Wealth means different things to different people.
Some people assume wealth is the amount of money you have in the bank or your investment portfolio. Others judge wealth based on the number of material possessions you’re able to buy. Then there are those people who figure only those with a high enough income can be considered rich.
What constitutes a rich life really depends on your relationship with money and what matters most to you in life. There are many ways to become wealthy that don’t involve money. Being content with what you have is a sure sign you’re living a rich life.
When you’re content, a number doesn’t matter as much as your mindset.
Take this headline from this weekend’s Wall Street Journal:
Millennials haven’t always had it easy. Many had student loans, stagnating wages and a difficult job market to deal with following the 2008 financial crisis. So I get why some people are gunshy:
Many of these workers may have struggled with stagnating wages and huge student loan debts earlier in their careers. Some worry they’ll mismanage this boon and forever ruin their chance at financial stability.
“These individuals completely feel and understand and recognize the pain of the last year, but now they’re being given an opportunity to come out of that,” Mr. Vakil said. “They’re saying, ‘This is my one chance.’ They’re taking it with both hands. They don’t want to mess it up.”
Sure, you don’t want to make unnecessary mistakes but the whole point of wealth is that it’s supposed to make your life less stressful. For many it seems building wealth only intensifies their worries.
Look at this headline from MarketWatch:
This person has a net worth that puts them in the top 5% of all Americans and yet they still have trouble sleeping at night because of financial worries. Here’s the kicker:
I have had a good career in technology and make about $300,000 a year. We max out all retirement vehicles and we have zero debt aside from our primary residence. We also have approximately eight rental income residential properties that net us about $6,000 per month after all mortgages and expenses. Passive income, if you will. Our monthly target expenses are about $10,000 to $12,000 on the high end.
They own eight rental properties. Eight!
Now could this person screw it all up by taking some avoidable risks? Yes, that’s always a possibility. But it sounds like they have things well under control when it comes to their finances.
I understand some people are more prone to anxiety than others. This is true of money and anything else you’re dealing with that involves uncertainty about the future.
There is always going to be something to worry about when it comes to building or preserving wealth.
What if the market crashes and doesn’t come back?
What if inflation is much higher than expected?
What if I lose my job?
What if the economy goes into a terrible recession?
What if I pick the wrong investments?
What if I’m not saving enough?
What if I’m saving too much?
You can drive yourself crazy going down the rabbit hole of potential financial landmines.
I guess my point here is that after a certain point you just have to control what you control and then let the chips fall where they may. If you have a good handle on your spending, live below your means, max out your retirement contributions to the best of your ability, diversify your investments and plan ahead for your financial future, that’s about the best you can do.
From there you make course corrections along the way but all of the others risks are out of your hands. You simply can’t control everything.
There is nothing wrong with striving to do better and improve your lot in life. But if you can combine the desire to do better with the ability to be content with what you have, that’s the sweet spot.
The person with six figures in savings who is comfortable with their place in life and grateful for what they have is far wealthier than the person with tens of millions of dollars but the inability to enjoy it or stop worrying so much about status and money.
Nick Murray said it best in Simple Wealth, Inevitable Wealth when he wrote, “No matter how much money you have, if you’re still worried, you aren’t wealthy.”
How Much Money Do You Need to Make to be Considered Wealthy?