It is an interesting question to ponder. What is wealth? What truly defines someone as wealthy and am I wealthy?
Upper-Class Versus Wealthy
My Early Perspectives on Wealth
When I was young I defined wealth by the amount of money people had. Wealth and Upper class were synonyms in my mind. Then again my world was defined by some fairly tight boundaries. The wealthy or upper class where I lived were doctors and lawyers. The handful of doctors and lawyers towered over most of the rest of the community who were laborers and tradesmen. A doctor was the upper bounds of what was possible outside some abstract article about someone like Warren Buffet.
Having Money is Relative
Contrast this with my wife’s upbringing. She went to a private school where many “Wealthy” Parents sent their children. Their definition of financial wealth was a far cry from my handful of doctors and lawyers. The concepts of private airplanes, horse racing, a house in the tropics, and other things you are unlikely to see your average doctor or lawyer affording come to mind. So at least with respect to money, having money is relative. But is wealth really just a number?
Wealth and Large Amounts of Money are Not Synonyms
As I left the sheltered world of high school I was exposed to ever more financially well to do individuals. These days I know people that have sold businesses with payouts in the multiple 9 figure ranges. But here is the thing, I learned along the way wealth as defined without the adjective financial is something different entirely. Many of these same individuals I would not call wealthy.
1 Million Versus 100 Million
Sure, the life and activities of someone with $100 Million are a lot different then someone with $1 Million. For good reason. $100 Million affords a lot of mistakes, you can afford to be inefficient with your money. $1M or even $3M requires conscientious spending per your values. But at least by default neither someone with $1M or someone with $100M is wealthy.
Abundance and Wealth
You see there is a second aspect to the definition of wealth. That is having an abundance. The thing with abundance is, it’s not just a number. Abundance is also a mindset. A belief that something is plentiful and therefore not scarce. When done right that belief is ingrained in everything a person does. It changes their culture, their perspective, the way they spend their time, their goals, and their happiness. That is what wealth really is. It’s also what makes it most people’s goal in some form or other.
A Readers Comment Case Study
Let’s relate this back to some comments from a while back. When I wrote my post on the middle-class reader Dan commented that his parents were financially well off. Yet despite their financial “
Here is the thing, Dan’s parents had money, but they didn’t have abundance. Their obsessions with every purchase were keeping them from feeling like they could sit back and enjoy life. In my view, his parents were simply not wealthy. They also never will be unless they shake this feeling and behavior.
Saving is Not The Goal, It is a Tool
I see the same with some who pursue FIRE. There is a tendency to save until the point where saving itself becomes the point of life. Actions like No spend Challenges devolve into not flushing the toilet to save a few bucks a month. Saving 50% of your salary gets lamented as too slow. It becomes a great big keeping up with the Jones moment but in reverse.
You Can’t Practice Extreme Frugality and Be Wealthy
Well here is the thing. There is nothing wrong with Frugality. This is especially true if you need to dig yourself out of some giant debt mountain or you are getting a really late start. Even if not in debt, being relatively efficient with your money is important. But I’ll be honest with you. Extreme frugality over the long term by definition means you will never be truly wealthy.
If you obsess over every purchase from now to the sun comes home you will never feel that money is abundant. Your actions and beliefs will hold you back. You probably won’t even enjoy yourself. You certainly won’t be wealthy in the context of abundance.
Forever Chasing the Next Larger Paycheck is Also Not Wealthy
I am picking on extreme frugality as an obvious target here. However, I’ll be honest the same risk applies to the other side of the coin. One can forever chase the next bigger paycheck. Done to extremes though one falls into the same trap as the individual with the spending neurosis. You would end up chasing the money rather than enjoying the abundance. Again that is not really wealthy. Note: This is not to downplay the positives of ambition, but it is to say there should be limits.
In All Things Moderation
Like everything else in life, Moderation is the key. Efficiency in money is to be praised. Obsession in money is something to be avoided lest you be kept from ever being truly wealthy. That would be a shame as abundance is one of the key lynchpins in finding maximizing happiness. I think we can all agree happiness is what we all strive.
Are you Wealthy? Do you agree with my definition?