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When you think about the wealthy, you probably picture people with high-end luxury cars, owning multiple homes, and living a flashy lifestyle.
While this does describe some wealthy people, the reality is there are many more millionaires you come in contact with every day that you would never realize are rich.
These people have what is known as stealth wealth.
They are part of the secret rich society that has plenty of money to enjoy all aspects of life, but they don’t flaunt their wealth.
They hide it. And for good reason.
By being financially invisible, they don’t have to deal with the hassles that come when you have a lot of money.
If you want to become part of the stealth wealth society, this post will walk you through how to do it, and the pros and cons.
In the end, you will be a blueprint for practicing stealth wealth and setting yourself up for financial independence.
Table of Contents
The Ultimate Guide To Stealth Wealth
What Is Stealth Wealth?
Stealth wealth is defined as keeping your wealth private from others.
This includes family, friends, and co-workers.
By having money and living a more middle-class lifestyle, you can enjoy your wealth without the hassles that typically come from having money.
Understand it is not about hiding your money from the government by having off-shore bank accounts or cheating on your taxes.
It is simply about keeping the details of your wealth to yourself so that others don’t know how wealthy you are.
Why Hide Your Wealth?
It sounds like it would be fun to be flaunting wealth and spend money like it was going out of style.
Having a flashy car, designer clothes, mansions, a yacht, and the finest clothing money can buy.
But this is only part of a wealthy lifestyle.
There is a dark side people don’t talk about or the television shows don’t show you.
If everyone knows you are rich, you will get hounded by long-lost family members looking for financial help.
You’ll get phone calls and junk mail nonstop to support various causes.
People will pretend to be your friend even though they are just along for the ride.
If ever you lose your wealth one day, you will find many of these same people suddenly disappear.
The Formula To Have Stealth Wealth
When it comes to getting to a status of wealth and having stealth wealth, many people don’t know where to start.
Others that have started began by cutting their expenses.
This is a good start, but isn’t the complete formula for wealth.
Here is the wealth formula:
Reduced Spending + Higher Earnings x Investing = Wealth
As you can see, while cutting spending is a requirement and a great start it is not the only thing you need to do to become wealthy.
I say this because cutting your spending is finite.
In other words, you can only cut so much.
You can cut out the expense of cable and the expense of gas if you can walk or ride a bike everywhere.
But you still need to eat.
You still need shelter and you still need running water.
Once you get to this point, you are done cutting your expenses.
If all of that cutting doesn’t result in a ton of savings, then you are going to have a hard time becoming wealthy.
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In fact, many people won’t even get to this point.
This is because they will find that their quality of life suffers too much.
Think of it this way.
Cutting back on spending money is like a rubber band.
When you stretch out a rubber band, it either snaps back or it breaks.
This is what happens to many people.
They either cut back so much they hate life (rubber band breaks) and they give up and go back to their old way of living.
Or they get to that point and go on a spending spree to make themselves feel better (rubber band snapping back).
You have to find the right amount of cutting back that you can sustain over the long term and still be happy.
This is what happened to me.
Back in the day when I was battling credit card debt, I completely cut out fun money from my budget.
The first month was great.
I was committed to getting out of debt and stayed in a lot.
But that second month, I hit the wall.
I hated not being able to go out with friends, not doing anything fun.
So I rebelled.
My stretched rubber band snapped and I went on a spending spree. So much for getting out of debt!
Luckily, I realized what the problem was before I did a lot more damage to my finances.
I adjusted my budget and allowed myself some money to have fun with.
While this meant it would take me longer to get out of debt, I knew that I was more likely to achieve my goal this way than by trying to go to extremes.
Adding In Higher Earnings
The second part of the wealth equation is where most people don’t focus their attention.
This is a shame since technically, your earnings are infinite.
You can get raises at your current job, move to a different employer for a higher salary, work another job, start your own side business, have rental income or investment income, etc.
The list for growing your income is virtually endless.
Again though, if you go too far with this part of the equation, the rubber band is going to snap back or break, just like it did with your spending.
The result again is to find the happy medium.
Don’t work 5 jobs and have zero free time just so you can get out of debt quicker.
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Increase your income enough that you still have your freedom but you are making progress on your goal of paying off debt or becoming wealthy.
Investing Your Money
Combining reduced spending and higher income is great.
But in order to truly have wealth, you need to invest your money too.
For example, let’s say you reduced your spending and are able to save $250 per month.
In one year, this comes to $3,000. Not bad.
In 20 years, you have an extra $60,000.
Now let’s say you worked on increasing your earnings too.
You earned a promotion at work that pays you an extra $833 per month.
That is $10,000 per year or $200,000 more income over 20 years.
Having $260,000 is great progress and you would have a solid net worth as a result.
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But you wouldn’t be considered a wealthy person and you wouldn’t be secretly rich.
In order have stealth wealth, you need to invest it.
If you take the $10,000 from your promotion and the $3,000 from savings and invest that money at 8% for 25 years, you are looking at over $1 million dollars.
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Now we are talking!
This won’t allow you to buy a yacht, but you would be part of the secret rich and have very little worries about money.
The question you might have is, where should I invest my money?
Investing in the stock market, real estate investing, or owning your own business are great options.
What you need to do is research each one to determine the right path for you.
How To Build Stealth Wealth
Now that you know the formula for attaining stealth wealth, what are some practical lessons you can use to help you succeed?
Below are 12 tips from the wealthy that you need to live by.
#1. Having money equals financial freedom
#2. Don’t become “cash rich” and “time poor”
#3. Experiences are better than more stuff
#4. Watch out for lifestyle creep
#5. Remember things cost money
#6. Having goals is incredibly important
#7. You must live in the present
#8. It helps to be lucky
#9. Play dumb
#10. Don’t Become A Public Figure
#11. Set Up A Family Legacy
#12. Be Humble And Polite
If you can follow these lessons, amassing stealth wealth will be much easier for you.
Here are the details for mastering each step.
#1. Having Money Equals Financial Freedom
The point here is that money provides you with options.
And I completely agree.
When you have money, you can choose to take a job in a field you love without worrying about the salary.
You don’t worry if something breaks because you have the money to repair it.
The bottom line is when you have money, life is less stressful.
If you have money, keep saving and investing.
If you don’t have money, you need to follow the wealth equation I talked about above.
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Focus on cutting back on your expenses and then start working to earn more money.
#2. Don’t Become “Cash Rich” and “Time Poor”
While we all strive to have enough money so that we can do what we please with our lives.
Just don’t sacrifice your time trying to achieve it.
If you spend all day at work and only kiss your children goodnight, you may want to reassess your priorities.
In other words, don’t make money your idol.
Practice living like money is a tool for getting you to where you want to be.
Learn what opportunity cost is and weigh all decisions in your daily life, not just financial decision, using it.
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Remember that everything has a cost, not just financial, and you need to know what you are potentially giving up when choosing one thing over another.
#3. Experiences Are Better Than More Stuff
I think this is a learned point.
In my teen years, I was all about the object: status symbols.
I wanted designer clothing and a cool sports car.
Now that I am in my 40s, all I care about is hanging out with my friends.
Even if we sit around all night talking, it doesn’t matter.
I enjoy their company and I have those stories and memories for the rest of my life.
And I wouldn’t trade any of that for designer jeans.
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Learn to appreciate life.
By learning what is important in life, you will enjoy your time more and worry less about trying to keep up with others.
When you do this, you will be amazed at how much more satisfying your life is.
The sooner you realize happiness comes from experiences and not things, the sooner you can build wealth.
#4. Watch Out For Lifestyle Creep
There are many benefits to keeping your living expenses in check.
Many people graduate college and stop living the college lifestyle.
They buy a new car, a new wardrobe, and rent the nicest apartment they can find.
They leverage their future.
If you are a soon-to-be graduate, keep living the college lifestyle.
It’s OK to live with Mom & Dad for a year or two and drive around an old car for a couple more years.
With the money you save, you can get a jump start on your retirement and start building your net worth.
And if you are older, keep living a middle class lifestyle.
You don’t need a huge house when a modest house will do.
And you don’t need fancy cars when an average car will serve its purpose.
You can practice stealth wealth by questioning all purchases.
Do you really need it? Will it help to get you to where you want to be in 5 or 10 years?
Advertisers are good at getting us to buy on emotion.
They know our brains have two sides: emotion and logic.
They develop advertisements so that we make impulse buys.
In a few hours when the reasoning side of our brain catches up, we regret the purchase.
This is what we all call buyer’s remorse.
To overcome this, stop and question purchases to save money.
When you think you want something, wait to buy it.
Wait an hour or a week or more.
Many times, you will find you no longer want it or even remember it in the first place.
This will allow you to save and invest more of your money so you can build stealth wealth faster.
#5. Remember Things Cost Money
Stop for a minute and think of all the fancy stuff you would like to have if you could buy anything.
Now think about the ongoing costs of these things.
This is what trips people up when it comes to wealth.
They see the expensive cars, many houses, etc. but don’t ever stop to think about the related living expenses.
You have insurance costs for the homes, cars, and boats.
There are electric costs, maintenance costs, operating costs, and more.
In other words, you need to generate more wealth every year just to afford all these things.
If you stop working, your cash flow dries up and you fall behind financially.
This is what happens to many professional athletes.
They never stop to think about what happens when they aren’t making as much money as they do now.
Take the time to think about the impact of having a lot of stuff.
You don’t want to be one of the rich people who have to work 80 hours a week just to afford the luxuries in life.
You want to be secretly rich where you can stop working and enjoy early retirement if you want to and still enjoy life to its fullest.
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#6. Having Goals Is Incredibly Important
Goals are important. They keep you motivated and lead to success.
I see setting a goal as challenging myself.
I feel that I need to be challenged to grow and learn and I never want to stop doing either.
Growing makes me a better person.
Learn to set goals for yourself. Don’t make the mistake of setting many goals at once.
Take it slow.
I like to break my long-term goals into short-term goals.
For example, paying off $15,000 worth of debt sounds daunting.
After a few months, you might give up.
Instead, keep your ultimate goal to pay off the debt, but set up a smaller goal.
Focus on getting your debt under $10,000.
You’ll notice the progress more and will stay motivated throughout the entire process.
Once you get your debt to $10,000 have another goal to get it to $5,000.
If these increments are still too big for you to stay motivated, then make them even smaller.
Find what works for you.
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#7. You Must Live In The Present
This one is hard, but is important.
I like to visualize my future. I imagine what life will be like when I have the money to retire, waking up when I want and spending my days doing as I please.
While this is good, I must remind myself to stop and smell the roses.
Life is a beautiful thing. Don’t miss it by living in the past or future.
What’s in the past can’t be changed and what lays ahead no one knows.
It’s necessary to have goals as mentioned above.
But it is equally important that you learn to be present and enjoy today.
Take advantage of the life you have and enjoy it!
Stop trying to compare yourself to others and acting like you are a rich person when you aren’t.
Be happy where you are and work to improve yourself.
#8. It Helps To Be Lucky
This is interesting, and is true. There is an old saying that goes “Luck is where preparation meets opportunity.”
If you prepare yourself for the opportunity, don’t be surprised when it arrives.
Most of the people you see who are lucky appear so because they took the time to prepare for opportunities.
For example, if you make it a point to save 15% of your paycheck you will build up a nice investment portfolio.
One day, you might be approached about an amazing job that you would love to have.
The only catch is that it pays less than your current salary.
Since you prepared financially by saving money, you can earn a lower salary and still survive financially.
Put another way, you might see declines in real estate prices and think, “man, others are so lucky to be buying houses right now. I wish I could, but I’m in debt up to my eyes.”
They are lucky because they prepared themselves for the opportunity.
They didn’t know housing prices would tumble.
But by staying out of debt, they prepared themselves to take advantage of the situation, whether it be with houses or stocks or something else.
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Start believing in yourself.
Believe that you too are lucky and prepare to take advantage of opportunities when they knock.
No matter what happens, stay positive with your attitude.
Stick to creating goals for yourself and get your finances in order so that you are in the best financial shape possible.
#9. Play Dumb
Rich people are known to talk a lot about the things they know.
Not only can this be annoying to others, but it makes them a mark.
If you have a large bank account and always are bragging about it, you are going to attract the wrong people into your life.
But if you don’t mention this, you won’t draw attention to yourself.
I have personal experience with this.
I went to college and earned multiple degrees in finance, so I know a lot about investments.
When I go with my parents to their insurance and investment appointments, I keep my mouth shut and ask basic questions that I already know the answer to.
I do this because if they realize I know about investments, they might try to skirt around some topics.
I’ve seen it happen many times.
Keep your wealth hidden by keeping your mouth shut.
The less you talk about wealth to friends and family members, the less chance they will catch onto you having stealth wealth.
Even if you are knowledgeable about a topic, keep quiet and just listen.
You’ll be better off in the long run.
#10. Don’t Become A Public Figure
It’s a good practice to try to keep a low profile as much as possible.
When you are in the public eye, you have a lot of people trying to dig up dirt on you.
With so much public information out there, including your home address, you will draw attention to yourself.
And this means your wealth could become known to the outside world.
Try to keep out of the public eye as much as possible.
When in public, don’t look the part of wealth.
Wear stealth wealth clothing that doesn’t show labels.
If asked, make up a story that you bought the item from a department store.
Drive a stealth wealth car.
Even if you have an expensive car, drive your older car.
#11. Set Up A Family Legacy
While it is important to keep your money hidden from others, you don’t want to make the mistake of not planning for the future.
This means taking the time to protect your money from the government when you pass.
Set up wills and trusts so that your children and even grandchildren can benefit from your net worth.
If you instill the right values in your children, chances are they will be able to keep the family legacy of stealth wealth going strong into the future.
#12. Be Humble And Polite
An overlooked way to practice stealth wealth is to be humble and kind to others.
You are no better than someone else simply because you have money and they don’t.
It could simply come down to the idea above about luck.
Be kind to everyone you meet and treat them as equals.
Remember also to always be grateful for the things you have and be generous with your time and money through volunteering and tithing.
And to be certain you fly under the radar when gifting money, do it in smaller amounts.
A big check or cash envelope will draw a lot of attention.
But multiple checks over the course of the year for $500 each won’t.
Advantages Of Stealth Wealth
Obviously having money is a good thing.
But there are other benefits of stealth wealth.
Here are some you might not have thought about.
#1. It’s Fun
Practicing stealth wealth is a lot of fun.
For example, you can go to a Walmart during the holidays and pay off all of the outstanding balances on the layaway gifts.
You can leave large tips for unassuming wait staff members who really impress you with their service.
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And of course, you don’t have to worry about money.
#2. You Have Real Friends
When you use money to draw attention to yourself, you attract all sorts of people.
Some of them are honest people, but many have ulterior motives.
As a result, it can be hard to determine who is a real friend and who is along for the ride.
When you practice stealth wealth, you have truer relationships because you don’t have to question if the other person is genuinely interested in you or your wallet.
#3. Avoid Awkward Conversations
For many people, money is a taboo topic.
And when people know you have money, it can make for uncomfortable conversations.
For example, a family member tells you how they are struggling to make ends meet.
Are they just telling you this, or are they beating around the bush and looking for some financial help?
And if you do help, where do you draw the line?
Are you comfortable with them asking you for more money again?
Is there an amount that you won’t lend them?
By keeping your financial situation secret, you can avoid these uncomfortable situations.
#4. Avoid Overpaying For Services
Ask any contractor and they will tell you they charge more money to people living in wealthy neighborhoods.
They know wealthy people have money, so they mark up their rates.
When you live in a modest home, you don’t have to worry about this markup in prices.
#5. Don’t Have To Worry About Keeping Up
The average person never becomes wealthy because they are always trying to keep up appearances with others.
If their neighbor buys a fancy car, they feel the need to as well.
If a friend takes an expensive vacation, they will too.
This is true even if they can’t afford it.
The result is more and more debt that keeps them from getting ahead financially.
When you have stealth wealth, you don’t care about trying to keep up.
#6. Money Equals Freedom
This is the heart of financial independence.
When you have true wealth, it doesn’t mean you simply buy everything you want.
It means you have freedom in life.
You can quit working and enjoy early retirement if you want.
Or you can work the job you love doing, regardless of the salary.
It allows you to control your time, which you only have a finite amount of.
#7. Reduce Government Taxes
When you have an investment portfolio that is earning a good amount of passive income from dividends and capital gains, you avoid the higher taxes on earned income.
This is why Warren Buffett pays less taxes than his secretary.
It isn’t because he isn’t paying his fair share, it’s because the tax code treats passive income differently than earned income.
Most rich people have their wealth tied up in their net worth, meaning their assets like investments, real estate, and businesses, while the average person has their wealth from their career.
Drawbacks Of Stealth Wealth
As great as it is to be part of the secret rich, there are drawbacks.
Here are some that you might not be aware of.
#1. Afraid To Show Off
While hiding your wealth is part of who you are, you might be nervous to show off your wealth for fear it will draw attention to yourself.
For example, maybe you want to splurge on an expensive car.
But the attention you get from friends and family worries you.
The good news here is you can simply explain it away.
Maybe you got lucky with a stock trade or you got a bonus at work.
As long as you remain humble, no one will suspect you have stealth wealth.
#2. Worry About Enabling Your Children
Another issue some people face is enabling their kids.
They don’t want their kids to have a sense of entitlement because the family has a lot of money.
This is a valid concern, but as long as you don’t give them everything they want and instead make them earn things, this shouldn’t be an issue.
#3. The Attack On Wealth And Success
A new trend has the wealthy as the enemy.
Success and wealth are now looked down upon by many people in this country.
It seems as though misery loves company and if you’ve made it financially, you cheated your way there or you took advantage of others along the way.
So while this isn’t necessarily a drawback of stealth wealth itself, it could be an issue as the government and society comes after the idea of wealth.
So there is the blueprint for you to live a stealth wealth lifestyle.
You need to make it a habit of keeping your expenses low, finding ways to increase your earnings, and investing your money.
As you do these things, over time you will build an abundance of wealth.
In fact, I encourage you to bookmark this post and read it over again at various times.
The reason is that when you are in different stages in life you will look at it from a different perspective.
In other words, you will always be learning.
And this takes me to another point.
Learn from those who are where you want to be.
Seek out wealthy people who manage their money wisely and pick their brains.
Learn from them and then use those tips and techniques in your life as you grow your wealth.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.
25 thoughts on “The Ultimate Guide To Stealth Wealth”
I would generally agree as well – especially on the lifestyle leverage. That can be a huge issue, especially if you’re needing to pay off debt when you’re first on your own. That time should be focused on paying it off and starting to build up a solid nest egg and not being extravagant. I would also add that many are also looking for opportunities to grow their money and wealth. They may not always work out, but many do.
Hey, that’s pretty good. I agree with everything especially this one – It Helps To Be Incredibly Lucky. I feel I’m super lucky and it keeps me going through good and bad times. I know it will get better later. I guess that’s being an optimist too.
Cash rick, time poor — It depends on what you spend your time on. I don’t have a lot of time because I spend most of the day with my kid. That’s still good.
I think that luck is simply being ready for an opportunity when it presents itself. I consider myself to be lucky as well. But like you, I’m an optimist and I think that helps a lot.
Very interesting! It’s really good to read a post about the lesson’s learnt from those who are rich. I’m sure many people can learn from this.
When I think of the wealthy I don’t always see happiness. “I’ll be happy when I have …..” is their mentality. So memories being more important than material things resonates most with me.
Most of the McMansions in our area are empty most of the time. People are too busy working and earning more to enjoy what they already have. It’s a death spiral.
It is sad that so many chase the status of wealth and then never really enjoy it because they have to work that much harder just to keep the things they bought.
I love this list Jon! Right now, I’m really focused on the “time poor” equation. I have four children running here, there and everywhere and I want to be involved with as much as their lives as possible. There will always be time when they are gone to make money. They will be living in my house as kids only once. I can’t miss that.
Great insight and I think it’s a great thing you learned that before it was too late.
I love how you put action steps under each one. I dug into your website more because of that. Keep up the good work.
Thanks! I don’t always add them in, but try to when appropriate.
“Memories Are Better Than Material Objects”, but it’s easier to accumulate stuff while watching TV and playing on the internet. It’s a constant struggle in our house to save for memory-making.
It is easier to accumulate stuff when you have advertisers coming at you from every direction. I’m the same way – let me know if you figure out how to overcome the struggle.
I completely agree with this list. As I grow older am realizing that in the grand scheme of things, time is the most precious thing you can spend and experiences and memories what you should be spending that time on. With time you can always make some more money, but you can’t buy back time to spend with your loved ones forexample. Striking a balance is certainly crucial.
And yes, Luck accounts for a lot in life!
Agreed Simon, you can never make more time. Find a balance that meets your needs and go from there.
“Luck is where preparation meets opportunity.”
I think that’s pretty much my career motto. Jobs in the entertainment business are ridiculously difficult to get – if you have high expectations like, you know, a living wage and health insurance. When the tiniest opportunity comes along, you have to be prepared to wedge yourself in there and kick butt like they’ve never seen before.
So true Mel. Thanks for sharing!
Great stuff here Jon, agree with the points you make here & this is similar to what Tom Coorley and Rich Habits espouses in his book / blogs :)..
While sure cutting expenses are great though, for me definitely generating residual income is a life lesson you are sort of hinting at here but not sure it’s explicit.. What are you thoughts on this i.e. having multiple residual income (or call it passive I suppose if you’d like ha) streams
Really thought provoking though and thanks for writing!
Great tips! Another resource for readers would be “Millionaires Next Door”. Its a personal finance classic, but really hits home about how Millionaires aren’t all that flashy or buy every expensive items they can buy.
Thanks for sharing those life lessons from very wealthy. What I can sense now is that they’re goal oriented and have a can-do attitude.
Great points from those that are already rich. I really think being rich isn’t how much stuff you have but being able to do what you want and not have to worry about money. Like treating a friend to dinner or going on a last minute vacation or whatever else you want. It’s up to you i would be rich if I could stay in a cabin reading all day on the lake but others need much much more
I live in for the moment while still aiming for the future. Past is past so what I do now for the present and the future.
Thanks for these tips. My biggest takeaway is “Don’t become “cash rich” and “time poor.”” It’s easy to be so caught up with career that we neglect the most important people in our lives.
I just wish our cash flow were better though
That is true! Goals are really important. With goals in mind, you know that you’re going somewhere and have a direction in life.
When will I be incredibly lucky? Should I look for it or wait for it to come by? I prefer to look for it so by the time it comes I am ready to grab it.
Learn how to do it from the expert! I realize if they can, we can also!
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