Why is it that so many of us want to be rich? I believe that it all boils down to our desire for happiness: we simply want the freedom to buy things and experiences that will make us happier. Rich people that can sustain their wealth often have this freedom. If you’ve ever had the chance to associate with the rich, you may have noticed how careful they are with their money, and that this appears to come naturally to them. I have discovered that, on a psychological level, it is precisely their wealth that helps the rich to have the right attitude towards money. Having the right attitude protects their financial freedom. You too can develop this mindset, without any more money. With a shift in perspective, you can make your money go a lot further, starting today.
Because the rich already have everything they desire, they often refuse Christmas and birthday presents (they might ask that, instead, you donate to their favorite charity). I am turning 29 tomorrow, and my family has been asking me what I’d like for a gift. For the first time in my life, I don’t want anything. I have everything I want, and then some. According to most standards, I am not what most would call rich. The reason that I am truly satisfied with what I have has nothing to do with my income. Over the past four years, I’ve developed a new attitude towards money that gives me great financial freedom. At any time, I can afford to go on a trip anywhere in the world and I can buy anything I want. In short, money is not a problem.
I believe that there is a simple reason why most people live paycheck to paycheck, no matter what their income: people of all income levels overvalue that which is hard to get. I cannot begin to tell you how much money I used to spend buying things I couldn’t really afford. The irony is that the more money I had, the less I fell into this trap.
Our tendency to overvalue that which is hard to get hits us hardest when it comes to real-estate. Three years ago my husband and I decided to buy our first home. Like most people, we took the endeavor very seriously, and we knew exactly how much we wanted to spend. We started by looking at houses within our price range. Unable to find our dream house right away, we quickly moved on to more expensive houses. And guess what, they were a lot nicer. “Could we really own this amazing house?” we asked each other. It was very tempting.
Not only were the more expensive houses nicer, but they were also difficult for us to afford. This made them seem a lot more appealing than they really are. It is well known that people believe that more expensive things are better. But there is another, even more powerful factor at play: we have a tendency to overvalue things that are difficult for us to attain.
When it comes to dating, women have used this fact to their advantage for a long time. This is how the term “playing hard to get” came into being. While personally I am not a proponent of this strategy, it is also not entirely irrational. Men are often more interested in women that require at least some effort to attain.
Things that are just beyond our reach seem more appealing than they really are. If you have ever experienced a substantial increase in income, then you may have already noticed this. Before I had my first real job, I wanted to buy everything. For example, whenever I went into this one store near me and looked at the makeup and jewelry stands, I wanted it all. I would have been delighted to have any of it. So, whenever I would get my hands on any money, it would quickly disappear in exchange for the first available trinket.
You can then imagine how surprised I was to find that having more money completely changed my perspective. Now, when I walk into that same store, those stands of makeup and jewelry no longer have any power over me. Feeling no overwhelming desire for any of the merchandise, I shop a lot more carefully, and only buy that which I genuinely like and need – which, as it turns out, isn’t very much. The merchandise looked a lot better when it was difficult to attain.
Notice that “hard to get” does not depend only on the price tag, but also on the type of product. While I consider a $90 mascara too expensive, the same $90 does not seem like much for a night in a hotel. The danger is that I might be tempted to buy the $90 mascara simply because it appears to be a luxury item. On the other hand, there is no such risk when I consider staying at a hotel for the same price.
It is easy to be a smart shopper when it comes to things that we can easily afford. However, I still feel tempted to overspend when, for example, looking at expensive jewellery. But, with my realization of this “hard to get” phenomenon, it is no longer able to manipulate me. I ask myself, “Would I really want it if I could easily have it?” Often, the answer is a resounding, “No.” It is amazing how much money I save by asking myself this one simple question.
In the end, after much deliberation, my husband and I bought a house that we could easily afford. We could not be happier with this decision. The house makes only a small dent in our monthly income, enabling us to use most of our income towards making our daily life more enjoyable. We hire cleaning service, eat good food, and travel often – none of which would have been possible had we gone for the “hard to get” house.