The problem with wanting to become rich is that there’s no good definition.
If you live in an apartment, you think that homeowners are rich. Us homeowners think that the people who live in mansions are rich. The mansion dwellers think that Oprah is rich.
And Oprah…well, I really hope that Oprah knows she’s rich.
But the very real question you need to grapple with is what makes you so sure you aren’t rich right now? After all, if you’re reading this, you’re doing so on a very powerful device and apparently have some free time.
You’re probably wealthier than most of the people on the planet and you’re certainly wealthier than most of the people who have ever existed.
It makes more sense to think of objective markers for wealth, preferably ones that are meaningful instead of arbitrary milestones like being a millionaire. Here are a few that make sense:
- Freedom from debt/having a positive net worth
- Spending less than you earn
- Financial Independence: Having passive income sufficient to cover living expenses
Pursuing these levels of wealth is a worthwhile journey, and wealth comes with significant benefits. Here are six that I think are important, and some of them might already apply to you:
1. The Ability to Give Back
I am not a self-made man. You are not a self made man (or woman). Every one of us was able to develop into who we are thanks to the patience and instruction of countless guides and teachers.
You may have put in a lot of hard work to get where you are, but you also got a lot of help.
It’s past time to pay it forward.
This is a benefit of being rich that you have the ability to start exercising right now. Unless your debt burden is severe, it’s even possible to start giving while you’re still in debt.
You may not be able to give a lot, but a little giving can go a long way. It only costs $38 a month to sponsor a child through Compassion International.
2. The Freedom to Pursue What Matters
Money is important because it’s the currency with which society interacts with each other. But there are plenty of things that are more important, such as family and community.
Achieving the level of financial independence lets you invest more of your most precious resource (time) into strengthening the relationships that matter most.
I like to think about the story of the personal finance blogger Mr. Money Mustache. The thing that everyone pays attention to is the fact that he retired in his early 30’s. While that’s impressive, the part that always stuck out to me was the fact that he retired before his son was born.
I actually believe that you should get married and have kids well before the average person does, and I acknowledge that retiring before having kids won’t work for most people. But it’s an amazing concept.
On the flip side, you have to be careful that the pursuit of money doesn’t distract you from what’s important. It would be a real tragedy to so obsess over building wealth to gain the ability to spend time with your family that you end up neglecting your family like the dad from Harry Chapin’s “Cat’s in the Cradle” (one of the best songs ever).
3. Control Over Your Time
Your most precious resource is time. As the (fictitious) philosopher Tyler Durden said, “This is your life, and it’s ending one minute at a time.”
I recently went back to work after almost a year and a half of working from home. There we’re a few positives like getting to see people, but completely handing over eight hours to my job felt a little like prison. Not a lot like prison, just a little.
When you gain freedom from employment, you have control over how you spend your time.
If you’re wise, you’ll still work. But you’ll get to choose projects that seem meaningful to you. You’ll get to choose ways of working that make sense to you. No more being chained to your desk in case the boss is watching. If you feel the most productive thing is to go on a long walk to clear your head, you can do it without having to justify yourself.
This is a freedom you can enjoy if you have enough invested to retire, but it’s also a freedom you can create through becoming self-employed. The ability to find profit without a traditional job is a door to far more freedom than the world of 9-5 has to offer.
4. Freedom From Worry
This one is part money, and part psychology.
The objective fact is that the stronger your financial situation becomes, the less you have to worry. But your subjective experience will be that you can worry when there is danger and you can worry when there is safety.
On the objective side, when you are free from debt, you don’t need to worry about things like losing your house. As Dave Ramsey says, 100% of the houses that are repossessed carry a mortgage.
When you spend less than you earn you can start investing and building an emergency fund. Not only does the emergency fund provide a buffer against life’s catastrophes, but just the fact that there is a gap between what you spend and what you earn is a margin of safety.
When you achieve financial independence, you no longer have to worry about losing your job or about how much active income you pull in this year. Any active income at all is just gravy when you have enough to never work again.
5. The Ability to Broaden Your Horizons
One of the things that you can do with extra time and money is to see more of this giant planet that you live on.
Travel isn’t the secret hack to a meaningful life, but it carries certain benefits.
I learned from a book called Off the Clock by Laura Vanderkam that one of the dangers of working a job year after year is that time gets lost in a “memory sinkhole.” All those commutes become one commute in your mind. All those meetings blend together like the colors on the dirty carpet.
New experiences force you to pay attention to where you are. You can’t cruise by on autopilot while secretly worrying about something else because you have no invisible scripts to help you navigate your current environment. This focus allows you to create deeper memories and to help slow time down (in a good way).
It’s important to remember that you are really three people:
- The remembering self
- The experiencing self
- The anticipating self
These three “selves” refer to your relationship with the past, present, and future. A well executed travel adventure can enrich all three selves, as you have the trip to anticipate, the novelty to capture your attention, and the memories to savor.
Of course, chances are you’re already rich enough to travel. You are definitely rich enough to plan smaller trips or even “micro adventures.” My wife recently went to a new restaurant across town with a friend that she thinks I need to try. That’s going to be our micro adventure this weekend. My anticipating self is already very excited.
6. Not Needing to Agonize Over Prices
I love this quote from a book I’m currently reading called The Millionaire Fast Lane by MJ DeMarco:
Think about the last time you bought a pack of gum. Did you fret over the price? Did you ask, “Hmmm, can I afford this?” Probably not. You bought the gum and it’s done. The purchase had no impact on your lifestyle or future choices.The Millionaire Fast Lane (Kindle Edition) p. 47
The wealthier you become, the more affordable the things you buy become. And as MJ DeMarco says, “Affordability is when you don’t have to think about it.”
I was recently listening to a podcast with Ramit Sethi, author of I Will Teach You to Be Rich. He has done very well for himself as a blogger, author, and entrepreneur. He said that to him, a rich life meant that he didn’t have to worry about buying appetizers. He also said he wants to buy a house, and not have price be the most important—or even a major—factor.
Obviously the level of wealth that let’s you buy appetizers without weighing the decision is more attainable than the kind of wealth that lets you buy a house without thinking about price, but they are both worth aspiring to.
Benefits That Are Really a Mirage
Unfortunately, some of the perceived benefits of wealth aren’t really benefits at all. People think they know what they want, but the things that they want always end up disappointing them.
Here are two “benefits” of being rich that are guaranteed to disappoint.
1. The Ability to Buy Status
You have a deep desire to be loved, respected and admired. It’s nothing to be ashamed of, everyone else does too.
The problem is the illusion that you can buy admiration and respect with status symbols. You can’t.
This is best illustrated by the “man in the car paradox” from Morgan Housel, author of The Psychology of Money. The idea is that when you see an expensive car, you become envious thinking that if you owned the car, everyone would admire you. Yet in thinking this, you never stop to admire the driver. You only notice the car.
When you think someone is admiring you for your shiny toy, they’re not. They’re just imagining themselves with your stuff.
I hate to tell you this, but there’s no shortcut to admiration and respect. The only way to get them is to earn them.
2. Accumulating Lots of Stuff
Again, it’s worth revisiting the wisdom of Tyler Durden:
“You buy furniture. You tell yourself, this is the last sofa I will ever need in my life. Buy the sofa, then for a couple years you’re satisfied that no matter what goes wrong, at least you’ve got your sofa issue handled. Then the right set of dishes. Then the perfect bed. The drapes. The rug. Then you’re trapped in your lovely nest, and the things you used to own, now they own you.”Chuck Palahniuk, Fight Club
The things you used to own end up owning you.
One way this happens is through entropy. Everything breaks. The more things you have, the more things that break.
Right now my lawnmower is broken. That’s one form of entropy. I own a house, so I need to mow my lawn which is becoming overgrown. That can be thought of as another form of entropy.
Now I have to spend time and money fixing my lawnmower problem and my lawn problem. But these aren’t universal problems, they’re problems for people with lawns and lawnmowers.
Be careful about buying stuff, even nice things. The only difference between “nice things” and “junk” is time.
Should you want to become rich? In some senses you already are and can start acting like it today.
But it’s worth pursuing further levels of wealth because there are more benefits to accrue. Just make sure you aren’t chasing the wrong things or missing what’s right in front of you.
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