I’m sure you’ve heard stories of people who lived a simple frugal life then after their death it’s discovered that they’ve managed to save millions of dollars. In 2018 there was a story published about Alan Naiman, a state social worker who had lived a very frugal life. He bought his clothes at the grocery store and patched up his shoes with duct tape. But when he died at the age of 63 his family was shocked to discover that he had left $11 million to various children’s charities. Alan Naiman practiced stealth wealth and it made him rich.
Stealth wealth is the practice of hiding your wealth from friends and family. You probably have met people who are quite wealthy and you had no idea. They’re the kind of people who drive normal cars, live in average sized houses, and whose clothes you wouldn’t give a second glance. Though it seems counterintuitive, most people who drive luxury cars aren’t rich. They look rich because of how they parade around, but their lifestyle often doesn’t coincide with the amount of money they have. In many cases that’s the reason they aren’t rich. On the other hand, many people who have a great deal of wealth drive average cars and live in middle class neighborhoods. While celebrities like to flaunt their wealth by buying million dollar mansions and super cars, savvy rich folks keep the majority of the fortunes a secret. This allows them to fly under the radar and live the lifestyle they prefer.
Examples of Stealth Wealth
- The 50 year old who drives a 20 year old Camry to work everyday, but has a million dollars in his 401(k).
- The family who has lived in the same house for the past 30 years even though they could afford to move into a bigger one.
- The wife who shops at Goodwill even though she can afford Old Navy.
Why do people flaunt their wealth?
Everyone buys things that they think will make them happy, but a lot of big purchases are made to show off. That new house, that new car, those new clothes or jewelry, while maybe not intentionally, often times are purchased in an attempt to get others to think highly of them. People buy a new car and they imagine their coworkers and peers seeing them drive up to work in it. Or they may buy new clothes hoping to get complimented on how they look. They want people’s approval and respect, and they think this is an easy way to get it.
The problem with this isn’t that making a big purchases is wrong, it’s that impressing others has no long-term value. Seeking validation from others isn’t a worthwhile pursuit because it doesn’t benefit you beyond some temporary satisfaction. Living your life based off of what you hope other people think will lead to a roller coaster of a life, where your feelings are constantly in the hands of another. Don’t give that kind of power to anyone!
We buy things we don’t need with money we don’t have to impress people we don’t like.
Dave Ramsey
Instead of buying things to impress people, buy with purpose. You don’t need to hoard money or never spend it on something that will make you happy, but don’t live in order to show off. Living your life in order seek the approval of other is burdensome. It’s super freeing to live without the fear of what other may think.
Good Reasons for Practicing Stealth Wealth
I think it is morally good to not be a braggart. Keeping our wealth to yourself keeps you humble, because no one is thinking too highly of you or treating you special just because you’re rich. Driving an old, reliable car and wearing last season’s clothing are good ways to make sure you keep things that way.
The best reason to be stealthy about how much money you have is that you are free. You don’t have to keep up with the Joneses. If you practice stealth wealth, you are free to avoid keeping up with the Joneses. When no one knows you are wealthy, there’s no pressure to behave like a wealthy person. There are so many celebrities who spend like crazy and live lavish lifestyles only because it is expected of them. You don’t have to buy a nice car. If you want to eat frozen meals for dinner you can. Being able to be normal is freeing!
Stealth wealth also makes you rich. Aside from being super manly, concealing your wealth makes you richer. Like Alan Naiman, being frugal when you don’t have to be allows you to keep saving. He could easily afford new shoes, but he kept fixing his old ones in order to save money. He could have bought fancy clothes, but he didn’t. Not caring what others thought of him allowed him to amass a fortune of $11 million dollars which he donated to charity.
Bad Reasons to Practice Stealth Wealth
Don’t hide your wealth just so you don’t have to help other people. Be a decent human being. That’s it, that’s all I have.
Don’t let lifestyle creep get the best of you
When our salaries rise it’s natural to splurge more often. It seems reasonable to buy higher quality things. To an extent that’s good. After you finish college and get a real job, you can stop eating ramen noodles and instead buy better groceries. But that doesn’t mean you should start going out to eat every night. Even if you make a good wage, you can still buy good quality off-brand groceries. Maybe you want to upgrade from your neighbor’s hand-me-downs. You can still buy clothes at Target instead of the GAP. Living below your means, which is a core principle of stealth wealth, is going to be best for you in the long run.
What do you think? Do you practice stealth wealth? Let us know in the comments below!