49 | The Teeny Sliver

This post is Part 1 of 3 of the "Promoting Transparency Instead of Perpetuating Taboo" series.

Morgan Housel says it so well, "People are good at learning by imitation. But the hidden nature of [financial] wealth makes it hard to imitate others and learn from their ways.”

Observe someone playing a sport. You can probably figure out how to score.

Observe someone raising a child. You can probably snag some pointers.

Observe someone doing a good deed for stranger. You can probably replicate it.

Observe someone interacting with their money. Take it with a grain of salt.

The reality is that we "see" a fraction of a fraction of how people interact with money - a teeny sliver of how they spend it.

Toss in the fact that we tend to compare other's highlight reels to our own blooper reels and that teeny sliver of spending becomes even more misleading.

Everybody has to maintain their car and pay utility bills, but the vacation or nice house or restaurant is what gets filed away in the observer's brain.

We don't see how much cash they have on hand.

We don't see how much equity they have (or don't have!) in their home.

We certainly don't see any investment balances.

We don't know their income level.

We don't know what else they spend.

We don't know their savings rate.

We don't know what their investment experience has been.

The funny thing about the teeny sliver of spending is that, if anything, it's a glimpse into what is preventing someone from building financial wealth.

Drawing conclusions about someone's financial well-being by observing their spending is like assuming someone is physically fit because you have seen them lounging on the couch or eating a piece of cake.

If incomplete, irrelevant observations are the embers on the fire, the way we talk (and don't talk!) about money only fans the flame...