Why Looking Poor Is Key to Better Wealth, According to Money Pro Nischa

For many, being rich is driving an expensive car, wearing designer clothes and toting a brand-name bag. However, Nischa, a former investment banker and YouTube channel host, is not one of those people.

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She believes that using your income on things other than outward appearances is the best way to become wealthy, and she broke it down in a video on her YouTube channel . Here are Nischa’s four reasons why looking poor is an important component of becoming financially successful .

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Ends Permanent Dissatisfaction

Everyone strives to improve their life and finances, but often, this creates a cycle of dissatisfaction. Your life improves when you get a raise, a promotion, a nicer car or move into a better neighborhood.

However, you also raise your living standards and make your new desires even more expensive. Nischa explains that scientific researchers have found this to be true, calling this the hedonic treadmill.

To understand the hedonic treadmill, imagine you’re on an actual treadmill. No matter what speed the treadmill is at, you won’t make any progress and will remain in roughly the same place.

Likewise, the hedonic treadmill shows that after you make enough for basic necessities like food, shelter and healthcare, additional income doesn’t have much effect on happiness.

No matter how much money or many purchases you make, your happiness doesn’t change noticeably because you quickly adapt to your new level of wealth.

Nischa uses the example of purchasing a new smartphone. Initially, you’re excited to try out the latest features and post clearer videos on social media, but that rush doesn’t last long. Once that brand advertises the newest model, you begin to feel the itch to upgrade.

This cycle extends to nearly everything that you buy, making it a trap that can keep you from building wealth. You step off the hedonic treadmill by choosing not to concern yourself with looking wealthy.

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Maintains Your Freedom To Choose

Maintaining a successful-looking appearance costs a lot. Individuals trying to look rich spend their money on designer clothes, nice cars and the newest tech.

On the outside, they may be the envy of others. However, internally, they could be working a job they hate just to keep up appearances.

Nischa admits that she used to have this mode of thinking. Most of her income went into showing others how successful she was, and she expected happiness to follow suit.

However, when happiness didn’t follow, she dropped her spending to almost nothing over several months. Nisha instead diverted that money toward education, learning and new skills. Because of this, she built up her financial security, left her job to pursue her passion and started traveling whenever she wanted.

Having been on both sides of the equation, Nischa says the feeling of freedom far exceeds the feeling of buying something new. She recommends earning money first and investing it toward freedom. Then, spend any leftover money on other things.

Takes You Out of Survival Mode

Keeping up with the Joneses is stressful. Nischa refers to a study by the American Psychological Association (APA) that found 72% of Americans felt stressed about money at some point in the prior month.

A different report from the UK’s Money and Pensions Service (MaPS) found that 62% of adults are anxious about their finances , and 48% worry about money at least once a week.

When you spend your money on expensive cars or homes that require 40% of your take-home pay, you must continuously work to afford them. Upgrading to a better vehicle or home also comes with higher maintenance costs, creating more financial obligations and anxiety. Choices like these keep you stuck in survival mode and struggling with your finances.

Nischa explains that creating a gap between your income and your expenses is the best way out of survival mode. Working to increase your income and decrease spending brings more freedom, peace of mind and flexibility in your finances and life.

The KonMari Method, made famous by Marie Kondo, emphasizes only keeping things that spark joy in your life. By doing this, you’re not only clearing out clutter you don’t need but you’re also creating space for mental clarity.

In a financial context, the KonMari Method reduces your need to buy things and simultaneously provides you peace of mind with less stress over finances.

Allows You To Live Authentically

Money often makes people pretend to be someone they’re not. Nischa points out a study that found 25% of Americans pursue romantic relationships for financial reasons, and half of those people fake their financial status to attract others.

Using wealth to attract others is risky because those impressed may only pursue you for materialistic reasons. Relationships based on money typically don’t last long and aren’t fulfilling. Nischa explains that authenticity is the foundation for a relationship that will last.

Staying true to yourself without needing to flaunt your riches is the essence of true wealth. Wealth can provide confidence and security, but you should use it to live authentically instead of wasting it on impressing others.

This article originally appeared on GOBankingRates.com : Why Looking Poor Is Key to Better Wealth, According to Money Pro Nischa