A couple weeks ago my friend Rachael Camp had a great post that shared the ways she viewed if she was wealthy. Some of her examples were:
- Could live in a high cost of living area
- Eat healthy foods
- Travel 3-4x a year
And the post ended by saying “looking at wealth as a lifestyle you can afford (instead of a number) is a game changer.”
This is one of my favorite posts I have read in a long time.
Way too often people define wealth by an arbitrary net worth number. The most common one I see with my clients is reaching $10 million net worth.
But this is dangerous thinking.
The goalposts are always going to move. $10 million actually means nothing, it is just a cool goal for people to say they hit. And once they hit that number, they will just pick a higher number. This will continue on and on and on. And then they will continue to be unhappy and focused on what is next.
So what is the better approach?
Thinking of the lifestyle you want to live just like Rachael did. The most common one’s my clients mention are: sending kids to private school, going on 1 international and 1 domestic trip a year, being able to make it to all your kids events, being able to pay for their kids educational expenses, etc.
I highly recommend everyone do this exercise. Think about:
- What matters most to you
- What you want your life to look like?
- What makes you the most happy
And then you can back track into what income level you need to accomplish that. This can be so powerful and help guide you through making tough decisions.
But do not forget that you need to also include savings into this so you can build up assets to continue to live that lifestyle in the future.
For me, I am wealthy if I can:
- Go out to fun dinner every weekend and not pick the place based on price
- Never say no to experiences with friends and family due to money
- Focus on my health: eat healthy foods, go to a nice gym, get massages, etc.
- Allow my spouse to pick what makes her happy. Where she does not need to work just to work.
Do this with your family today! It is such a powerful exercise.
Disclaimer: None of this should be seen as advice. This is all for informational purposes. Consult your legal, tax , and financial team before making any changes to your financial plan.