By Brad Beckstrom
If you read enough, eventually you come across some big concepts. Whenever I see one, I like to jot a quick note or clip entire articles in Evernote. Sometimes these ideas just sit there and I later come across them accidentally when searching for something else. One of the things I’ve been thinking about for a while is prestige or, more specifically, Prestige Syndrome. Syndrome is defined as “a group of symptoms that consistently occur together or a condition characterized by a set of associated symptoms”. So, just for kicks, let’s take a look at something I like to call “Prestige Syndrome”.
Prestige Syndrome can be caused by earning more money and then feeling the need to spend that money to exude prestige, to do what rich people do. Continually upgrading your home, transportation, entertainment, and clothing choices to be aligned with that certain level of prestige that comes with your new higher-paying job. Sometimes this lifestyle creep can be very subtle, spending away our discretionary income on luxuries that suddenly seem more affordable to us.
An even larger problem, especially in our country, is spending money you don’t have to exude prestige. This is also more commonly known as “ Keeping up with the Joneses”.
We don’t have to look far to see examples of Prestige Syndrome. McMansions with three extra bedrooms and four extra bathrooms “just in case”. Massively oversized SUVs primarily used to run to the grocery store and sit in traffic. Prestige Syndrome can occur at all income levels.
The interesting thing about Prestige Syndrome is that there is no top. If your friends and business associates own Gulfstream jets than Prestige Syndrome tells you you should own one. You’ve earned it, and you believe people do things differently at this income level. The spending levels simply increase with the career ladder. The McMansions, vacation homes, yachts, limo services, security, valets, and private jets are all just steps on this ladder.
This ladder is what we call vertical wealth. Spending goes up as your income increases, often surpassing your income. This is how debt-fueled spending is created. Read more…