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What is wealth?

Barron's cited a survey from Charles Schwab where respondents decided that $2.2 million is the dividing line for being wealthy. Do you have that much? Is is likely that you will? Do you really need that much though? I've long been more concerned with the idea of freedom, financial and otherwise, than monetary wealth.

    1. A parable from me

    Who is wealthier, the man who makes $20,000 and lives like he makes $10,000 or the man who makes $100,000 and lives like he makes $200,000?

    "People who live below their means have a wealth that others cannot imagine" Paraphrasing Naval Ravikant.

    2. Live below your means

    Low hanging fruit here is to live in less house than you can afford (and get a 15 year mortgage) and drive your cars long past the point of they're being paid off.

    Having a small monthly nut is a form of wealth.

    3. Don't make a hobby out of buying stuff

    Of course we all need things but we probably don't need to buy a lot of stuff. There are things that we should not cheap out on, for me that includes tools and footwear. Most of my clothing needs can be very inexpensive, the few dress shirts I have came from Ross or TJ Maxx for example and I only have two suits and they are both more than 20 years old (that they still fit is a good indicator for health which is addressed below).

    No, or very little clutter is a form of emotional wealth.

    4. Don't aspire to own stuff

    I am a car guy. I am a motorcycle guy. I have never had a desire to buy expensive cars or buy a motorcycle or other toys along these lines. I enjoy taking pictures of expensive vehicles but assign no personal value to having a Porsche in the driveway and would derive no validation by owning something expensive like that.

    Not being consumed by the desire for expensive things is a form of emotional wealth.

    5. Health is wealth

    First the literal application which is you're not spending money on medication or on co-pays for many doctor visits.

    More qualitatively, if you are fit enough and able bodied enough to do what you want to do, that makes for a better, richer life. If you are fit enough and able bodied enough to do what you might have to do (some sort of work past the age you expected to work), that might make for an easier financial life.

    The right combination of habits and it is very likely you'll have a similar body shape as you did in your 20's.

    Having your health is wealth.

    6. Time is wealth

    As companies are now starting to recall workers back from work from home, some workers are pushing back on the idea of going back to the office. I've been working from home since late 2003 and I cannot envision the scenario where I would be willing to give up the freedom, the autonomy of having complete ownership of my schedule. Owning my time is a huge priority for me, much higher up on my list than how much money I make.

    Owning your time is wealth, it is freedom.

    7. You do need some money

    A quote attributed to Woody Allen is "there's no problem where more money made it worse." Ideally, you'll have some sort of emergency fund, a retirement account and no debt.

    Maybe don't think in terms of one big income from a job, maybe instead think about building multiple streams of income.

    8. Be able to deal with adversity

    Occasionally, bad things happen. Don't wait for bad things to happen to then figure out what to do. Do you work? What would happen if you lost your job (applies even if you're self employed)? Figure out your Plan B now.

    9. Summary

    • Live below your means
    • Stay healthy
    • Own your time
    • Be resilient

    Do all these and you're probably wealthier than you realize.

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