One of the largest myths is that wealth comes by achieving a certain milestone. A six-figure salary. A million-dollar net worth. From a more mathematically sophisticated perspective, a Financial Independence number that would allow you to live off only the interest of a principal, assuming 4% annual returns (give or take, based on your risk tolerance).
While all of these are terrific financial benchmarks for financial goals pushing us towards a more responsible financial future, achieving any (or all!) does not suddenly make you wealthy. Even achieving your FIRE (financial independence, retire early) number and happily 4%-ing into the future does not equate to wealth.
Wealth is a mental state of peacefully feeling you have enough. Enough time. Enough choices. Enough freedom. The path to get to wealth, and the dollar value at which different folks realize wealth, varies significantly.
Why Aren’t I Wealthy?!
What stands in the way of achieving wealth? Folks in the modern world tend to lament, “If I just had a small salary raise, life would get so much easier.” Then they get the raise. In the subsequent joy, they lock in a new expense, like a new or higher car payment, and end up in the same financial situation, lamenting for another small raise.
That is lifestyle inflation. As a person’s salary goes up, that person raises the bar for what will make them happy. Each income increase leads to new happiness benchmarks, preventing ever reaching that blissful state of wealth.
“Keeping up with the Joneses” often prompts this lifestyle inflation. The “keeping up with the Joneses” concept refers to seeing a purchase someone else made, usually one that never interested you before, and feeling enough relative deprivation to encourage you to desire or even make a similar purchase.
This materialistic cycle can start with innocuous purchases: Your sister bought a new blender that expedites her food prep. You have a blender, so you do not need a blender, but you want this new blender to save time and effort! While that new blender is not going to shatter your budget, eyeing your neighbor’s Ford F-150 may. Continuous envy of neighbors’ purchases can also send you down a path of wasting money on frivolous spending. They redo their patio, so you redo your patio. They buy a golf cart, so you buy a golf cart. They add bright green lights to their Ford F-150’s tires so they light up and look cool, and now you want to do the same. Make it stop!
Finding Wealth
I recognized that I had hit wealth when my mom asked me if I was having a good birthday on my birthday last year. We were in Boston, on our way to see a Red Sox game. My answer to her was, “Yes, but it does not feel out of the ordinary. I really enjoy every day now.” At that moment, I realized I am truly wealthy: I no longer live for a one-week vacation each year or the rare joyful event. Instead, happiness and fun are the driving factors in my life, and work and obligations fit around them. I have pieces of complete bliss each day, whether it is escaping to the pool for an hour, playing rugby, or catching up with a friend. To me, this is wealth.
While there are certainly material things, like our condo’s pool, that facilitate feeling wealthy, the most important aspects center around achieving a more relaxed emotional state. While this does not mean having a certain amount of money, finances certainly contribute.
Eliminate Financial Stress
Keeping up with the Joneses usually requires going into debt. The car loan on the new Ford F-150 is not small. But here is the real crazy part: The Joneses, the folks you are trying to keep up with by spending all your money, are also in debt! You just think they are doing well because of their new car, deck, motorcycle, kitchen island, outdoor lighting, fancy clothes, or whatever.
Instead of buying something because the Joneses have it, learn what truly makes you happy. That is what you need to buy. Once you have it, enjoy it. Do not worry about what else you could have. Enjoy whatever it is that gives you the most joy. We bought a condo that has pool access, and the hours I spend by that pool give me the most joy. I do not worry about the building that also has a hot tub. My pool is what I want, and it is perfect. The Joneses can have their hot tub.
In a world of advertisements selling you the “30 Most Useful Things You Didn’t Know You Needed on Amazon” (Don’t click the link!) and targeting your preferences, teaching yourself that you are content with what you have is difficult. But it is worth it. You only have time to truly enjoy what gives you the most happiness if you stop making other less important purchases.
Control Your Time
After breaking free from the financial rat race, the restrictions of employment and other obligations remain the other hindrance to true wealth. Candidly, controlling your time does not happen overnight, and it requires some work. Establishing yourself as a reliable employee to your employer or service provider to a client takes consistency and rapport. Build it as fast as you can because it is worth it.
Make yourself reliable while setting clear boundaries. If you own a business and only want to work four hours on Mondays and Thursdays, but you deliver the best services on the market for four hours every Monday and every Thursday, you will receive continued demand while controlling your time. If you are an employee, sign off when your paid day is over and carve out the times you need for yourself while delivering high-quality work when you are available. Few people consistently produce high-quality work. Make yourself elite, and spend the remainder of your time free.
Achieve Freedom, Achieve Wealth
The combination of escaping financial constraints and time constraints is the freedom I call wealth. Wealth is feeling content in your life, as it is, every day. It is never feeling you lack the means to create your happiness. It is never feeling like you lack the time to enjoy your life. It is having the freedom to choose the path that gives you joy each day.
This freedom has no number. Your financial portfolio may decline on the day that you realize you are wealthy because wealth is an emotional state of being. Wealth is when you are free to make the choices to maximize your happiness without the constraints of time or money.
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