Is Narcissism Keeping You from Becoming Wealthy?

In their book, The Narcissism Epidemic: Living in the Age of Entitlement, Doctors Twenge and Campbell argue that narcissism is becoming rampant in America, and that this is leading to a lot of the bad financial behaviors we are seeing today.  From the book:
“We have phony rich people (with interest only mortgages and piles of debt), phony beauty,(with plastic surgery and cosmetic procedures), phony athletes (with performance-enhancing drugs), phony celebrities (via reality TV and YouTube), phony genius students (with grade inflation), a phony national economy (with $11 trillion of government debt), phony feelings of being special among children (with parenting and education focused on self-esteem), and phony friends (with the social networking explosion).  All of this fantasy might feel good, but, unfortunately, reality always wins.  The mortgage meltdown and resulting financial crisis are just one demonstration of how inflated desires eventually crash to earth.”
The way to become wealthy and financially independent is straightforward: Stay out of debt.  Live on less than you make.  Invest this extra money, and then reinvest most of the proceeds.  In fact, retirement with several million dollars in the bank is well within the grasp of most people.  And yet most people are deeply in debt.  Could the reason be narcissism?
One cannot become wealthy when buying a new car every couple of years, losing several thousand dollars in depreciation each year – not to mention interest payments.  And yet, most people are running down to the dealers when their cars pass 40,000 miles.  Never mind that many cars today will easily do 150,000 miles without any major repairs.  They want to look good with that big new car payment.
One cannot become wealthy if one is every extra dollar is spent on clothes.  And yet, many people are going to the malls every weekend and buying new outfits that will only be worn once.  At a yard sale one could not even get $5 for these same outfits that cost $50 at the store the weekend before because clothes drop in value dramatically the minute they leave the hanger.   And yet thousands of people have maxed-out store credit cards because of trying to stay up with the latest fashions.  Indeed, sales clerks are expected to sell new store credit cards more than they are expected to sell merchandise.
One cannot become wealthy if one is spending thousands of dollars a year on electronics and expensive data packages.  Despite being near a phone nearly everywhere we go, and surviving for years without being constantly connected, many individuals find that they cannot go anywhere without a cell phone.  Also, instead of having one or two family phones, every family member including the elementary school students must have their own phones.  Now that there are smart phones, we need to be able to check our email and surf the web everywhere we go.  How many emails do you actually get that could not wait until you get home?  Is that data package really worth more that $1500 per year?  Does that eight-year-old really need to be texting his friends that he is playing video games?
The fact is, many individuals spend more than they make in an effort to create a false sense of wealth.  They buy news cars, buy expensive clothes, and carry expensive gadgetry in an effort to keep up with the Joneses.  As they old saying goes, they are spending money they don’t have to impress people they don’t like.  All of this because we have a need to feel important and to be admired by others around us.  This is what keeps many of us from actually becoming successful.
When you walk into a room, the millionaire (or potential future millionaire) won’t be the one with the expensive cell phone on his belt and the fancy suit.  It won’t be the guy in traffic with the new car.  It won’t be the guy living in the McMansion.  The millionaire will be the guy in the old jeans.  The guy in the 2-8 year-old car.  The guy in the well-built but modest home.
To become successful, one needs to stop worrying about what other people think and do what needs to be done to conserve and build wealth.  The person who becomes a millionaire will overcome narcissism – the need to be admired.  She will be confident in herself.
Let your status symbol be your paid-off mortgage.  Your paid-off car.  Your basket of mutual funds.  Your ability to write a check whenever things happen.  Your ability to pay cash for a vacation.  Set your sites on the right goals, and success will follow.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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