I recently came across an article on the Moneyist section of Marketwatch. The Moneyist section is similar to a Dear Abby piece where the person behind The Moneyist answers personal finance questions sent in from readers.
This question happens to come from a 26 year old who makes $105,000 a year. The questioner feels very lucky to be making that amount but her friends have been shaming her for making so much money.
You can read the piece here.
The piece got me thinking about the virtue of practicing stealth wealth.
Stealth wealth is the practice of keeping your true wealth hidden from others – including your friends and family. I would include not just wealth but also income into that practice.
If this questioner practiced stealth wealth, then her friends would have no clue to her income. She would never have been shamed by her friends for the relatively high income she makes.
People’s Behavior Towards Wealthy Person
You know the old saying “misery loves company.” This is so true in personal finance as well.
I think people are psychologically wired to compare themselves with others. The feeling of jealousy kicks in pretty quickly if they realize someone is doing better than them.
That is the reason why, despite being globally well off, Americans are still generally unhappy compared to other nationalities because everyone else in America is doing relatively well. We only compare ourselves to people we see day in and day out.
The average person would probably feel resentment if they just lost their job but their best friend just got a raise and is financially thriving.
The average person would probably feel better about themselves if their best friend also suffered a job loss so misery loves company.
Imagine getting your car repo’ed because you couldn’t pay the lease payment, but then your best friend upgrades his car from a Subaru Forester to a Mercedes GLS 580 with an MSRP of $98,800. A sense of envy will probably creep in.
This sense of envy is why there are people out there saying billionaires shouldn’t exist or that all rich people must have lied or schemed their way into riches.
That is also why people protested the folks who work at Wall Street in the Occupy Wall Street movement. It also happened in San Francisco back in 2013 when people protested the tech buses.
It is also why people say the rich are not contributing enough in income taxes or that millionaires need to be taxed a lot more.
It is not surprising that this questioner’s friends were envious of her. In order to make themselves feel better, they have to try to put her down by shaming her high income.
Practice Stealth Wealth To Keep The Peace
The solution of preventing hostility towards you is to not give off a perception of outperformance. Perception is the key word here.
Of course, you should aim to outperform in your financial life. And, hopefully, you do end up outperforming.
But at least don’t give off the appearance that you have done so.
Practicing stealth wealth will give you a great peace of mind.
If your friends, family members, and neighbors don’t see how well you are doing, then there is no way they will be envious of your success.
You don’t have to deal with resentment, envy, jealousy, nastiness, or shame from them.
Not only am I a believer in stealth wealth, I am also a practitioner.
When I was younger and didn’t know any better, I would try to talk myself up to friends and family members. I didn’t make much income and didn’t have much in terms of net worth.
In my 20’s, I faked it like I made it. But the funny thing is, in my 30’s, I fake it like I didn’t make it despite being in a more robust financial position.
Like I said, I enjoy that peace of mind.
The key to stealth wealth is to downplay your income and wealth. There are a number of ways in achieving this.
Ways To Downplay Your Income And Wealth To Family, Friends, Neighbors And Others
Just Smile And Nod
WallStreetPlayboys is another personal finance blog I follow and they are a big proponent of this approach.
When someone approaches you with a comment, unless there is upside to the discussion, just smile and nod in agreement.
That will save you a lot of time and energy in engaging in a discussion with only downside.
For instance, I was approached at a family function by my uncle a few years ago. He saw the G-Shock watch I had on my wrist and commented “look at you wearing that plastic watch; I guess you couldn’t afford a nicer one.”
This was after he noted that a couple of other people at the function wore Rolex.
I didn’t engage him in this discussion despite having a couple of Rolex watches at home myself. I figured there was no upside to this discussion.
If I responded by saying I have two at home, he might feel I was bragging and try harder to put me in my place.
To me, it wasn’t worth having that discussion. I just smiled at him, nodded in agreement, and then walked away.
Don’t Wear Expensive Items In A Casual Setting
This brings me to another way to practice stealth wealth.
If you don’t want people to know how financially well off you are, don’t wear expensive items.
That is one of the reasons why I wore my G-Shock watch to the family function. I also like to wear my G-Shock because I find it comfortable to wear.
When attending a get together with friends or family, leave your expensive watches, bags, earrings, and other jewelry at home.
Wear something less conspicuous and more in line with the income level of the group of people you will be seeing.
Leave wearing your expensive items for work and for formal functions where you will be dealing with people you know who are at least the same income/wealth level as you if not greater.
Answer Back With A Humble Response
I like to use humble responses which significantly downplay my financial standing.
A couple of lines I like to give are “I’m saving for that” or “I’m just a working stiff.”
For instance, I was at a housewarming a year or so back and one of the guests said to me “this is a great house, why don’t you look to buy a house like this?”
I responded, with a smile on my face, “this is a nice house. I would like to live in a house like this but I need to save up some money first.” Never mind that my home costs 3 times that house.
Not only did I practice stealth wealth in that case, I also paid a compliment to the host. Double win in my book.
At another family function, I was asked why I don’t drive a nicer car.
I have family members who are self-employed business owners and they drive BMWs and Mercedes. I responded “I’m just a working stiff, what do you expect? It would be great if I’m a business owner. Then maybe I can afford a nicer car.”
Once again, I was able to downplay my wealth. And at the same time, pay a compliment to my self-employed business owner family members.
Have A Fancy Job Title? Don’t Advertise It
You have worked hard to advance in your career and to get that nice office. You know it is well earned through years of hard work and sacrifices.
Wouldn’t it be nice if everyone can be happy for you?
But we know that is not always the case. There are people who can be resentful of your professional success.
Therefore, it makes sense to downplay your professional success by keeping your fancy title to yourself.
There are times when it makes more sense to just tell people you work in the finance department of your company as opposed to telling them you are the CFO.
Or you can say you work for company X without mentioning your fancy job title.
Also, don’t fall into the trap of disclosing how much you make to inquisitive family members and friends. Keep your income to yourself.
Don’t Post Pictures Of Extravagance On Your Social Media Accounts
Keep what you share on your social media accounts modest. Avoid showing any pictures of extravagance.
Sometimes the temptation to share the best part of the trip or experience is overwhelming. We do spend a lot of time trying to capture the perfect picture or moment.
Why shouldn’t we share the best part of our vacation?
Once again, if you want to practice stealth wealth, then you should arrange your photos from flashiest to the least flashy.
Choose the ones that are around the upper 60% to 70% of flashiness.
Don’t post the over-the-top best photo unless you want to cause a the feeling of envy in your friends and family members.
Benefits Of Stealth Wealth
A Better Peace Of Mind
I already touched upon this benefit of stealth wealth.
You will save yourself a lot of resentment, shame, envy and jealousy from people you know by practicing stealth wealth.
No One Hits You Up For Money
When people don’t know how well off you are they won’t be coming to you for money.
Sometimes it could be hard to say no to a friend or family member if they ask. The best thing is not to give them a reason to ask you.
If they think or know you have money, you will be the first person on their list they will hit up for money. Why put yourself in that situation?
Shield yourself from being put in that situation by practicing stealth wealth.
Additionally, if you have been practicing stealth wealth, even when they do ask you for money, it is a lot easier to say no. If you know they know you have a lot of money sitting in the bank, it makes it a lot harder to decline to help them out financially.
Don’t Feel Like You Need To Treat All The Time
You avoid tons of mooches when no one knows you have money.
Your friends won’t automatically think you would pay for a meal because you make a lot more than them. Going dutch becomes a lot less awkward.
If there is a huge income or wealth discrepancy, family members traveling on a vacation with you might expect you to cover all expenses. If they don’t know how much you have, then there is no expectation for you to pay.
Avoid the feeling of pressure to have to pay for items for friends and family by being stealthy with your financial situation.
Don’t Need To Answer Questions About Why You Didn’t Spurge. Avoid Being Called A Cheapskate.
People make assumptions about how money should be spent.
I’ve been on personal finance message boards where people comment how insane it is for someone who makes $2,000,000 a year but only spends $80,000 a year.
Why doesn’t it matter how much someone spends? It has no effect on me. Does it matter if that person makes $2,000,000 or $20,000?
The best way to avoid addressing questions about your spending or lack of spending is to keep your income and expenses private.
If no one knows how much I make, they can’t call me a cheapskate for opting to buy a $10,000 used car as opposed to a $100,000 Mercedes.
No one would question if I decide to stay at a Holiday Inn instead of a Four Seasons on my vacation.
You Can Continue Your Match On Your Financial Path Without Negative Feedback
People tend to like to provide advice even when unsolicited.
The more information people have, the more they like to add in their two cents and comments.
Keeping your finances to yourself allows you to continue on your financial path without receiving negative feedback.
Imagine if you tell everyone you know that you make $2,000,000 a year but only spend $100,000 annually.
People will start telling you how little you are spending, how you are being too frugal and how you are not enjoying life to the fullest.
This type of negativity might distract you from continuing down your savings path and cause you to splurge which runs counter to your initial financial plans.
Lower Chance Of Being A Financial Target For Fraud
This is the same concept as having mooches in your life.
Once people know you have money, you automatically become a target for financial fraud or theft.
The more the fraudster thinks you have the higher amount he might try to extract from you.
Decrease your chance of being a target by keeping your income and wealth to yourself.
Lower Worry About People Wanting To Hang Out With You For Your Money
You don’t have to worry or question why people want to hang around you. The question of “is it because they like you or they like your money” goes away.
If no one knows how much you have, then there is one less concern about them wanting to hang out with you because of an ulterior motive.
Helps Develop A Humbling Mindset
Sometimes wealth can distort someone’s sense of reality. That person might start thinking they are better than other people with less income or wealth.
A sense of entitlement or cockiness might creep in. That person might start conflating net worth with life worth which takes into consideration more than just money such as relationships formed and contributions to society.
Keep a humbling mindset by not flaunting your wealth and downplaying it every chance you get.
In Summary
There are many benefits to practicing stealth wealth.
A few ways to achieve stealth wealth is to 1) smile and nod in agreement when there is no upside on challenging someone’s assumption of your income or net worth; 2) don’t wear expensive or showy items in casual social meetings; 3) answer back with a humble response if people try to talk you up; 4) keep your fancy job title to yourself; and 5) share low key pictures from vacation or other experiences on your social media accounts.
To the audience: Have you ever been envious of a friend or family member because of their financial success? Do you believe in the benefits of stealth wealth? What are other ways you have practiced stealth wealth?
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That’s interesting, I’ve always practiced stealth wealth because it saved money and because I have fairly simple tastes. But in a small town setting you can forget about keeping your job and relative income level secret because everyone knows what you do. Or they did before I retired early. It has been five years now and finally its getting to where some people don’t know who I am. Good advice, I think that stealth wealth goes hand in hand with avoiding lifestyle inflation, which goes hand in hand with becoming wealthy. At least it worked for me.
Nice to get a different perspective of someone living in a small town.
Have you received any negative comments from people because you live a much simpler life than what others might expect of you because of your successful job position?
I live in New York City. Unless you are the CEO of Goldman Sachs, it is unlikely anyone knows what another does or how much that person makes.
No, I think it isn’t that uncommon in rural areas for people to live that MIllionaire Next Door kind of lifestyle. I think it puzzles some of my former employees that my car and my boat and my house are not as nice as theirs but I know people with more money than me that also are very frugal. I think the pressure in the city to conform to peers expectations is much higher. My company headquarters was in a large city and I went there frequently. And those executives, even the ones I outranked, were way more status conscious about their clothes, watches and cars. They had cuff links that cost more than my car!
We naturally practice stealth wealth because the flashy stuff doesn’t do much for us.
Our friends and family see us as successful but they have no clue how successful. People are always telling us we work so hard and “deserve” nicer cars and a fancier (more expensive) house. We always respond…maybe one day, it’s fun to dream.
When I’m reality we could already afford a much bigger and more expensive lifestyle but we just lay down.
I like that response “maybe one day, it’s fun to dream.”
I might add that to my rotation of humble responses.
I like the simple life so it just comes natural to me. However, I do get some negative comments sometimes from people who really know me.
A few weeks ago I looked at an apartment to rent and I saw in the ad the the owner said he is also interested in selling. I went to look at the apartment and asked how much. He just looked at me, laughed and said “You? You want to buy the apartment?”.
I was with my flip flips and a plain t-shirt.
After reading your path to financial success article, I am curious how you approach stealth wealth with your children?
It’s hard with stealth wealth around my children (all under the age of 10). Quite frankly, I think I am doing a terrible job on that front because of two reasons:
(1) I want to educate them on personal finances early. So I bring them along on my real estate ventures – they have attended open houses with me, seen me deal with tenant issues, participated in discussions with realtors, etc. They have a sense as to how many rental properties we own. I would imagine they correlate the number of real estate properties with a degree of wealth.
(2) I also enjoy good experiences such as nice vacations and restaurants. I enjoy those experiences with my kids in tow. My kids can see that we can afford some “nice” vacations, food and stuff.
So I haven’t quite master stealth wealth with my kids. I know other successful people who have and I applaud them for that.
Sounds like you’re doing a fantastic job, Rich. Passing on your vast knowledge of real estate is one of the greatest gifts you can give them. One of the hardest lessons I’ve learned is “our kids are not us”. I had things slightly better than my father, but the goal was to “do better” in life. I can’t hold it against my son that I made it one rung higher. He was born and raised in Dallas. I was raised in the sticks (Louisiana). He will never know what it was like for me to be raised just above poor, but below middle class in the country. It put a desire in me that he simply doesn’t have. He still works hard — don’t get me wrong — but that “dirty life I’m getting out of here” mentality that I had, it’s impossible for him to have. So the best you can do is teach them about money *and* tell them all the stories of struggle of where your money came from. There’s nothing wrong with that.
Yea, I would agree that it is good they go with you on those trips! It is an interesting line because that is the best type of financial education, but then where is the line with letting them in on the details. No kids for me yet, but I have a 15 year old sister that I am trying pull with me down a different path than our parents took.
When you are a doctor or dentist, it isn’t so easy to pretend you are “average”. There isn’t much to “hide” about your job title. When you are a physician, it is well expected you make good money (even if you believe you don’t). For a doctor to practice stealth wealth is harder because of that. As far as driving a nice car is concerned, that doesn’t matter (anymore). With 9 out of 10 new cars coming on the road being financed/leased, you can’t really tell if the Lexus owner is really well off or just so so. Even if you paid cash for your $50K sport car, you can still tell people you financed it because you didn’t have the money to pay for it all, and everybody believes you. A nice car doesn’t mean a lot these days and certainly won’t “break” your stealth.
You are right. With certain jobs, such as a doctor and dentist, the presumption is that you make a lot of money. But I think someone who wants to practice stealth wealth can downplay their financial standings as opposed to “playing the role”. A doctor or dentist can always counter the rich narrative by saying you are buried under student debt or insurance is so expensive if you run your own practice or I made peanuts for the first few years out of school while a resident.
That is an interesting take you have re: car. I personally don’t think just because someone is driving a nice/expensive car, that person has money. But I think that opinion is common among Americans. They equate a nice or expensive car to wealth.
If you DO drive a nice car, you can always say that you are on the hook for a nice 60 month car loan, and they understand you have hefty payments (even if you paid CASH for the car, which no one knows). After all, it is expected that you finance a car, so why say otherwise? Btw, did you know which car is the least influenced by a driver’s wealth? A Toyota Prius. That’s right. When you see any Prius owner, you just can’t tell anything about his financial status. Prius owners are from all trades, ranging from an average income to very rich!. You drive a Prius and no one has a clue! That is, if you like a Prius of course, but that’s a different story.
Thank you for the insight about Prius car owner. I didn’t know that, but then again, I don’t drive a Prius.