Wealth is what you DON'T see

Housel draws a crucial distinction between rich and wealthy. Being rich is a current income. Wealth is the money not spent — the income you convert into assets and don't turn into visible stuff. The catch: wealth is, by definition, invisible.

When you see someone in a $100,000 car, you don't actually see wealth — you see someone who has $100,000 less than before they bought it. The person may in fact be poorer for it. We judge wealth by what we see (cars, houses, watches), but those are exactly the things wealth was spent on, not evidence of wealth retained.

This has a subtle danger: because we can't see restraint, we have few role models for it. We learn to spend from the visibly rich, not the quietly wealthy. Wealth is the financial assets you haven't yet converted into the stuff you see — an option and flexibility not yet taken.