Rich and broke.

The difference between looking rich and being secure isn’t what you make.

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This essay was originally published here.

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Most people think earning money is about creating a ceiling.

How much can I afford?

What’s the nicest version of my life that I can build from what I make?

When you use your money to create a ceiling, that becomes visible. You might have a nice car in the driveway, a big house, or a fancy watch on your wrist. Life can look pretty grand, especially from the outside.

But I’ve come to learn, slowly and usually the hard way, that the happiest people are rarely focused on money as a ceiling. Instead, they use money to build a floor. A floor is what you have beneath you when something goes wrong. Because something always goes wrong, eventually.

As far back as I can remember, my dad has lectured me on the value of money as a tool. It all started with a stern talk in our family car over a nickel.

I was eight or nine years old, at a roadside convenience store outside of Gaithersburg, Maryland, with my three cousins. I went in to buy some candy, and the clerk gave me a nickel back in change. I walked out of the store and tossed the nickel on the ground.

My dad saw the whole thing happen, and he leaped out of the car. His eyes lit up with a fire, and he put me in the car and closed the door. His face showed exactly how disappointed he was. Didn’t I understand the value of money? How could I just throw it away? Did I know how his family had grown up with nothing?

I was too young to understand at the time. So I thought my dad was being ridiculous. And I was embarrassed to be scolded in front of my cousins.

But that’s who my dad is. A man who grew up with very little. Who once found a ten-dollar bill on the sidewalk, ran home to show his stepfather, and watched him yank it away to go buy beer. A man who’s always carried that fear of going back to nothing, and who built his life around the idea that you protect what you have before you spend anything.

Growing up, I was too immature to see wisdom in any of this. I just saw someone afraid to spend or stretch for more than what he had. If you made money, why not show it off? My friends’ dads drove Jaguars and wore Rolex watches and took the family to Turks and Caicos.

I told myself that when I grew up, I’d live differently. I’d prove my dad had it all wrong. That the right move was to go out and build the biggest, most impressive life I could. I was going to do more, have more, and look like more.

That plan started taking shape in 2016, when Jennifer and I packed up our New York apartment and moved to Los Angeles for my first executive job. I was a new VP of Sales, and Jennifer had taken a director role at another hot LA startup. We had two good salaries, impressive titles, and we found ourselves living in the most image-obsessed city in America.

So what do two confident, young LA transplants do in that situation? We got two fancy cars. A BMW for Jennifer and a flashy new Mercedes for me. Because that’s what success looks like. That’s what “My dad had it all wrong” looks like.

I still remember the first morning I pulled into the parking lot at work in my new luxury car. A couple of colleagues walked by and said, “Wow, love the car, Justin.” And there I was in LA, at 35 years old, with the satisfaction of having made it. The feeling I’d been chasing since I was a kid, watching my dad tell my mom that $49 for new shoes was outrageous.

Jennifer and I were using our money to extend our ceiling as fast as we could. And it felt like success. Until Jennifer called me at work one day the following April.

She’d gotten an email from our accountant, and the taxes we owed on April 15th were not what we’d been expecting. When she finally got the words out, my chest felt like it might rip into two pieces. We owed $58,000 in taxes that we hadn’t planned for.

We’d failed to understand the tax implications of selling some stock back in New York, and we hadn’t set aside enough money. So when the tax bill finally arrived, the money we owed the IRS was sitting in our driveway on eight wheels.

For the next year, every bonus check I earned went straight to the tax bill.

I thought about my dad’s wisdom (that I’d so confidently dismissed). He’d been talking to me about financial literacy since I tossed that nickel on the ground. Trying to drill into my stubborn head that there’s a difference between what you can possibly afford and what you can position underneath you, in case something breaks. That a luxury lifestyle is meaningless when the worst kind of financial surprise arrives unexpectedly.

How could I have allowed this to happen?

My dad has never found himself in a surprise financial crisis. Not because he made more money than we did. He just never got caught up in raising his ceiling instead of building his floor.

Many people who appear wealthy have built an impressive ceiling. Sure, the income and the lifestyle and the success is probably real. But the floor underneath might be a lot shakier than they’d want to admit.

Because raising the ceiling is the “fun” part, the part that makes you look wealthy and feel like you’ve made it. And in today’s world, that’s what seems to matter to most people.

Floor building is boring. And nobody can see that stuff. You can’t see the peace of mind that comes with absorbing an unexpected bill without panic. And you don’t see what happens when the market tanks and the floor builders see a buying opportunity, while the ceiling builders freak out about their portfolios.

Neither lifestyle is inherently “wrong.” Building a ceiling feels like the whole point when you’re working hard and earning well. It’s human nature to compete and play status games. Jennifer and I were those people. But I feel fortunate that we got knocked for a loop earlier rather than later in our journey.

After that year of bonus checks going straight to the tax bill, we started thinking about our lifestyle and our earnings differently. We stopped spending to show off and started working to protect the money we had and to protect our peace of mind. And slowly, over time, we started feeling something different. Like we finally had room.

Room to breathe and to make decisions without fear being the driving factor. As I launched my own business, I had room to say no to the wrong client or to walk away from things that weren’t working. When we eventually moved to upstate New York, we bought a house we could easily afford, which meant less stress. And once we finally had a sturdy floor underneath us, it changed everything about how we operate.

That’s what building a floor actually buys you. Optionality. And the freedom to make choices that aren’t driven by panic.

I still remember throwing that nickel on the ground and my father marching me into the car over it. Back then, I thought he was being ridiculous. Thirty years later, I was handing over bonus checks to cover a mistake I absolutely could have avoided by simply listening to him.

Most people don’t realize the importance of building a floor until something goes tragically wrong. And by then, of course, it’s too late.

I share our financial learnings because I notice so many people talk about making money. But there’s not enough focus on taking care of the money after you make it. And that’s been one of the most important lessons Jennifer and I have learned on this journey. It’s really the crux of success to be responsible (to yourself and your family) with the money you manage to make in your work.

So this week, I’m asking you to look down. Not at the version of your life that photographs well, but at the floor underneath it all. If something breaks tomorrow, will it hold? Nobody will ever compliment you on your floor. But you’ll feel it every single day.

That’s all for this week.

See you next Saturday.

Cheers,

Justin Welsh

P.S. If you enjoyed this, a Restack would be the kindest compliment you could pay. Have a great weekend.

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