financial independence

Five Signs of a Financial Fraud

Ana Sorokin fooled even New York’s elite…

Call them poor, call the “pre-FI” – but don’t imitate the behavior of these closet financial fails

Shakespeare once said “the world’s a stage”. And today, in the age of Instagram, Facebook, and 24 hour media saturation, the phrase has never been truer. People live their lives in a more public way than ever, often constructing a narrative that is very far from the truth. And one of the biggest subjects of these false narratives concerns financial status.

Some people are financial frauds, desperately trying to signal financial success when they in fact have nothing. I don’t have a problem with this per se (they all have their reasons). But modeling your behavior after a financial fraud can have dangerous consequences. Do what they do, and you may find yourself as broke as they are.

That’s why I’ve put together a helpful list of secret signs of a financial fraud. See if you recognize them in your colleagues, friends… or yourself.

  • They travel a lot – they always seem to be traveling, but within very specific parameters. They usually “stay with friends”, and favor emerging market countries with rock bottom costs of living. They also prefer hubs of airlines like Frontier, Spirit, and Air Malaysia. Which leads me to my next point…
  • They post a lot… but very selectively. There seems to be a pattern from all their posts from Iceland, Bali, and Mexico. En route, they rarely post selfies from the plane except when upgraded to business class. They certainly never post pictures of their hotel room – only the ocean view which can be seen from some indeterminate vantage point – perhaps the edge of their balcony or the hotel’s roof?
  • They brag about their rich and famous friends: financial frauds always seem to have spent the weekend at a friend’s palatial mansion, where they have inevitably encountered people whom they believe are very impressive and noteworthy. The connection with their wealthy friends always seems vague – but they are invariably vastly more attractive and young than these “friends”, seem to behave as their go-fors, or some combination of the two.
  • You can’t quite tell what they do for money: whenever it takes several paragraphs to explain someone’s vocation, that’s a red flag. Financial frauds never seem to have “normal” jobs that would typically fund their claimed lifestyle, such as doctor, lawyer, engineer, etc. I once had a friend who described he and his wife’s vocation as “bringing people together”.  They were always broke.
  • They don’t appear to own anything: despite their exquisitely fabulous lifestyles, these folks seem to have avoided the trap of owning anything of value. Perhaps they are dedicated socialists and feel that only the state should own property, or for that matter cars or decent furniture. That’s why they rent, lease and shop IKEA.

Now there’s nothing inherently wrong with a person that is poor, broke, whatever. Most of us have passed through (or are still working through) this phase. I just have a problem with people that create and publicize false financial narratives. They can be insidious in many ways. Those that believe their false stories may imitate their bad behavior. Or they can discourage others from doing it right, causing their friends to wonder why “everybody” else seems to be living it up while they endlessly scrimp and save.

That’s why it’s so important to identify financial frauds. And if you do see anyone with more than one behavior listed above, maybe you can take them aside and talk to them about the path to real fiscal health. And make an honest man/woman out of them yet!

Have you or any of your friends exhibited any of the above behaviors (even I have!)? Tell me about it in the comments below.

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