251 | The Illusion of Wealth

The ideas that we have about what wealth looks like are wrong. The truth is a lot of the “wealth” that we think we see is all an illusion.

We’ve been taught to look for certain markers of wealth, but those markers don’t always show what we think they do.

In this episode, let’s explore the concept of wealth and how to think about the typical markers of wealth.

• • a hypothetical example of a lawyer with a fancy lifestyle and one with a regular lifestyle
  • the way we think about lawyers with these two lifestyles
  • what could be happening behind the scenes of the lifestyles
  • the tendency of lawyers to want to show their success
  • the financial dangers that sometimes come with showing success
  • caring less about what others think of you than what you actually want
  • building true wealth

You’re listening to Personal Finance for Lawyers. I’m Rho Thomas, and as a busy wife, mom, and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back. So today we are exploring the concept of wealth, and we’re going to do it through the example of two hypothetical lawyers. So the first lawyer I want you to imagine lives in this nice, big house in this beautiful neighborhood. They have a fancy car, they wear designer clothes, they take luxurious vacations and belong to the best social clubs or country clubs. They go to the nicest restaurants, like they are living the life now, I want you to imagine another lawyer who lives in a regular house. They have a regular car, they wear nice clothes, but they’re not anything noteworthy, right? It’s not all of the designers and stuff that you see with the first lawyer. They take nice vacations, but again, it’s not anything noteworthy. They are just living a regular life. What we have been taught in our society is the first lawyer is wealthy and the other lawyer is not. However, we don’t see what’s going on behind the scenes. So with the first lawyer, they might live in this nice, big house in this big neighborhood, but they might also have a bunch of debt, a bunch of credit cards. They might not have money left over at the end of the month. With the person who lives in the regular house, who’s living the regular life, what we don’t see behind the scenes is the multiple six figures in their accounts and the fact that they have no debt, maybe they still have a mortgage or something like that. But it’s something very manageable. That first lawyer could be living on the edge and just about to fall over, and that second lawyer could be very comfortable, but we take what we see, we take the appearance, and we equate that to being wealthy or not being wealthy. And the thing that I want you to know is sometimes what we see is an access to money or an access to credit. So someone who’s making multiple six figures might be able to make payments on a nice, big house and a fancy car and the luxury vacations and whatever else, but they might not be keeping any of that income for themselves and building wealth. Wealth is the part that we don’t see. And so just because we see someone who has a certain appearance, it doesn’t necessarily mean that they are wealthy or they are not. And let me say this, I’m not saying that anyone who has the nice car and the nice house and the designer clothes and all of that is drowning in debt. Somebody might have all that stuff and just be filthy rich, and we don’t know what’s going on, but the point that I’m making is we can’t tell just from seeing. The wealth is what’s going on behind the scenes, but also the debt is what’s going on behind the scenes. We only see what people want us to see.

There is a tendency, especially within the legal profession, or other professions like it, where people want to show that they are successful. They want to show that they’ve made it. And a lot of times it’s because we get these images in society, or we get these lessons in society, that that’s what wealth means. That the nice house, the nice car, the designer clothes, whatever else means that you’re wealthy. But that’s not the case, and I have seen over the years so many people trying to project this image of success, trying to make people think certain things about them, and they’re doing it at the expense of their financial stability. They’re doing it at the expense of actually building the wealth that they’re trying to portray that they have.

I don’t want you to live at the edge of your income and have all these payments going out and you’re basically trapped in the job that you’re in. I believe that true wealth is having control of your time. I say it in the intro of this podcast. True wealth is having control of your time, but you don’t have that control if your income is accounted for as soon as you make it. It comes into your account, and it goes right back out to the mortgage company and the car company and all the credit cards and the personal loans and whatever else. If you are so beholden to your income, you’re not going to be able to have that freedom and that control that you want. And again, it’s not to say that there’s anything wrong with having these things that are often seen as what successful people have, having that nice house or that nice car or anything like that. I like nice things as well. But I want to make sure that as you are acquiring those nice things, you’re doing it in a way that doesn’t sacrifice your financial stability and your freedom.

One of the keys, I think, in building wealth, when you have a normal nine to five job, like if you’re working for a firm or for a company, and you want to build wealth, I think you have to be less concerned about what other people think about you, and more concerned about what you actually want. This is something that I just told some of my clients at a retreat, that I had an in person event that I did because I think that drive for us to portray a certain image, for people to think a certain way about us, can get us into trouble. Sometimes it gets us into these situations that we are not actually equipped to handle financially, like maybe your income could handle the payment for the house or the payment for the car or the vacations or the whatever else, but it can’t handle all of the things all at once. Or maybe it can technically handle all the things, but then there’s nothing left over. There’s nothing left over for yourself. So I want you to be mindful as you are buying different things, or you are wanting to trade up in terms of your house or your car or things like that. Be mindful that these new purchases that you’re making or the things that you desire to have are actually things that you want and not just things that you think you should have because you’re a lawyer or that you think other people think you should have. Be mindful that they’re things that you want, and then also be mindful that they are things that your income can actually afford, that you’re not putting yourself in a precarious position because you’re trying to keep up a certain appearance or keep up with what other people are doing.

I plan to title this episode the illusion of wealth, because I think that’s exactly what happens with that first lawyer that we talked about, where we believe that just because we see certain things, it means that the person is wealthy. And that’s not necessarily the case. That is an illusion. But things that we see are not necessarily reality. They are an indication, again, that that person has access to a certain level of income or to certain credit or things like that. But the things that are going on behind the scenes are the things that really matter. Those are the things that really indicate the financial health that a person has, and it’s impossible for us to see it on the outside unless that person is sharing. And most people don’t share what’s actually happening behind the scenes. Most people don’t share that they have X amount of debt or that they have X amount of wealth. It tends to be something that we keep close to the vest, and so just keep that in mind. When you are looking at somebody’s situation from the outside, you don’t actually know what’s going on behind the scenes, and when you’re thinking about their own situation and what you want to do just make sure that you’re not taking yourself to a place that you can’t actually sustain because you’re trying to keep up appearances.

You want to build true wealth, not just the illusion of wealth. All right, so that is it for this week’s episode. Please take a second, share this with a friend or two who could use this information. My goal is to help as many lawyers as I can to get on top of their finances and build wealth so that they can have that freedom that so many of us crave. And as always, I appreciate your support. As we close out, friend, I pray that you take the information you learn here, apply it in your life and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to take back control of your time build wealth and live the life of freedom and choice you deserve. Talk to you later.