I woke up this morning with the following tweet on my twitter timeline. The message is that the wealthiest people didn’t get rich on a monthly salary. It got me thinking.
How do we define “rich” and who really are “rich”?
In the list of Forbes wealthiest 500, you will only find entrepreneurs and early investors in successful enterprises. The narrative is true that nobody got rich living pay-check to pay-check. But aren’t “wealthy” and “rich” relative terms?
When can you call yourself rich?
At what moment in their life does one meet the criteria of being rich? Do they compare their net-worth to someone else’s net-worth? Or do they compare their current net-worth to their past net-worth?
How does one measure richness? There is no true measure. Rich is truly an ambiguous term and is not limited to money. Money is just a means to get through life. Money is bleh.
Being rich is relative to the current situation of a person.
For the homeless, the man who owns the hut is rich. For the owner of the hut, a man who owns an apartment is rich. Each person has their own perspective and definition of the rich.
Types Of Rich
The Happiness Index Rich
I developed my own happiness index to measure richness. The higher the index on a scale of 0 to 1, the richer you are. Derek Sivers fits perfectly in this category as he considered himself financially free at the age of 22 with just $1,200 in the bank and set out to do what he loved. He never worked for money again.
The Salaried Rich
Take the case of one of our community member who has been in a salaried job for almost two decades now and has a net-worth of $2.2 million. He has never earned more than $100k in a year but has ended up rich through disciplined investing. He has no regrets whatsoever. He has a wonderful family. He has lived below his means and has spent almost the same amount of money each year for the last decade.
I Don’t Know I Am Going To End Up Rich, Rich
There are some people who accidentally die rich. They never believed that the actions they took with their modest salaries would one day make a fortune. They never thought that they would leave millions of dollars to charity and their kin.
Take the example of Grace Groner who lived nearly her entire life in Lake Forest, Illinois, about 45 minutes north of Chicago. After graduating from Lake Forest College in 1931, Grace was hired as a secretary at Abbott Laboratories, where she worked for more than four decades. Grace never earned an amazing salary as a secretary. According to the Los Angeles Times, she got her clothes from garage sales. She lived in a one-bedroom house that was willed to her when a friend passed. But in 1935, a few years after she started her job at Abbott Labs, she bought three shares of the company’s stock for about $60 per share. Her total investment was under $200.
Grace never sold those shares. Through dividends, share splits, and dividend reinvestment, when she died in 2010, her three share purchase was worth $7 million.
The Time Rich
There is no fun in being money rich and time poor.
One of the best kind of richness is being time rich. Have enough time to do whatever the hell you want without any hurdles. No nonsensical meetings or staring at a camera for hours everyday. No spreadsheets to fill up or emails to send.
In a book titled “The Five Regrets Of The Dying“, Bronnie Ware captures her findings on the top five regrets of the Dying –
1 — I wish I’d had the courage to live a life true to myself, not the life others expected of me.
2 — I wish I hadn’t worked so hard.
3 — I wish I’d had the courage to express my feelings.
4 — I wish I had stayed in touch with my friends.
5 — I wish that I had let myself be happier.
The Financially Independent Rich
Another most popular way of becoming time rich, money rich, and increasing your happiness index is through financial independence.
You accumulate enough money to last a lifetime. You are free from the shackles of earning money to live a life. Once you are free, you immediately become time rich and your happiness index increases dramatically.
The Windfall Rich
You get rich by a windfall gain accrued either through inheritance or through lottery. However, studies have shown that as many as 70% Americans who experience a sudden windfall lose that money within a few years. This is not unexpected.
Money is like a magnifying glass. The habits you had before you became rich are magnified after you become rich. A gambler will only end up as a rich gambler. And a philanthropist will end up as a rich philanthropist.
What Kind Of Rich Do I Want To Be?
I really do not care about having millions of dollars sitting in the bank. All I want is enough.
Here is my checklist –
a. Have enough money to last a life time.
b. Live a decent and frugal lifestyle.
c. Have enough time to read as many books I want.
d. Enough time with family.
e. Ability, time and the will to do one hard thing every day.
f. Write everyday. Teach everyday.
When do you think you would call yourself rich? It’s an interesting question to contemplate.