Do You Want Financial Security or the Appearance of Wealth?

An expensive car or home does not make one wealthy.  In fact, the inverse is more likely true.  –Richard Paul Evans, best-selling author.

Some pretend to be rich, yet have nothing; others pretend to be poor, yet have great wealth.  Proverbs 13:7

Some Old-Fashioned Cowboy Wisdom

Big hat, no cattle is an old cowboy saying, popular in Texas, used to describe someone who pretends to be something he is not.  In personal finance it describes people who go into debt to buy big homes, fancy clothes, luxury cars, and exotic vacations (big hat items representing the appearance of wealth).  All of this spending prevents them from building up any real wealth (the cattle).  As evidenced by the quote from the Old Testament above, this is not a new problem.    

This life is all about choices and almost all of us have to choose between big hats and cattle.  Very few of us have enough money for both.  And the order in which we acquire them is important.  If we buy the big hat first we will probably never have the cattle.  On the other hand, if we work on building up our herd first there is a good chance we can buy the big hat later, if we still desire it.

The lesson from the excellent book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, by Thomas J. Stanley and William Danko is that most of the wealthy in America don’t wear very big hats.  They budget, control their spending, save, and invest.  It is these habits that have allowed them to become wealthy.    

The Difference Between Hats and Cattle

There is a very important difference between hats and cattle.  Hats, no matter how careful you are, wear out, lose their value, and have to be replaced.  Cattle, on the other hand, require a lot of maintenance, but if you care for them properly they multiply and become more valuable.  So what will it be?  The choice is yours; hats or cattle?   

8 comments for “Do You Want Financial Security or the Appearance of Wealth?

  1. January 10, 2014 at 10:54 am

    Hats ON Cattle! 😉

    On a serious note though – great post, brotha. Have definitely heard this saying before, but you can never be reminded too often of it. Nor that Millionaire Next Door Book for that matter (fun fact: Thomas Stanley has a Twitter account and will often interact with those who reach out :))

    First time visiting your site but now have it in my RSS reader to stay connected to… Keep on spreading the good word!

    • Brent Esplin
      January 10, 2014 at 4:42 pm

      Glad you found me and enjoyed the post. I will take a look at your site. Thanks for the tip on Stanley’s Twitter account. I will have to check it out. The Millionaire Next Door is one of my favorite personal finance books.

  2. January 15, 2014 at 7:18 am

    This is so true. Young professionals where I work get a job and three months later have a BMW. Now I think to myself, what a bonehead move to get a car that is probably 70% of their annual income. But they feel they are successful because of the car they probably lease. Great post.

  3. January 15, 2014 at 8:12 am

    Excellent post with an excellent message. I might start using that saying: Big hat, no cattle!

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