Are luxury goods worth it?

I was recently revisiting Morgan Housel’s insightful book, The Psychology of Money.

- KEITH LIM

In one chapter, he recounts working as a valet when he was younger. He got to park expensive cars—Ferraris, Lamborghinis, Rolls-Royces—for people far wealthier than himself. He wanted a car like that someday. He thought it would send a signal: “I’m rich. ’m important. I matter.”

But then, when he looked back, he noticed something peculiar. As a valet, he never actually cared about the drivers. Whenever someone drove in with a fancy car, he never thought, “Wow, the driver must be such a cool person!” Instead, his thought was always: “I wish I had a car like that so people would think I’m cool!”

His goal in getting a luxury car was to make others think highly of him. Yet, having encountered hundreds of luxury car drivers, he realized he didn’t think highly of any of them. In fact, he barely thought of them at all. Housel realized that if his goal was to be respected and admired, luxury goods probably wouldn’t be an effective solution.