Fake rich? Affluent millennials are more likely to exaggerate to appear wealthy. Here's what experts say they should do instead (2024)

High inflation has prompted even well-to-do Americans to rethink their spending habits.

But one group — affluent millennials — are more likely to lie or exaggerate their finances to appear financially successful, according to a recent survey from Wells Fargo.

That goes for 34% of affluent millennials versus just 20% of Gen X or 4% of baby boomers.

More than half of affluent Americans have cut back on luxury purchases post pandemic. Moreover, most say they wait until items are marked down before they buy them.

Yet affluent millennials — with $250,000 to more than $1 million in investable assets — are going to great lengths to appear wealthy.

Wells Fargo found 29% of affluent millennials admit they sometimes buy items they cannot afford to impress others.

Meanwhile, 41% of affluent millennials admit to funding their lifestyles with credit cards or loans, versus just 28% of Gen Xers and 6% of baby boomers.

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More than half — 51% — of affluent millennials say their efforts are working, with people assuming they are wealthier than they are.

But they are paying a price, with 40% reporting they have taken on more debt than they would prefer.

Affluent millennials have been affected by inflation, a high cost of living and the restarting of federal student loan payments, if they still carry those debts, said Emily Irwin, managing director of advice and planning at Wells Fargo.

"Yet they want to have a reflection of, 'We're working hard, and therefore we're successful, and we can still do everything that we want to do,'" Irwin said.

Despite the displays of rich lifestyles that appear on social media, two-thirds of individuals surveyed are reluctant to talk about money, according to Irwin.

"It seems to be a real silent journey that individuals are on," Irwin said.

Women in particularly are more hesitant to discuss financial topics, except for earnings.

Meanwhile, men are most reluctant to talk about their earnings, though they are willing to address most other financial topics, including investments, balance sheets and debt.

Silence around money can encourage illusions about how much money other people really have, according to Irwin.

Regardless of what someone's financial picture is, it is easy to draw conclusions from what they portray on social media, Irwin said.

"There's this tension between looks and appearances and taking on debt," Irwin said.

While people may be willing to portray a certain lifestyle — and the balance sheet necessary to support it — it is important to keep in mind that that may or may not be true behind the scenes, she said.

Much of people's behaviors come down to their money stories – How did they grow? How were they raised with money? And how does that have an impact on their spending and saving behaviors now?

People who are trying to put on a show of affluence tend to come from poor homes and also tend to not have as much money or net worth, notes Brad Klontz, a certified financial planner and expert in financial psychology and behavioral finance. Klontz is also a member of the CNBC FA Council.

"It's just not representative of how most people become wealthy and how most wealthy people spend their money," Klontz said.

Ultra wealthy individuals won't show you their wealth on Instagram or show you their designer labels and Gucci belts, he said. Instead, they're often enthusiastically frugal.

"The only way to grow net worth is to not spend your money," Klontz said.

Before making discretionary purchases, ask yourself some questions first, Irwin suggested.

First, do you have enough cash flow to support those expenditures?

Second, do you have enough money saved for emergencies?

Additionally, are you paying yourself in a retirement plan, either through an employer or self-directed IRA?

"Those are the kinds of things that you want to be able to identify as you put on your oxygen mask first," Irwin said.

"Only after that are we really able to think about, 'Hey, is splurging appropriate, given the overall financial picture?'" she said.