Building wealth is not only about earning more but also includes financial planning that takes into account your monthly expenses, savings, investments and future requirements — plus factors outside your control i.e. inflation.
‘Fake it till you make it’ is an aphorism often used as advice about managing image ahead of success. But Chartered Accountant (CA) and financial advisor Nitin Kaushik feels that when it comes to , “Faking wealth is the fastest way to stay BROKE.”
He explained, “Most people spend they haven’t earned to buy things they don’t need to impress people they don’t even like. It is a cycle driven by a fear of appearing unsuccessful, but the math of status-seeking is a zero-sum game.”
‘Wealthy look a liability in disguise’
Why zero-sum? Because for the ₹20,000/month you may spend on “lifestyle maintenance” — branded apparel, car EMI or luxury dining — you are not just losing cash but spending future . “At a 12% market return, that ₹20,000 monthly spend costs you ₹1.9 crore in wealth over 20 years,” Kaushik wrote in a post on social media platform X.
“A ₹50 lakh entry-level luxury car loses 20% of its value the moment it leaves the showroom. Within five years, it is worth half what you paid, while the maintenance and costs continue to drain your primary capital,” he added.
‘Stop viewing money as a tool for status’
According to Kaushik, true wealth is unseen — in the compounding portfolio, paid-off assets and unused credit lines. He adds that “real is the ability to say “no” to a job you hate or a deal you don’t like”.
The CA further noted that looking wealthy is “often a liability in disguise” — for example a ₹5,000 watch and a ₹5 lakh watch both tell the same time, but one buys you months of freedom.
He adds that focusing on look (“marketing materials”) leads to compromising on substance (actual wealth in hand). “You can’t buy that freedom if your capital is tied up in a depreciating wardrobe. Your banker and your CA are the only people who see your actual balance sheet. The shift happens when you stop viewing money as a tool for status and start viewing it as a tool for time,” he feels.
He added that tracking the habits of those who are shows that they are “obsessed with being rich, not looking rich”.
“The former gives you options; the latter just gives you an audience,” he added.
Here’s why this advice makes sense
“” is a harsh reality as cost of living increases each year — from food to housing, education and healthcare. Thus, factoring in your current lifestyle needs and probable future cost to maintain the same lifestyle makes it imperative that you save enough for the time you cannot make money.
In some ways, lifestyle inflation is a wealth-killer. But completely depriving yourself is not the perfect answer either. Even Edelweiss Mutual Fund Chief agrees! A proponent of SIPs (systematic investment plan), Gupta also advocates for people to “enjoy the fruits of your hard work” and find a good middle ground between spending and saving / investing.
On achieving this balance, Gupta shared a simple to help:
- According to this rule, those in their 20s should save around 10% (or even 1% if that’s all they can manage) of their earnings, because “habits matter more than amounts”.
- Further, in your 30s, she recommends saving 30% of the earnings as “life and goals get serious”.
- Followed by upping the savings to 50% of your earnings in your 40s, stating that this is “peak income, make the most of it”.
“Tax is deducted at source. Why not do the same with your savings? That’s SDS — Savings Deducted at Source. Automate your SIPs, RDs (recurring deposits) or (fixed deposits) before you even see the money. You can do both — buy the handbag and save money for the start up, and that Gen Z, is real flex,” she added.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies or user-generated content from social media, and not of Mint. We advise investors to check with certified experts before making any investment decisions.