied up the $500 or whatever it was for that night but my point is is that when you seek to show off that you have money you might get somebody like Tom in your life who encourages you to spend more money another situation is that you might attract people that want to get to know you just because they perceive that you have money this is the wrong crowd in my opinion because they don't truly want to get to know you they just are there
because at that exact moment you have what they're looking for now if you were to live humbly and modestly you might be able to find someone who values you for you and what you are truly about not only are you living a more authentic way you are attracting people that want to be around you for your mind your energy and your presence so looking poor is a really easy way to weed out the people people that want to be your friend for the wrong reasons and that leads me to a bonus reason today let's call
it reason number 3 and A2 or 3.5 which is that you should aim to maintain a low profile because it doesn't make you a Target imagine you brag about your cars your watches your houses and your big portfolio on social media well now you are someone who is known to have a lot of money and it could potentially make you a target for robbery at some point in your life or even worse kidnapping and that's just extra risk I would not rather invite into my life reason number four that keeping a low profile is a
good thing is that you will soon realize that you can be happy with the stuff that you already do have often times I think we aren't grateful enough for the basic necessities that we have for example a bed to sleep in access to food and clean drinking water there are so many countries out there that lack these basic resources and by not overindulging we can simply look at our life and be appreciative of the stuff that we have think about all the things that really matter to you at the end of the day for me
it's my health connecting with other people and being social and having laughs with my friends then it just comes down to having a purpose with my work having food and shelter and then I'm pretty much ready to go at the end of your life you're not going to take any of the money with you but you will remember all the great experiences life had to offer you as well as all the connections that you made and having this appreciation will help us avoid what researchers call the honic treadmill that's the observed tendency of humans to
return to a relatively stable level of Happiness despite major positive or negative changes in their life so famously in a study in 1978 lottery winners reported being similarly happy before before and after winning the lottery these winners were studied and the findings actually showed that having a large monetary gain in their life had no effect on their levels of happiness after just a few months it didn't make them any happier they just simply got used to having more money and their happiness level eventually returned to their Baseline in other words if you go out and
buy that Gucci belt that you've always wanted sure it will trigger some dopamine for you in the short term but over a longer time period you will just revert to your Baseline level of happiness I've also noticed personally the same Phenomenon with a new car so initially once you get your new car you are so happy to drive it but after a few months the newness or the honeymoon period Fades away and it's just like driving any other car what you want to do is break this cycle and not get blinded by the newest hottest
items out there make the conscious choice to keep a low profile and I think you will have a lot more peace of mind reason number five that being subtle and living within your means is so important is that well technically you could retire with less money if you're able to spend less money as your Baseline when it comes to retirement you simply just won't need as much money to retire according to the 4% rule which I've talked about on this channel you can technically call yourself retired when you're able to withdraw 4% from your nest
egg every single year and live off of it so if your lifestyle cost you $50,000 a year you need a nest egg of $1.25 million and this will allow you to withdraw $50,000 a year and live off of your Investments imagine your lifestyle cost you $100,000 per year or double that then you're going to need $2.5 million in order to withdraw at that that same healthy 4% rate so living below your means just helps bring down the burden of that Financial stress and it also means that you can take steps to eliminating debt if you
do have debt and one of the signs that you are going to be doing well financially is that if you're able to effectively manage your debt the average American has personal debt so excluding mortgages of around $23,000 according to a recent study with a lot of it coming on a credit card ideally if we're living below our means and keeping a low profile we're going to be able to keep that amount much lower than that when it comes to our own debt that way we're able to manage the payments in a way that's not going
to cut into the remainder of our lives so I think I've effectively shown you all the benefits that a modest life and looking poor can give you today I think it frees you up in so many ways financially that you will be happier have more peace of mind and cherish the things that actually matter if you enjoyed this video you'll really like this video right here on these seven major differences between rich and poor people it's one of my best recent videos and I think you guys will probably agree with a lot of what's said
in there I'll see you guys in that video just just seriously go click it now and uh all right thank you for being here peace [Music]
