In most cases, what separates those who become wealthy from those who do not is the discipline to not follow the crowd and the ability to not care about impressing others. The road to wealth is much narrower and less traveled than the road to perpetual middle class. Buying the checklist items to cement your place in suburban America and show everyone you’ve made it is the surest way to not make it. If a country club membership costs $250/mo. ($3,000/yr.), that is an opportunity cost of $519,103 (investing$250/mo. at 10% over 30 years would amount to this much). That’s half a million dollars! Similar math can be done for new car payments, big houses, fine dining, and other staples of the middle class. This post is not intended to make anyone feel bad if they currently spend on any of the items listed above, or to say that people should not spend money on things that give them pleasure; it’s just trying to show the true cost of such items. The true cost of things cannot be fully understood without considering other opportunities that were passed up (AKA opportunity cost). The math of compounding works differently than basic addition. For instance: $250/month for 30 years only adds up to $90,000, but as mentioned above, when compounded at 10% annually, it equals $519,103. Money is a tool and should absolutely be used to enhance your life, but there has to be a balance and you have to consider what is truly important to you, as well as opportunity cost.
Bottom line: most people can either look rich or be rich, but not both. And if someone wants to do both, they need to become rich first rather than trying to prematurely look rich.
Bryant Quick 