What You Don’t See

Note: This post was first published in October 2020 and updated in January 2022

A lifetime ago (i.e. back in my teenage days), I had a very short but highly memorable stint working for a moving company.

The set-up was simple.

The owner of the company, who doubled up as the CEO, CFO, CTO, driver, and mover, had offered me a job after having helped our family move to a new house.

He would call me the night before the next job and pick me up the following morning. Depending on the size of the job, there would typically be another one or two guys helping out.

It paid ten bucks an hour (which actually went a long way back in the 90s) and was a decent way to make some extra cash over the summer holiday.

The first few jobs were tiring but uneventful. Then, on a particularly sweltering day, we ended up moving a family that, for some reason, decided to bring their dishwasher, stove, and fridge to the new place.

I was questioning my choice of summer employment by the time we got the appliances out of the apartment and into the truck (almost getting crushed by a massive fridge may or may not have had something to do with it).

But the most, ahem… exciting part was yet to come.

As we were running short on time, we crammed as much furniture and boxes as possible into the lift.

One of the guys (let’s call him Sam) breathed out, squeezed into the lift, and pressed the button.

The doors closed, the lift inched up – and promptly got stuck.

Thankfully, it only took about an hour to get the lift back down and open the doors.

However, it was just enough time for all of us to decide that we weren’t coming back the following day. We finished the move, collected our $100 each, and left.

That very night, we were meeting a group of friends at the only bar that wouldn’t card us.

While I was busy with some mental acrobatics, trying to figure out how to make my money last through the upcoming stint of unemployment, Sam promptly ordered a large round of drinks, handed the pretty waitress his $100, and said:

“No change”

Suffice it to say that he was the coolest guy in the bar that night.

A Different Level

Over the next two decades, I’ve seen this story play out in many different shapes and variations.

There was one of my analysts, who woke up after a wild night out to find a £5k table service receipt in his pocket.

Cue in a series of embarrassing (and unsuccessful) phone calls to everyone else present that night, trying to get them to foot some of the bill.

The associate who scored an £80k bonus (roughly £40k after taxes) and then took out an additional line of credit to buy a brand-new, top of the line BMW.

Three months later, he was let go in a massive downsizing.

And then, on a totally separate level was the senior MD who let it slip that despite having spent over 20 years in the industry, he was on an interest-only mortgage as he kept running out of money.

What made this revelation particularly ironic tragic is it came over drinks at a fancy ski resort in the French Alps.

I am beyond convinced that the same story will play out after the most recent bonus round.  No matter how large the payouts, some folks will spend them all – and then some.

So why is it that some people choose to behave this way – and others don’t?


… a society where everyone makes the same amount of money. Let’s say it’s $50k a year.

Some folks will save a portion of what they earn and spend the rest.

Some others will spend the whole lot.

Yet another group will spend the whole lot, then borrow some more money – and spend that too.

There’s no judgment here. The beauty of living in a free country is that everyone is welcome to do as their heart desires.

However, the challenge for everyone in the first two groups is that they will ALWAYS feel poor.

Humans are social creatures. Whether consciously or not, we compare ourselves to others all the time.

And when others have things that we don’t, it is only natural to feel that they are richer than us.

What exacerbates the situation is the fact that possessions are visible. Ostentatious spending – even more so.

By default, folks who spend a lot of money are signaling wealth. But as Morgan Housel puts it in the Psychology of Money:

Someone driving a $100,000 car might be wealthy. But the only data point you have about their wealth is that they have $100,000 less than they did before they bought the car.

Because, as he goes on to explain, it’s the money NOT spent that actually makes you wealthy:

Wealth is the nice cars not purchased.

The diamonds not bought.

The watches not worn, the clothes forgone, and the first-class upgrade declined.

In my experience, it’s that analyst who maxes out dinner allowance to buy groceries, skips out on fancy but forgettable bottle service, and invests in property instead.

The MD who brown bags his lunch. Or the immigrant who lives with his mom until he’s 30 – because that’s what it takes him to get on solid financial footing.

In other words, wealth is what you don’t see.  And if you want to be wealthy, that’s what you need to focus on.

As always, thank you for reading – and happy investing!

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Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.

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24 thoughts on “What You Don’t See”

  1. Wonderful anecdotes as always BOF, and a brilliant read.

    Makes me feel less guilty about bringing sandwiches wrapped in foil while other junior lawyers and staff eat out almost daily (or at least they were before this year’s events) .

    Although a native of this country, I share very similar sentiments as the immigrant mentality you describe – here and in your other posts. It is the result of a not-so-fortunate upbringing and the desire (or paranoia) of trying to out perform my parents and live comfortably in the future.

    I have been brought up in a wonderful and loving family, and continue to do so now even in my late 20s, and often that is the only wealth we need as humans. But sadly that doesn’t pay the mortgage or bills. Teaches you humility I guess.

    And I would also like the financial wealth to go with it, so I’m going it alone because (hopefully) future me and future family will benefit from both.

    I still have a lot to learn but find great comfort in your posts knowing I’m ‘on the right tracks’. Thank you BOF.

    1. Thanks for your comment, you are definitely on the right track and I’m happy to hear the posts serve as positive reinforcement.

      The underdog mentality can be a massive competitive advantage vis-a-vis others. At the end of the day, the fire in your belly goes much further than natural talent (which I am sure you also have plenty of). If you combine the two, there’s no stopping you.

      Enjoy the journey!

  2. Love it, as ever.

    One of the unexpected upsides of having a long commute home from London meant I always had to leave in time to catch the last train back. And yes, it was usually a much closer call than it should have been. But it did mean I’d be gone before the real damage started 😉 Have heard some similar shockers of nights out. Crazy.

    It’s funny, it took me a while to realise how much of a benefit it is very rarely feeling envious or comparing myself to others in terms of stuff or money. It’s sometimes hard for me to understand even though I see so many people I know who do, all my family included. It’s just one of those things I really don’t get. I’m big on live and let live. Just don’t complain to me when you’re broke 😉

    1. Thanks Michelle! Likewise. I am fortunate to have met my wife before I started in IB, so I never felt the need to join the crowd on nights out in search of a potential partner.

      For the longest time ever (i.e. before kids came along), our Saturday nights out consisted of playing a few hours of tennis and then having dinner together at the clubhouse. In bed by midnight, fresh and energized the following day.

      And you are spot on – breaking the psychological tendency to stack ourselves up against others is the key to financial independence.

      1. Accountantonfire

        Can you share a few books that you like about personal finance. I have been reading a few lately: Simple path to wealth, meaningful money handbook, automatic millionaire, millionaire next door. Would love to see any other books you would recommend.

  3. What an amazing story.

    It’s insane that Sam tipped the girl $100.00. It’s incredible what guys will do for pretty girls. The problem is that douchebags like Sam make it very difficult for other blokes, because they’re willing to bend over backwards to lavish money on women (who shamelessly lap it up – their feminist proclivities go out of the door when it comes to grabbing men’s money and freebies).

    Therefore guys like me who are more prudent with their money and don’t spend it like it’s confetti as they are saving for the future are seen as much less desirable to most women. The latter, in general, despite what they assert, will magnetically attach themselves to men who spend lots of money on them.

      1. Agreed, that’s the last person you want to be with.

        However, I think what’s interesting here is that impressing the girl wasn’t even top of Sam’s agenda. We’ve become good friends over the years and he’s genuinely a person who likes to spend all of his money (and then some) to enjoy life – in his own way.

        The point is that the world is full of people like Sam and the sooner we stop comparing ourselves to them, the better off we will be.

        1. “The point is that the world is full of people like Sam and the sooner we stop comparing ourselves to them, the better off we will be.”

          That’s a very interesting point in that you’re assuming the “spender” types are fixed and there’s no possibility of change in attitude. I agree that this is often the case but there is anecdotal evidence of some reformed characters – it possibly takes some seismic event to change their coarse.

          I personally view my FIRE awakening as firstly being a shift of spending from stuff to freedom – I’m not so sure there was a huge difference mentally initially.

          Now I have children my thoughts go to how I can raise them to be less likely to become like this and more likely to have a healthy relationship with money. I suppose that’s a huge topic though and not something easily covered in a comments section.

          1. Some could “reform” but there’s too much money at stake in perpetuating the consumeristic behaviour patterns.

            At the end of the day, the FI movement is very much a fringe (despite what we like to tell ourselves) and there will always be more folks who prefer to spend today and not think about tomorrow.

          2. I don’t think we want them to change, the economy depends on them, otherwise our FIRE plans would fail!

    1. I totally agree. Like when you’re in Holland Park or Chelsea and someone steps out of their £8mil+ house into an ’03 reg car. That’s where the real money is. Brits are more ostentatious with wealth than continentals.

      1. On that note, spotting Teslas and Audis at Walmart, and Honda Fits at Whole Food – now how cool is the latter. I’ve seen many nice cars outside not so very nice homes. And what do we make of nice cars with uber stickers?

        1. Another form of signaling. I cannot afford a nice house, so at least I’ll get a fancy car.

          One of the reasons fashion accessories have become so popular. You may not be able to afford a Burberry coat, so might as well stretch and buy their scarf.

  4. Hey it’s not just lunch…I brown bag breakfast too. It’s much healthier as well as being seriously cheaper. I do get the odd funny looks but who cares. I highly recommend it although it’s easier when someone is doing it for you. I reiterate based on the comments above, the most important decision I ever made is the person I asked to marry (very luckily that person agreed!) – a similar mindset is crucial. I’ve never had any desire to signal…just none.

    I’ve got a banking friend at another firm, similar level, whose renting in Zone 1 costing £4k a month. So that’s £48k a year. Meanwhile, my place is now paid off + there’s rental cashflow. That colleague needs to earn a £100 – £150k bonus pre-tax just to break even to my situation excluding any capital gain I might incur. Compounding cashflow is powerful. Amazing how bankers can spend up to 100 hours a week eulogising over high ROIC companies and not apply it to their own situation. I also know an (ex)colleague who bought a fast car with his bonus, sat outside his flat and he was subsequently made redundant…..pointless. Or the £10 – £20k family holidays with people coming back seemingly more stressed than they left. If you are a high earner e.g. IB VP above you gotta be looking at trying to save / invest min 50% of net monthly salary and your entire bonus – I’m never less than 70% & 95% + of bonus and I’ve missed out on nothing. It’s not easy with house prices the way they are I acknowledge.

    I must admit though, pre family, I needed to seriously cut loose one night at the weekend – I was lucky to participate in a fantastic team sport with a bunch of people who perhaps you’d typically call blue collar workers – made great friends and we had for a number of years some awesome nights out – was a great antidote to the week and was quite inexpensive. I recommend finding something similar to people in an intense work situation.

    My only sin is school fees…..well if you’ve got a dog in the race…you are going to give it every possible advantage if you can afford it. Though it’s not clear to me how worth it, it is at primary tbh (I know this is a different thread) and a small part of it is to feed my own anxiety I admit. I know plenty of people for whom it’s probably a waste of cash – others a great payoff.

    1. As someone who is into a healthy lifestyle (by IB norms anyway), I think most people don’t fully appreciate how unhealthy it is to have takeaway for lunch and dinner, every day. You can mitigate the damage somewhat, but it really adds up.

      Sadly no brown bagging here (enough of a struggle to make lunch for our older child in the morning) but I have a very healthy breakfast and dinner every day so hopefully the lunch takeaway doesn’t do too much damage.

      As far as the savings rate – I think most people would do great just saving their entire bonus. To be fair, some of the younger bankers seem to have their head on straight – always love hearing that someone is going to put the entire lot away and not blow it on something silly like yacht week.

      1. Trying to retire early

        Great article as always BOF. Since house prices are crazy in the London/South east, what multiple of household income & deposit would you recommend? . For something of a good size in London, I find that myself and my husband would have to max out this tying ourselves to paying a huge mortgage indefinitely!

        1. Thank you!

          It’s a v tough question to answer – really depends on your current and future income, plans for kids (if any), other expenses, etc.

          We are living centrally but my sense is that moving out of London and commuting in can be a much better deal than getting saddled with an inordinate mortgage, especially now that working from home looks like it’s here to stay.

  5. I completely get, and agree with the principle of the argument here, but I think there are some exceptions in today’s markets.

    We’re currently in a major asset bubble where you can buy something at a retail price and it instantly be worth more than you paid for it.

    And so, those bonuses which might be spent on certain things – are they really spent or is it that the money is just holed up elsewhere?

    If you can buy nice things and they maintain their value, then why not. You get the best of both worlds.

    I do appreciate though that this asset bubble has been fairly short lived and there’s nothing to guarantee it will continue, however the rich have been holding other assets for year (art, collectible watches and cars etc). To some it is spending, to others it is diversification.

    1. A surprising number of colleagues I speak to on a regular basis choose to invest their bonuses into productive assets (i.e. equities, real estate) or stores of value like art. So yes, not really “spending” as you correctly point out.

      That being said, these are mostly senior bankers in their late 30s and beyond.

      The younger guns still go for something flashier. A 20k Rolex may go up in value over time but I doubt it will have the same impact as it would compounding in the stock market over two decades!

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