Page 100 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

But wealth is hidden. It’s income not spent. Wealth is an option not yet
taken to buy something later. Its value lies in offering you options,
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flexibility, and growth to one day purchase more stuff than you could right

now.

Diet and exercise offer a useful analogy. Losing weight is notoriously hard,
even among those putting in the work of vigorous exercise. In his book The
Body, Bill Bryson explains why:

One study in America found that people overestimate the number of
calories they burned in a workout by a factor of four. They also then
consumed, on average, about twice as many calories as they had just burned
off … the fact is, you can quickly undo a lot of exercise by eating a lot of
food, and most of us do.

Exercise is like being rich. You think, “I did the work and I now deserve to
treat myself to a big meal.” Wealth is turning down that treat meal and
actually burning net calories. It’s hard, and requires self-control. But it
creates a gap between what you could do and what you choose to do that

accrues to you over time.

The problem for many of us is that it is easy to find rich role models. It’s
harder to find wealthy ones because by definition their success is more
hidden.

There are, of course, wealthy people who also spend a lot of money on
stuff. But even in those cases what we see is their richness, not their wealth.
We see the cars they chose to buy and perhaps the school they choose to

send their kids to. We don’t see the savings, retirement accounts, or
investment portfolios. We see the homes they bought, not the homes they
could have bought had they stretched themselves thin.

The danger here is that I think most people, deep down, want to be wealthy.
They want freedom and flexibility, which is what financial assets not yet