Understanding the Feeling of Wealth

What is the Horizon effect in the context of wealth perception?

• A phenomenon where wealth feels just out of reach

• A strategy to save more money

• A way to calculate net worth

• A method to invest in stocks

How can one avoid the Horizon effect?

• By spending more on luxury items

• By investing all your money in stocks

• By ignoring financial goals

• By focusing on how much more freedom you have now compared to the past

What is lifestyle creep?

• A gradual increase in expenses as income rises

• A sudden drop in income

• A method to save money

• A way to invest in real estate

Why is it important to live below your means?

• To avoid paying taxes

• To spend more on luxury items

• To increase your debt

• To feel more psychologically wealthy

What is a common issue with having wealth in illiquid assets?

• It increases your monthly expenses

• It can lead to feelings of financial inadequacy

• It makes you spend more on luxury items

• It reduces your net worth

Why is having liquid cash important?

• It allows you to buy more luxury items

• It increases your debt

• It reduces your investment opportunities

• It provides financial security and flexibility

What is the main disadvantage of relying solely on active income?

• It provides more investment opportunities

• It increases your net worth

• It allows you to retire early

• It can feel burdensome and lacks financial freedom

What is the social comparison trap?

• Comparing your wealth to others, leading to negativity

• A way to calculate your net worth

• A method to increase your savings

• A strategy to invest in stocks

Why is it important to define what 'rich' means to you personally?

• To spend more on luxury items

• To reduce your net worth

• To increase your expenses

• To avoid constantly feeling like you need more money

How can living above your means affect your perception of wealth?

• It can make you feel less wealthy despite having a high income

• It increases your net worth

• It allows you to retire early

• It provides more investment opportunities