Dave Ramsey says 'very few people' who look like they have money actually do — claims vastly expensive cars, vacations on social media are rarely signs of real wealth. Here's the true test

An effort to keep up appearances has, in fact, pushed many Americans into debt.

Money dysmorphia

The rise of social media has created a steady stream of conspicuous consumption. It’s now easier than ever to see the cars, houses and vacations your friends and families are indulging in and that’s having an impact on the way many Americans view their own wealth and finances.

A significant 29% of American adults surveyed by Qualtrics for Intuit Credit Karma said they experienced “money dysmorphia,” a term financial advisers have coined to describe a feeling of insecurity when it comes to your financial well-being, even if you’re not actually faring as poorly as you believe. This psychological disconnect between perception and reality is wider for younger Americans, with 62% of Gen Z Americans surveyed by LendingTree saying they feel financial pressure to keep up with someone within their circle, such as a family member or friend.

That survey also found that 51% of respondents admitted to overspending to impress others. Amongst this cohort, 56% are now in debt because of this overspending.

Borrowing money to splurge on items only to impress others could trigger unsustainable lifestyle inflation. Once you’ve stretched your budget to buy that fancy car or borrowed money to go on vacation, you may struggle to sustain that loan. This could be why even high-income Americans are now struggling to make ends meet. Roughly half of six-figure earners said they were living “paycheck to paycheck” according to a recent Lending Club survey.

However, if consumption isn’t an indicator of wealth, what is? Here’s how Ramsey defines “true wealth.”

True wealth

On his website, Ramsey offers his definition of financial success: “True wealth is about three things: making an impact through giving, leaving a legacy and having options for how you live your life.”

Being able to donate to charity or for worthy causes is a genuine sign that you and your family have economic security and abundance. By this measure, the U.S. is in a pretty good spot with regular Americans comprising 64% of all American charitable donations in 2022, according to an analysis by the United Nations.

Leaving a legacy to loved ones is another common sign of true wealth. Americans are relatively wealthy by this measure too as 68% of Gen Z and millennial Americans have already received an inheritance or expect to receive one in the future, according to USA Today Blueprint. The average size of this inheritance is $320,000.

Ramsey’s final yardstick for true wealth is more subjective and difficult to measure, but the freedom to choose your lifestyle, where you live, and how you spend your time is another signal of financial success. And for those who’ve been lucky enough to find that in their lives, they know it’s priceless.