You meet two brothers out at the bar, Tim and Greg. Tim drives a brand-new Mercedes, shows off his Rolex watch, and buys a round of top-shelf tequila for everyone. The other brother, Greg, drove to the bar in his beat-up minivan from 2010, wearing faded jeans and a t-shirt. He nurses a couple of IPAs. Who do you think is wealthier?
The answer might surprise you. While we tend to associate images of flashy cars and watches with the idea of being rich, most real millionaires practice stealth wealth. They care more about actually having that money in the bank than showing it off, and that’s why they often slip under the radar. In fact, anyone you meet could be a millionaire in disguise, practicing stealth wealth.
What is Stealth Wealth?
The concept of stealth wealth found its roots in the classic book, The Millionaire Next Door, written by Thomas J. Stanley and William D. Danko in 1996. This book examines the lifestyles and habits of real millionaires. And these authors discovered that our preconceived notions about what wealth looks like don’t necessarily match the reality of it.
For example, while we might think that most millionaires would opt to live in affluent neighborhoods, they are disproportionately clustered in middle-class and blue-collar communities. They focus more on investing a large percentage of their household income than on purchasing material items that signal wealth. Even more surprisingly, about 80% of millionaires are entirely self-made, not having received any inheritance money.
It turns out, most millionaires are living that “stealth wealth” life by using their money more intentionally. They trade a high-consumption lifestyle for assets that appreciate, more money in the bank, and a simpler way of life. Practicing stealth wealth helps them accumulate even more money, continuing to grow their wealth. But their lack of public wealth displays makes these millionaires difficult to spot!
10 Ways Millionaires Practice Stealth Wealth
It’s easy to notice conspicuous consumption, but it’s much more difficult to spot stealth wealth. Here’s how folks with a stealth wealth mindset slip under the radar, and how it helps them grow their money more significantly.
1. They know their values
People who practice stealth wealth don’t really struggle with impulse buys as much as the average person. That’s because they have a clear understanding of what they value in life. When you’re spending in a way that truly makes you happy, there’s less temptation to get a dopamine spike from filling up your Amazon cart with random items.
These folks set aside a healthy budget for their interests and cut out spending on things that don’t move the needle. This will look different for everyone depending on their hobbies. It’s important to reflect on what brings you joy, and what role money can play in that. Figuring out what drives you is a key factor of personal finance. And so is understanding the “why” behind your money will help keep you motivated to manage it deliberately.
2. They don’t try to keep up with the Joneses
We get it. Being content with what you have can be tough when you’re bombarded by shiny new products being splashed all over social media. Our feeds are often flooded with videos of people in perfect outfits, taking lavish vacations, and driving fancy cars. Meanwhile, our neighbors might be making some home upgrades that leave us feeling like our brown cabinets from the 70’s are too outdated. But a stealth wealth mindset trains you to put on your blinders, and not worry about keeping up with the folks around you.
The truth is, just because you see a perfect kitchen online doesn’t mean that you can’t still use your own kitchen to make delicious meals that bring the family together. Just because you’re rocking an old t-shirt and sweatpants at the gym instead of the latest Gymshark set doesn’t mean you won’t get a killer workout in. Instead of worrying about how you might look to others, stealth wealth folks are grateful for the things they already have. Oftentimes, outward signals of wealth are more of a distraction than anything. Ironically, trying to appear wealthy actually erodes wealth. For many folks it leads to increased levels of debt and more money stress.
If you’re struggling with the temptation to spend money to fit in with those around you, try practicing some gratitude in your everyday life. When you wake up, write down a few things you are thankful for, and mix it up! It can be something as significant as your best friend, or as small as the new coffee blend you purchased. Either way, you’ll likely notice that you feel happier and less tempted to spend on things that others deem important. You’ve found joy in what you already have – and that’s powerful!
3. They keep their biggest expenses in check
Three things that come to mind when I think of wealth: mansions, Ferraris, caviar. But the truth is that most wealthy people work to reduce the costs of their three biggest expenses. Those are housing, transportation, and food.
When Stanley and Danko first started trying to research wealthy people for The Millionaire Next Door, they headed to affluent neighborhoods across the country to survey people. However, they found that the people in these more uppity neighborhoods had not amassed large amounts of wealth. Instead, more wealthy people could be found clustered in more affordable middle-class and blue-collar areas. In 1996, they found that the average millionaire lived in a home valued at around $320,000. That’s about $647,000 in today’s dollars. While that isn’t chump change, it’s certainly not the $5M mansion most of us imagine!
Here’s the thing. While a mansion might sound nice, what isn’t so nice is being house-poor. Overstretching your housing budget can put you in a really bad place should your income or circ*mstances change. Plus, do you really need an Olympic-sized swimming pool!?
When you work to reduce the biggest costs of your everyday life, you no longer need to sweat the small stuff as much. If you want to enjoy a $5 latte a few times per week, it won’t break the bank. You’ll enjoy less stress, and you’ll be able to save and invest a higher percentage of your income. Consider only buying used cars with cash (or ditching your car altogether), house hacking to reduce your living expenses, and using these tips to slash your grocery spending.
4. They stay on top of lifestyle creep
When most folks get raises, that extra money helps them to save and invest more, right? RIGHT?
Wrong. We as humans often experience this weird thing called lifestyle creep, which is when our expenses subconsciously increase to meet our growing income. Sure, it’s okay to upgrade your lifestyle a bit as you make more money. For example, deciding you can finally afford that cleaning service, or going to a nicer gym. However, you want to make these decisions intentionally.
People with a stealth wealth mindset are keenly aware of lifestyle creep and they actively fight against it. Instead of mindlessly spending when they earn more, they make some calculated decisions to upgrade their lives in a few specific ways. This way, a hefty portion of extra cash can get funneled towards investments.
5. They hang out with frugal folks
We’re not encouraging you to ditch all of your friends, of course. But it’s important to remember that the people we spend the most time with have a huge influence on us. That’s why we recommend spending time with people who share your stealth wealth mindset.
That’s true for both real-life friendships and the online communities you participate in! Instead of following accounts that make you feel jealous, inferior, and poor, unfollow those accounts and fill your feed with content from other frugal folks who will help you on your stealth wealth mission.
6. They have meaningful money conversations
Instead of bragging about how much money they spend, stealth wealth folks talk about money in productive ways. They encourage healthy financial habits for their partners, friends, and family. They want to be uplifting to others in their lives to help them to build wealth too.
Instead of keeping their wealth-building knowledge a secret, they’re happy to answer any questions their friends and family might have about saving and investing. They’re more than happy to refer them to helpful resources like personal finance books (and podcasts 😉).
However, remember that talking about money can be very nuanced. If you do want to share finance tips, only do it with folks who are clearly interested. It’z not worth overstepping boundaries. If someone seems uncomfortable talking about money, it’s probably best to back off. Some people are more open to talking about money than others. But those who are willing will likely learn more and experience greater wealth accumulation. Bringing more folks into the healthy money habits crowd is really fun!
7. They value time over material possessions
There’s a great quote from Edwin Way Teale that states, “reduce the complexity of life by eliminating the needless wants of life, and the labors of life reduce themselves.” Translation: owning a lot of stuff makes you work harder. Being content with less will free up your time.
The more you consume, the more you need to work. Not only to make enough money to continue the cycle of consumption but also to clean up and organize all the crap you’ve bought. What good is owning a bunch of stuff if you become a slave to it and to the monthly payments they incite?
Conversely, if you eliminate the desire to spend mindlessly and lower your annual expenses, you may find that you’re able to work less and still save significant amounts of money. For example, instead of buying a fleet of new BMWs for the entire family, opt to share a single, reliable used car. Because of that frugal decision, you’re able to take off time from work to go on a random Tuesday hike, or spend a month traveling. By adopting stealth wealth, you learn to value time over money and you spend accordingly.
8. They avoid bad debt
Debt is almost as sneaky as stealth wealth. It’s often the reason why some folks might look rich, but in reality, they have few assets and are living paycheck to paycheck.
Wealthy people know how detrimental bad debt can be to their personal finances. Not only is bad debt often used to buy material goods that depreciate in value, but the high interest rates that come with it can cause debt to spiral out of control.
This is why it’s important to always follow the golden rules of plastic. Always pay off credit cards in full and on time each month, and avoid other high-interest rate debt products like personal loans.
Related- if you’re still carrying around high-interest rate debt, kick it to the curb with one of these debt payoff strategies.
9. They focus on net worth over income
Your income can increase tenfold, but that doesn’t necessarily always mean you’re saving more. In fact, many folks with high incomes over $100,000 each year still report living paycheck to paycheck. This is partly due to lifestyle creep as we discussed earlier.
Income increases aren’t a bad thing. Everyone should be asking for raises and trying to make more over time. But the overall focus for those practicing stealth wealth is increasing their net worth. This means slowly accumulating more assets, and minimizing liabilities. Wealthy folks put pay raises to good use by paying down debt and investing more. They’re not using that increased income to level up their lifestyle.
10. They take the boring approach to wealth-building
Lastly, those who have built stealth wealth did so with boring, proven methods. Instead of investing in risky, get-rich-quick schemes, like picking single stocks or throwing all of their money into crypto, they invest the majority of their money into highly diversified index funds or target date funds.
Wealthy folks don’t try and time the market and brag that they picked winners. Instead they dollar cost average, investing money consistently each month regardless of what the stock market is doing. They take the slow and sure path to wealth building.
The Benefits of Stealth Wealth:
Practicing stealth wealth can bring so many amazing benefits to your life. Here are just a few things that you can expect to happen when change your mindset and opt to pursue the stealth wealth approach to building wealth.
Less Stress
Imagine how much less stressed you would be at work if you knew that you didn’t need that job to survive. Or, how much less stressed you would be when your car broke down if you knew you had the money in the bank to fix it…and then some.
People who practice stealth wealth know the value of having cash on hand. That’s because they avoid overconsumption and focus on saving and investing. This makes them more prepared to handle life’s surprises.
Also paying upfront for things and experiences lets you enjoy them more. Like when you save up for a vacation with cash instead of taking on debt, you can travel stress free, knowing you’re not stuck with paying it off later.
You’ll Be Happier
In the great words of John Lennon and Paul McCartney, “money can’t buy me love.” You might think that having access to whatever material possessions you want would bring you joy. But the truth is that if you’re not already happy with your life now, buying a bunch of stuff probably won’t make you any happier.
What will bring you more joy is spending money in alignment with your core values, and having more time and freedom to enjoy the things you love. It’s extremely difficult to achieve any degree of time freedom if you’re living a flashy and consumerist lifestyle. However, living frugally and practicing stealth wealth can allow you to work less and enjoy what matters most.
You’ll have a greater ability to give
When you practice stealth wealth, you shift the focus to others and away from yourself. And this includes giving more funds to help shape the world into a better place. Giving away your money can be incredibly fulfilling because it helps you to develop a healthier relationship with money, and allows you to focus on more than just your own desires. It keeps us from turning into Scrooge McDucks, all while helping those who need that money more than we do.
Because people who practice stealth wealth spend less money on frivolous goods and work to keep their expenses reasonable, they can enjoy the benefits of generosity to a higher degree!
You’ll have better relationships
Let’s be real here for a second. Sometimes, money can add some awkwardness to our relationships with our friends and family. For example, if people know you have money, they might be more likely to ask you for it. Or, they might start hanging out with you because they think you’re going to pick up the tab at dinner!
Whether you want to admit it or not, money can play a huge role in our relationships. It can be like the elephant in the room. If you walk around trying to flaunt the fact that you’re rich, it might not be the good look you think is. And it could leave some of your friends with a bad taste in their mouths. Practicing stealth wealth can ensure that money doesn’t form a wedge between you and your loved ones
Live in alignment with your values
So, you might be thinking, “what’s the point of accumulating all this wealth if you shouldn’t spend it?” But hoarding all your money is not what stealth wealth is all about either. We aren’t saying you should save up five million dollars just to die with it in the bank. Instead, people practicing stealth wealth have spent the time to reflect on what they value, and they spend lavishly on these things that move the needle for them.
Because they save money in most budget categories, they can afford to spend more on whatever aspects of life they value most. Skipping out on buying the newest, fanciest car could mean having $50k to spend on a three-month trip around the world with the family. Living in a modest home instead of a McMansion means extra cash to spend on date nights with your partner.
Instead of mindlessly consuming to keep up impressions, stealth wealth-ers cut mercilessly on the things they don’t care about so that they can fully enjoy what makes them happy. They also enjoy the stress-free freedom that not having to worry about money provides.
The downsides of stealth wealth
Even though stealth wealth can bring so many positives to your life, there are a few downsides to look out for.
You’re going against social norms
Practicing stealth wealth is counter-cultural. It goes against expectations of how you “should” act once you have money, and it can be easy to feel isolated when you don’t give in to consumerism in the same way your friends or neighbors do. Not everyone is going to understand what you’re doing. Plus, if you become financially independent, you might find that you have more free time than most of your friends, which can be lonely.
But, sometimes the harder things in life are the things most worth doing. Adopting a stealth wealth lifestyle falls into this category. This is why it’s so important to work towards finding friends that share your values now. Surround yourself with people who embrace frugality, and won’t put any pressure on you to spend to keep up with those around you. In modern America, we’re tempted to think we are what we buy. But that’s a total lie!
Can cause you to take frugality to the extreme
Just because you’re practicing stealth wealth doesn’t mean that you should never spend on yourself at all!
Adopting a frugal lifestyle is one of the best things you can do for yourself, but remember that too much of a good thing can become harmful. If you’re too focused on growing your net worth into the stratosphere, you may neglect to spend a little money now to greatly improve your lifestyle. It can be easy to turn all of your attention towards your future retirement, but the truth is that we’re not promised tomorrow. Balance is key.
So, find little ways to enjoy your life and your money now. Whether that means splurging on a craft beer every week or taking a weekend trip with your family every month, put a little bit of that money to work for you now. You can’t take it with you!
The Bottom Line:
True millionaires practice stealth wealth, by adopting a simple, less flashy lifestyle that helps them save more and work less. They spend according to their values, not to impress others. They also invest their money in tried and true ways.
What’s more important to you? Looking rich, or actually being rich? By adopting a stealth wealth mentality, you’ll become a naturally happier person, living more in alignment with what’s truly important in life.
Related Posts:
- Getting Rich vs. Building Wealth
- Good Luck Or Hard Work: Which Earns You More Money?
- 14 Tips for Mindful Spending
