There is a book titled Receipts of the Rich written by Morita Takako, a professional tax accountant who has worked in Japan for 30 years. Her work involves managing the private assets of wealthy clients. To handle tax processing, she has to examine their receipts. Over the past three decades, Morita has organized more than 10 million spending receipts from the wealthy, and she wrote this book based on the distinct spending patterns she discovered along the way.

There is a famous saying about food: "Tell me what you eat, and I will tell you what kind of person you are." Because food reflects culture, religion, regional background, family environment, personal taste, and lifestyle, knowing what someone eats gives you a fair understanding of who they are.

"Spending Habits Are a Mirror Reflecting One’s Philosophy of Life"

However, the question of "where you spend your money" tells you even more about a person than "what you eat." Examining someone's expenditures reveals what they eat, gauges their economic power, highlights the culture they enjoy, identifies their religion and family members, and uncovers their hobbies and priorities. The best way to truly understand a person is to review their spending history. This is why Morita states: "How you spend money is a mirror that reflects your values and philosophy of life."

There are various types of wealthy people. Some became rich through entrepreneurship, others through inheritance, and some through sudden wins like cryptocurrency investments. Their spending patterns all differ. Among these, Morita believes the model we should follow is the self-made entrepreneur. Unlike heirs, entrepreneurs built their wealth themselves, and unlike those who struck it rich overnight, it is not yet certain whether sudden-wealth individuals will be able to preserve their fortunes. Entrepreneurs are people who made themselves rich and sustain that wealth. Morita presents their spending habits as the ideal model.

First, Morita observes a major difference in the asset composition between those who successfully sustain wealth and those who do not. People who fail to properly maintain their wealth tend to possess only tangible assets—such as cash, stocks, and real estate—assets that are conventional and directly observable with the eye. In contrast, the asset portfolios of wealth-preservers look different. While they also hold tangible assets like cash and real estate, they possess an equally heavy concentration of intangible assets. Intangible assets refer to invisible values such as skill, knowledge, credit, health, and time.

Choosing "Stock Spending" Over Luxury

How did Morita discover that wealthy wealth-preservers have an abundance of intangible assets? She realized this by examining the receipts of where rich people spend their money. Successful rich individuals spend heavily on things like skills, knowledge, and health. When you buy a car, the car is visible. When you purchase tangible assets, others can easily tell where the money went.

On the other hand, expenditures on intangible assets like skills and knowledge are invisible on the surface, making them largely unnoticed by others. Yet, receipts reveal that the wealthy pour massive amounts of money into these areas. Though invisible outwardly, these assets continuously accumulate internally. The true wealth that characterizes the rich is not tangible goods like cash, real estate, or cars, but intangible assets like knowledge, skills, health, and credit.

Furthermore, expenditures can be categorized into "flow spending" and "stock spending." Flow spending vanishes entirely the moment money is spent. Today's expenditure loses its value by tomorrow, or at least depreciates significantly. For example, buying a car means its value drops to secondhand market prices the very next day. This is flow spending.

Stock spending, conversely, is an expenditure that builds something up within yourself. While it may look like it holds little immediate value right now, it continues to accumulate and its value eventually surfaces later on. Educational expenses are a prime example of stock spending. The more you learn, the more accumulates inside you, and the higher its value grows over time. A core characteristic of the spending habits of the wealthy is that they engage in a high volume of such stock spending.

Flow and stock spending are not always strictly cut-and-dried. Buying the same pair of sneakers can differ depending on the motivation. If you bought sneakers simply because they were cheap and had a nice design, that is flow spending. If you bought sneakers specifically to protect your legs from injury during daily runs, that is stock spending. The crucial factor is whether the future is taken into consideration. Factoring in the future makes it stock spending; failing to do so makes it flow spending.

Because the wealthy spend large sums of money overall, they also engage in a lot of flow spending. The majority of people judge the rich based solely on these flow expenditures—such as assuming the wealthy buy a lot of luxury goods just because they carry designer items. However, the true hallmark of rich spending is not this flow spending, but their heavy volume of stock spending. They spend vastly more than the average person on the present-oriented future, particularly through stock spending on invisible intangible assets. This is where the competitiveness of the rich originates.

Newly wealthy individuals often indulge in luxury. They buy expensive cars and designer goods and go on lavish travels. They engage in flow spending meant strictly for the immediate present. Morita views this as a sort of rite of passage for those who newly attain wealth. However, some rich people continue indulging in luxury, while others see their luxury spending transform into stock spending for the future. The latter group consistently sustains their wealth. Continually preparing for the future is the path to long-lasting wealth.

Accumulating Knowledge, Protecting Health, and Expanding Connections

Morita specifically categorized the common spending patterns of long-term wealthy asset holders into eight areas:

-Expenses for valuable experiences
-Expenses for continuous learning
-Expenses for physical health
-Expenses for mental health
-Expenses for family
-Expenses for human networks and connections
-Expenses for social contribution
-Investment expenditures

First, one of the spending habits of the rich that genuinely surprised Morita was spending aimed at acquiring knowledge. Their book-buying expenditures are vastly higher than those of ordinary people, and almost all wealthy individuals hold economic newspaper subscription receipts. This may not offer immediate tangible help, but the knowledge accumulated through this process can pay off down the road in unexpected ways. Spending on knowledge stands out as the first major characteristic of rich spending.

Health-related expenditures are also substantial. It is common for them to hire personal trainers for consistent strength training and engage in various sports like golf and tennis. They also spend considerable amounts optimizing their sleep environments, such as investing in high-end mattresses, pillows, and lighting. The defining characteristic is that preventative spending overwhelmingly outweighs treatment-related spending. They are exceptionally proactive about health management.

Some might think such spending is only possible because they are rich, believing that they, too, would make such expenditures if they had wealth, and that they simply lack the leeway right now. However, Morita argues otherwise. She notes that as the tax filing deadline approaches, she gets extremely busy. Though she knows exercise is necessary, she fails to work out during peak busy seasons.

The wealthy, however, are different. Even when pressed by deadlines, a person cannot maintain 10+ hours of continuous, unbroken concentration without rest. There are brief breaks in between. Morita points out that while she simply rests during downtime, the wealthy use those short moments to go out and exercise. The ability to execute what one resolves to do, no matter what, is what differentiates actual wealthy individuals from everyone else.

The wealthy also invest heavily in precious relationships with people. They spend on meeting and hosting individuals, as well as on gifts and hospitality. For their children, they spare no expense on opportunities that broaden human networks, such as getting into prestigious universities.

Overall, the rich make numerous expenditures looking 10 to 20 years down the line, rather than focusing solely on the immediate present. They spend based on potential, even when guaranteed rewards are not in sight. For them, life as a whole is a form of investment. Because they consistently invest in their future, their future income and rewards grow in tandem. This is the hallmark of rich spending as revealed in Receipts of the Rich.

About Dr. Choi Sung-rak: He graduated from Seoul National University’s Department of International Economics, and earned his master's and Ph.D. in Public Administration from Seoul National University Graduate School of Public Administration, as well as a Ph.D. in Business Administration from Seoul School of Integrated Sciences and Technologies (aSSIST). After serving as a professor of business administration at Dongyang Mirae University, he retired in 2021 after accumulating 5 billion won in assets through investments, and now lives as a FIRE (Financial Independence, Retire Early) practitioner.

[ⓒ Global Economic Times. 무단전재-재배포 금지]