“Rich” is as subjective as “happiness” — it means different things to different people. However, there are a few basic indices of wealth that relate to all.
Perhaps you believe it means being in the top 1% of earners in some of America’s richest cities. Perhaps it means being able to afford a flashy mansion or spending your life hopping from one luxurious holiday to the next.
Former investment banker Kristin Addis, on the other hand, told Insider that earning about 40% of her previous six-figure salary while travelling the world made her feel richer. Nick and Dariece Swift, who both quit their employment to make a fraction of their previous salaries, said they’re happier working for less money. The self-made millionaire stars of “West Texas Investor’s Club” believe that their relationships are more important than their wealth.
Finally, “rich” is as subjective as “happy” — it means something different to everyone. However, no matter how you look at it, there are a few fundamental signs of wealth.
“Most people don’t know that it’s not about how much money you earn in life. In his book “Rich Dad, Poor Dad,” Robert Kiyosaki writes, “It’s how much money you keep.”
Money, in the end, does not fix financial problems; in fact, it often aggravates them. Consider lottery winners who lost everything in a matter of years or professional athletes who made millions in their twenties only to go broke.
“Money always highlights our tragic human shortcomings, shining a light on what we don’t know,” Kiyosaki says. “That is why, all too often, anyone who receives a sudden windfall of cash — say, an inheritance, a pay rise, or lottery winnings — quickly finds themselves in the same, if not worse, financial situation than before.”
You can survive comfortably on a budget.
One of the most important tenets of responsible money management is to spend less than you make, regardless of how much you earn.
Anthony Hsieh, a self-made billionaire, told Insider that his parents, who immigrated to the United States from Taiwan, taught him to work within his means.
He claims the habit has helped him a lot, and it’s one of the reasons he’s flourished and thrived in consumer lending for 30 years. “I’ve worked in consumer lending for four economic and housing cycles, and I’m always at the table as a key executive. Part of it, I believe, is my discipline in ensuring that the business and I do not overspend.”
If you’re already doing it, living within your means might not seem like a big deal, but not everyone does. According to a 2019 study by GOBankingRates, a third of Americans are living paycheck to paycheck.
You’ll be able to afford the things you really want in the end.
Most people would consider you wealthy if you could buy a yacht in cash today. However, if you can buy the same yacht in five years after setting a savings target and putting money aside on a monthly or annual basis, guess what? You’re most likely already wealthy.
Survey after survey shows the same depressing finding: Americans aren’t saving nearly enough. According to the same GOBankingRates study, 45 percent of respondents did not have any household savings, and an estimated 40 million households do not have any retirement savings at all.
This leads us to the next topic we’ll discuss.
You’ll be able to afford to retire anytime you like.
It is costly to retire. According to experts, you’ll need to substitute around 70% to 80% of your current salary in order to live comfortably in retirement (although that number is disputed). Even if you’ve downsized and maybe even moved to a low-cost-of-living location, retirement is still a long period of living on little or no income.
The standard “retirement age” is 65, but this is changing as more Americans discover they can’t live 20 years or more without a paycheck. According to a study released by the Bureau of Labor Statistics in 2019, almost 20% of Americans aged 65 and up are still employed.
It’s a blessing to be able to retire whenever you want.
You aren’t driven solely by financial gain.
One thing that self-made millionaires and those who research them have in common is that they appear to concentrate on something other than the dollar signs: they’re solving a dilemma, pursuing a passion, or trying to expand their business as much as possible.
That in itself is a luxury. You can bet that if you can’t make ends meet, you’ll be focused on the dollar signs rather than the analytical satisfaction of your career.
This isn’t to say you can’t be pleased to earn a good salary or be excited to see your investments rise, but money isn’t your primary motivator or source of pleasure. You’re in good shape if you have the luxury of concentrating on something other than money.
Money is an ally to you.
Self-made millionaire Steve Siebold writes, “Most people have a dysfunctional, adversarial relationship with money.” “After all, we’re taught that money is scarce, that it’s difficult to come by and much more difficult to hold. Stop thinking of capital as an adversary and start thinking of it as one of your biggest allies if you want to start attracting it.”
According to Siebold, affluent people raise more money because they aren’t afraid to accept that money can fix most problems: “[The middle class] sees money as an endless unavoidable evil that must be suffered as part of existence.” Money is seen as the great liberator by the world-class, and with enough of it, they can buy financial peace of mind.”
You’ll be ahead of the curve if you don’t fear capital and instead see it as a friend and a weapon to help you reach your goals.
You are not stranded.
In her novel, “#GIRLBOSS,” Sophia Amoruso, a self-made millionaire, and founder of NastyGal, wrote, “What I have learned over time is that money spells freedom in many ways.” “If you learn to manage your money, you won’t be trapped in jobs, places, or relationships that you don’t like just because you can’t afford to leave,” she said. … Being in a good financial position will open up a lot of doors. They will slam you in the face if you’re in a bad spot.”