Have you really considered if you are wealthy?
Many people don’t know it, but if we live in the United States we are among the wealthiest people in the world. If you have access to a shower every day, heating when you need it or even regular internet access you are amongst the wealthiest folk on the globe.
But just how wealthy are you? It’s all very well to assume that you have wealth because you can get into your car and drive – but are you actually creating wealth or trapped in a surprising poverty cycle?
Are you wealthy? How to assess your wealth
Another way of looking at wealth is to consider how much wealth you have accumulated at a certain age. This is further explained in the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko, and argues that a 30 year old who earns $ 25,000 but who’s net worth is $ 80,000 has more relative wealth than a 50 year old earning $ 200,000 a year but who’s net worth is only worth $500,000.
The concept of relative wealth can be applied to any person at any age and is an interesting way of looking at how wealthy we are in relation to our peers.
“Stuff” and its impact on our wealth
When we consider what wealth is we are typically confronted with images of “stuff”. The person with the most toys wins! But essentially if you are focusing on the accumulation of things – flashy cameras and cars – luxury holidays and other consumables you may in fact be rather poor.
The late journalist and economist Ferdinand Lundberg defined being poor as:
“For my part, I would say that anyone who does not own a fairly substantial amount of income-producing property or does not receive an earned income sufficiently large to make substantial regular savings or does not hold a well-paid securely tenured job is poor. He may be healthy, handsome and a delight to his friends — but he is poor.”
Lundberg essentially defines wealth as having income-producing assets. There is nothing wrong with having consumables – those flashy items which make us appear to be wealthy – but you must be able to financially withstand the hiccups life throws at you such as a short term job loss.
Are you really wealthy?
So take a look at the life you live and the work you do – are you financially affluent or are you actually a poor person with a lot of toys. If you proudly drive your shiny new car to work but depend on your job to make the repayments you are not deemed to be wealthy according to Lundberg. Assess your wealth and do something about it today.