How to Avoid the Temptation to Show the World that You’ve Made It

Have you ever gone out of your way to impress someone after making a lot of money?

Maybe it was right after you landed your first six-figure job.

Or maybe it was when your startup went public and transformed your seemingly worthless stock options into a life-changing windfall overnight.

If you have, in a way, it’s like proving to the world that you finally “made it,” right?

Well, these moments often remind me of stories about famous people who came from nothing, made a bunch of money and then got themselves in trouble.

Take Mike Tyson, for example.

Now, Tyson is a heavyweight boxer and was one of the highest-paid athletes during the peak of his career.

But, he ended up blowing his newfound wealth almost as quickly as he made it.

In fact, during the height of his spending, he famously purchased over 100 cars, he bought several million-dollar homes and he even bought a few Bengal tigers to go along with it all.

And so, you likely know where the story goes from here, right?

Because despite having earned over $400 million at the height of his career, Tyson ended up losing nearly all of it and went on to file for bankruptcy in 2003.

You know, Tyson’s situation is a tragic rags to riches story.

That’s because he had this desire to show the world that he finally made it, but in the end, he ended up nearly losing it all.

Now, as a first-gen high earner, have you ever felt compelled to show the world that you’ve finally “made it”?

Have you ever splurged on a brand-new luxury car or bought a home that was at the top of your budget?

Whatever your situation might be, it’s crucial to remember that spending to keep up appearances now can derail your plans to leave a legacy for your family and hinder your ability to save for the long-term.

That’s why, as your windfalls come in, it’s essential to clarify your values, set your priorities straight, and develop a touchstone to help keep your financial goals on track. Because if you don’t, your retirement plans might fall short, and you may not have much to show for it after all.

New Money Challenges

Now, thinking about Mike Tyson’s financial fall from grace, I see echoes of his experiences in my own background as a first-generation Romanian-American.

You see, my parents immigrated to the States with little more than hope shortly before I was born.

But, with persistence, they gradually built a modest amount of wealth through their own sheer determination.

However, what became clear to me from watching them manage their money, and what resonates with Tyson’s story, is the added layer of complexity that comes with managing newfound wealth.

That’s because, in the Romanian community where I grew up, there was an unspoken rule that financial success had to be visible.

You see, it wasn’t just about having money, it was about showing the world that you had finally made it, right?

And so, what did this look like?

Well, it meant driving the right car, living in a well-decorated home, and dressing in a manner that screamed success.

And in many ways, this behavior wasn’t just a personal choice, it was a cultural expectation that mirrored the societal pressures you or I often face.

But you know, the tendency to spend extravagantly to signal success isn’t limited to any one community.

Indeed, from stories ranging from “The Great Gatsby” to the reckless spending of the Gold Rush 49ers, this pattern of behavior spans cultures and eras.

In fact, it’s a phenomenon that economists call “status consumption,” and it’s a term popularized by Thorstein Veblen in his seminal work, “The Theory of the Leisure Class.”

Now, Veblen describes how luxury goods and services are not just simple material purchases, but, instead, they’re public symbols of economic power.

You see, status consumption often leads to spending that goes beyond your or my own means and is a way to visibly signal success to the community around us.

Now, this signaling might manifest itself in the purchase of luxury items like high-end vehicles or clothes or accessories to many other forms of conspicuous spending we might engage in.

And so, why do we engage in this kind of behavior?

Well, research suggests that this behavior is typically driven by our own internal desire to publicly affirm our success and gain acceptance into higher social circles.

But, the trouble is that this kind of spending can jeopardize not only our current financial situation but also our ability to sustain wealth long enough to secure a comfortable retirement and provide for our loved ones across generations.

And so, going back to Tyson’s experiences, the challenge becomes clear about how essential it is to balance the desire to show that you’ve “made it” with the discipline to sticking to your long-term goals.

The Pitfalls of Status Consumption

Now, I’ll admit that Tyson’s story is a bit of an extreme.

I mean, the likelihood of you or me finding ourselves in similar situations and making the same choices is very small, right?

Well, maybe.

You see, the degrees of spending might be different, but the behavior is more common than you think.

How so?

Well, let me tell you the story about Dave and Beth.

Now, like many of us, Dave and Beth were diligent about managing their finances when they first got together.

You see, Beth was raised in a working-class family, and she learned the value of a dollar early on in life.

In fact, Beth had this skill where she could stretch a dollar farther than anyone she knew.

Now, the thing going for both of them was that Dave wasn’t a flashy spender either.

And so, early in their marriage, they lived an otherwise simple, minimalistic lifestyle.

Beth even drove the same car she had in high school, and she was adamant about not upgrading her car until Dave paid off his own car.

So then, from the outside, this couple was the picture of financial prudence.

But then, wouldn’t you know it, something changed.

You see, Dave got a big job promotion that moved their family across the country to Florida.

And just like that, all of a sudden, they found themselves in an affluent, gated community in Orlando, far away from their humble beginnings.

Now, with this new home came new neighbors who were now highly educated, successful professionals and entrepreneurs who lived life on a grand scale.

And these neighbors drove the latest model luxury cars, they were members of the local country club, and all their kids attended private school.

And so, how did this affect Dave and Beth?

Well, things started to change.

And it all began, with small things.

First, they decided to get a nicer car to replace the old one.

Then, they started treating their new neighbors to upscale dinners here and there.

And then, one thing led to another, and their spending spiraled out of control.

And you see, for Dave and Beth, it wasn’t about meeting their physiological needs.

It was about the status consumption.

In other words, their spending was fueled by a desire to fit in, to show that they too had made it.

That’s because their spending was no longer driven by their own values centered in being mindful of the resources available to them.

And so, with each purchase, they strayed further and further away from their true selves.

And, so, how did they manage?

Well, despite Dave’s high income, the couple soon found themselves with over $100,000 in credit card debt, and they ended up tapping into their home equity line of credit just to keep up.

You see, what they owned on the outside was costing them everything on the inside. And eventually, they had no choice but to get help from a bankruptcy lawyer as well.

How to Avoid the Temptation of Status Consumption

Now, while Dave and Beth originally started their financial journey on the right foot, ultimately they lost track of their long-term goals because they were so consumed by their near-term desire to show the world that they’ve “made it.”

And from this perspective it’s clear that, without a strong foundation and a clear vision, anyone can fall into the trap of status consumption.

So then, what can you do to ensure that you don’t fall into a similar fate?

Step #1: Define What’s Essential

Well, the first step to safeguarding against the pitfalls of excessive spending is to firmly understand and define your core values.

What do values have to do with money?

Values reflect what matters most to you at a deep level. These are the principles that guide your behavior, even when no one else is watching.

By identifying your values, you equip yourself with a compass to guide your financial decisions, especially as your wealth grows over time.

To begin this journey, ask yourself, “Do I know what my core values are, and which ones can help guide me as I make savings and spending decisions?”

Set aside some quiet time to reflect on what truly matters to you. Think about moments in your life that have brought you the most joy and fulfillment, and consider the values at the core of those experiences.

Jot down your thoughts in a journal, focusing on the principles that guide your actions when no one else is watching.

If you’re still unsure, try completing a values assessment or reviewing comprehensive resources like James Clear’s Core Values List, which I’ve discussed in previous posts and podcast episodes available at https://legacygenone.com.

Once you have a clearer understanding of your values, use them as a compass to evaluate your current spending and develop your long-term savings goals.

Step #2: Crystallize Your Long-Term Vision

Alright, now with your core values defined, the next step is to use those values to crystallize your long-term financial goals.

Anyone can set long-term goals, but the difference here is that you’re digging deep, considering what’s important in your life, and then looking into the future to see what your life might look like as a result of the financial choices you make.

Because here’s the thing: without a clear vision for what the money is for, it’s all too easy to let windfalls be squandered on fleeting pleasures rather than having them contribute to what matters most in your life.

So then, take the time to ask yourself, “How do I want to put my money to work in a way that honors what’s essential to me?”

Then start by reflecting on your core values and how they can shape your financial future. Take some time to visualize what a fulfilling and meaningful life looks like for you in the long term.

Does this mean ensuring that you have enough money set aside for a meaningful retirement? Or is it about having enough money saved to provide for two or three generations down the road?

Either way, write down your specific long-term goals that align with your values, and consider how each goal will contribute to what truly matters to you.

Step #3: Create Your Touchstone

Finally, once you have your values and goals defined, it’s time to bring them together to form your touchstone.

Now, a touchstone is a concrete representation of your financial philosophy and goals. It’s not just a to-do list, but a blueprint for your life decisions.

This touchstone ensures that every financial choice you make supports your ultimate life goals and helps you resist the pressures of status spending.

So then, the purpose of a touchstone is to help you stay grounded when you’re tempted to show the world you’ve made it.

It does this by prompting you to ask questions like, “Does this purchase support my values and help me achieve my long-term goals?”

Now, one of the most effective things you can do is to use your financial plan as your touchstone.

Begin by reviewing your financial plan regularly to ensure it accurately reflects your core values and long-term goals. Ensure that it’s detailed and actionable, outlining specific steps and milestones for achieving what you’ve set out to do.

At the same time, keep your financial plan easily accessible so that when you do face the temptation to show the world that you’ve made it, you can take a moment to revisit your plan and remind yourself of the bigger picture and your ultimate life goals.

So then, by consistently leaning on your financial plan during moments of temptation, you’ll be better equipped to make decisions that align with what truly matters to you and avoid the pitfalls of status spending.

Don’t Let Your Net Worth Dictate Your Self-Worth

You know, when it comes down to it, this isn’t just about managing your spending, it’s about living a life that’s aligned with what you truly believe and value.

So then, from this perspective, avoiding status consumption involves reflecting on your values, setting a vision for your future, and utilizing your financial plan to remind yourself of what’s on the line if you do decide to use your money to show off that you’ve “made it” instead of fulfilling your life goals.

Because if you don’t, you could end up losing more than money, it could cost your character and your family’s future. Remember, every dollar spent in an attempt to impress other people is a dollar not spent on saving for retirement or building a legacy that lasts.

Ultimately, it’s a missed opportunity to invest in what truly matters to you and your loved ones.

But, with all that said, imagine a future where every financial decision you make is a step towards that ideal life that you’ve already envisioned.

Imagine yourself years from now, being surrounded by the people you love, living a life rich with purpose and stability because you chose to invest wisely, spend thoughtfully, and prioritize what truly matters to you.

So then, let your touchstone guide your choices, big and small, no matter what’s going on in your life.

And remember, that every decision you make is an opportunity to reinforce the life you’re building today while taking you one step closer to becoming the master of your own financial independence journey.