Imagine that you attend your 20-year school reunion and are catching up with old friends. You speak to John, who tells you that he earned a three-year qualification in mechanical engineering and now owns an engineering workshop. You also speak to Steve, who studied for 14 years and is now a specialist physician with his own medical practice. John was an average pupil and Steve was the dux in your matric year. Who of the two is likely to be wealthier?

Studies have shown that John, with his engineering workshop, is likely to be wealthier than Steve. There are a number of reasons for this interesting situation. The first is that John started generating an income after studying for three years, whereas Steve had another 11 years to go before he started to generate the income of a fully qualified specialist physician. John saved money during those 11 years, whereas Steve spent most of what he earned while he worked and studied to complete his qualification.

Let’s say that, once he is fully qualified, Dr Steve generates an income three times that of John’s and they both save 10% of their income. Once he starts working, it will take Dr Steve 10 years to catch up with John with his engineering business. They will have been out of school for 24 years before Dr Steve catches up with John.

In reality, it will probably take longer. Dr Steve will not be able to save 10% of his income from the start of his career, because he has to pay off student debt, and he will probably incur more debt to set up his private practice.

Ultimately, Dr Steve’s superior income will enable his wealth to catch up with, and eventually overtake, the wealth of John the engineer.

But there is another obstacle that Dr Steve must overcome before he can achieve that. This has to do with the status ascribed to Dr Steve. Doctors and other people with advanced degrees are expected to fulfil the role of an upper-class citizen. John the technician would not be out of place in a modest home with a nondescript bakkie or sedan. It costs John less to maintain his standard of living than it costs Dr Steve to service his high-status lifestyle.

Professionals often say that society expects them to live in expensive homes, wear expensive clothes and drive expensive cars. We judge a book by its cover, often judging professionals by their outward appearance rather than their net worth. And unfortunately for them, the pressure to maintain an impressive outward appearance can impede their ability to grow their wealth.

Another disadvantage of living in an affluent neighbourhood is that you are bombarded with cold-calls from so-called investment experts. In a survey by the authors of “The millionaire next door: the surprising secrets of America’s wealthy”, some professionals said they had bad experiences with these cold-callers, to the point where they would no longer invest in equities, thus further impeding their prospects for growing their wealth.

Research shows that people who spend on luxuries tend not to be price sensitive to most things, but, ironically, they are very price sensitive when it comes to paying for good legal and financial advice that would help them to get ahead.

Successful wealth accumulators, on the other hand, are price sensitive to most things, but less price sensitive when it comes to paying for services that will help them to control their family’s consumption. They will also happily spend good money on legal and financial advice, which they know will help them.

Surveys show that, the more time you devote to purchasing of luxury items, the less likely it is that you will become wealthy. The reason is that time and energy are finite resources, and research has shown that, when you allocate a lot of those resources to researching and purchasing big-ticket items, you have less time to plan your investments. This sounds obvious, but what is not so obvious is the inverse correlation between the time spent on buying luxury items and wealth accumulation.

Many purchasers of luxury cars spend a disproportionate amount of time researching (sometimes for months at a time) a particular vehicle before buying it. If they had spent even 25% of that time planning their investments, they would be much wealthier today.

Such buyers often argue that they bought the vehicle at cost, or below cost, but because they paid as much for a car as many people do for a house, they are massively out of pocket despite the discount.

It’s all a question of focus.

Paul Leonard, who holds the Certified Financial Planner accreditation, is the Eastern Cape regional head of financial services company Citadel.