He’s right, of course.
Big houses, luxury cars, nice boats, nice clothes, expensive vacations, etc., these are status symbols.
Portfolio assets are what you don’t see: the money saved, invested and not spent. I completely agree with Nick that we should honor the people who create wealth by not flaunting status.
We salute the billionaires and fake billionaires who pretend to be rich on social media by flaunting their lavish lifestyles. Most people should look up to the Millionaire Next Door types who live below their means, save money regularly, and prefer a normal lifestyle, occasionally spending money on things they prioritize.
That’s my American (personal financial) dream.
However, Nick’s thought gave me an idea.
Let’s say you’re on a game show. I’d say the price is right, but kids today prefer Mr. Beast. What if you won a prize and had to choose between a $3 million house and a $3 million portfolio?
Which would you choose?
We surveyed our audience and the results were what you’d expect:
The money offers you much more flexibility and liquidity. A home comes with property taxes, insurance, maintenance and upkeep. Money is the wise choice.
I would take it home.
Surprising, right?
I’m a numbers person. That would be an irrational decision.
Here’s my explanation: At this stage of my life, a $3 million house would give me much more utility in terms of experiences and happiness.
As a personal finance person, I know I have to tell you that the dopamine rush you would get at home would wear off over time. I have read all the studies. But that is not my experience in practice.
Our lake house has made me happier over time. It’s spending more time with family. More time outdoors. More time on the water. More experiences.
I don’t like seeing the value of my portfolio increase. Of course it offers a feeling of comfort and security. But the prosperity goals don’t bring me more joy in my life.
Of course, you don’t need an expensive house to create memories and experiences. I have simply learned that turning money into utility that I can use again and again brings me joy in life. Another number on a screen doesn’t do that.
If you had asked me twenty years ago, my answer would have been very different. If you ask me, things might be different in twenty years.
Your preferences can and will change based on your age, circumstances and life experiences.
Sometimes they even surprise you.
Michael and I talked about this financial exercise in this week’s Animal Spirits video:
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Further reading:
The best investment I’ve ever made
Here’s what I’ve been reading lately:
Books:
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