It is not so uncommon in our society to associate wealth with the type of car someone drives.

We think a person driving Toyota Land Cruiser is wealthier than someone driving Maruti Celerio.

We consider cars as status symbols. However, this relation between cars and wealth isn’t as straightforward as it seems.

Does what car someone drives really determines how financially well off the person is?

Some people who drive luxury cars might be wealthy. But in majority, not all are as wealthy as you think.

It proved true especially from my personal experiences of looking within my social circle. 

Depreciating Assets Vs Investment

The Millionaire Next Door unveiled some of the surprising secrets of rich people in America.

One secret is none of those millionaires actually owns luxury or high-end sport cars.

The authors also discovered that people driving luxury cars have smaller net worth than those who don’t.

It reveals that many wealthy individuals prioritize financial prudence and modest living to achieve lasting prosperity.

Car is a depreciating asset. The moment a new car is driven off the lot, it loses a significant portion of its value.

In contrast, rich people invest in appreciating assets, such as real estate, stocks, or businesses, which will grow their net worth.

Someone driving an expensive car not only proves his financial illiteracy but also lack of long-term financial security.

I know few people who purchased expensive cars like Creta or Seltos on loans and their net worth are just negative.  

Financing the Purchase and Debts

In most cases, people who drive expensive luxury cars purchase through bank loans just to be a rich man in the car.

Look around. Is there anyone you know of who drives expensive cars but doesn’t have a loan? 

Monthly loan installment can be manageable for some people. However, it’s not living below means.

It’s how even an entry-grade civil servant drives a luxury SUV despite his financial security being at risk.

If people don’t get loans or purchase with their own money, our place like Thimphu won’t be crowded with cars.

Moreover, foreigners may not call Bhutan a ‘poor country with rich people’ either. Our trade balance with India won’t be this horrible.

Purposes and Values Prioritization

Wealthy individuals often prioritize financial independence and long-term security over ostentatious displays of wealth.

They will choose modest or even second-hand cars. They know car is one of the transportation modes, not a representation of self-worth.

People who spend lavishly on cars may prioritize status and image which leads to a misinterpretation of their true financial positions.

It’s why your dad uses Samsung phone and Dell laptop when you have an iPhone and MacBook. 

In this case, it boils down to how you look at things from the perspective of values and purposes. 

Income and Purchasing Capacities

People who drive expensive luxury cars might be having high income. But a high income alone does not guarantee lasting wealth.

Someone becomes financially secured and wealthy managing the money well, investing, and living below means.

Mike Tyson earned more than $400 millions. He finished them faster than his knock-out punch when he declared bankrupt with debt of $27 millions. 

Many high-income earners live paycheck to paycheck, accumulating debt despite their substantial earnings.

One example is NBA players. Despite earning in millions per season, they go broke within first 5 years of retirement. 

Conversely, people earning moderate income also accumulate significant wealth over time living with sound financial principles.

Purchasing expensive luxury car and then living a flashy life isn’t a sound financial principle. 

Hidden Wealth and Other Sources

We cannot say for sure how rich someone is looking at their materialistic things. Wealth is not always obvious.

Some of the wealthiest people may still choose living a relatively modest lifestyle and drive ordinary cars.

Such individuals might have substantial assets, investments, or business interests that are not immediately visible to the public. 

Conclusion – Are Nice Cars so Bad

Someone driving an expensive luxury car may not be wealthy. Someone who is wealthy may not drive a luxury car. 

Does it mean, one should not purchase a luxury cars to become wealthy? Nope. 

If you can afford one it’s well and good. But having to max out your credit limit for a car isn’t a good thing. 

In the end what gives you a sense of financial independence and security will never come from material things. 

What you think of expensive luxury cars? Would you purchase one if the bank gives you a loan?

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