Some say being wealthy is a feeling but most agree it is a certain amount in the bank.
Whichever definition you believe, you might not actually know what you are worth.
Due to inflation fears starting to hover around 2% when life gets back to normal and the Fed planning to announce interest rate hikes by 2023, this causes the purchasing power of money to decline so everything becomes more expensive.
Meaning, if you are worth $3m today in a few years it will only be worth $1m.
Yet to be frank, this isnât a major concern for most Americans.
Only those in the top 10% who already pay a hefty amount in taxes due to their job, businesses, properties, etc. and have most of their money tied to investments are worried. The market becomes more volatile during this period of time when interest rates and inflation concerns arise and this means they have to work harder to preserve their wealth or status, if they care to have one.
The problem with earning more is that every time you beat your benchmark and rake in more than you thought your salary would provide, it doesnât feel as special anymore since you are endlessly riding on the lifestyle inflation wagon wanting more competing against no one except yourself.
Rich doesnât mean you are more happy. Scientific studies, polls and comprehensive experiments have done extensive research to prove that money is actually more likely to lower self-esteem, fulfillment levels and breach supportive connections. If you want to learn how much money you should own to feel satisfied, read here.
Rich is relative. It could mean you are in the top 10% or just feel happy 24/7 with no health/family problems. Once you become sick, you can never be as happy as someone who doesnât have to deal with that burden. Health is wealth and without it, you literally cannot do anything.
Thatâs the problem with banking and corporate life, but we wonât get into that here. You know the 90 hour work weeks exist and companies only throw money at the problem instead of really solving it.
No matter how much you have, luckily if you meet this basic criteria and universal indications of wealth, you can always consider yourself âwell offâ or rich:
#1: You Arenât Soley Motivated By Money
Money is enticing and also makes us dumber.
Just look at the âVarsity Bluesâ college admissions scandal. These rich gullible parents thought they could get away with a federal crime of photoshopping their children onto fake athleteâs bodies, paying $80k+ for a test taker and donating a building to get them into a college while the students realistically had pretty decent chances on getting into the schools on their own.
Money screws up our brains and itâs fascinating to learn how people who have money think they are invincible and able to get away with anything.
If youâre constantly motivated to buy the next thing, show off and compare yourself to others, thereâs no point in living. Life will get pretty miserable if you keep chasing. You will be living on the hedonic treadmill, being happy and stagnant which can cause mental illness and other side affects down the road.
Instead, focus on something other than yourself. Solve a problem, find a passion, help others and invest in yourself. No paycheck, title, salary or position will make you more fulfilled than being proud of something youâve built or changed.
#2: Your Money Relationship is Stable and Moderate
Being truly wealthy you donât equate your emotions to the stock market nor feel the urge to impulse buy. You donât find the need to buy things just because they are on sale nor impress anyone except yourself.
No wonder the richest people in the world look like average people. They wear the same daily black t-shirt driving Hondas sipping Coke-except for one of them who only drives Teslas. Money isnât something you fantasize over and looks are a waste of time. You must be strategic about it because itâs easier to loose than make money and only buy what you need until you become comfortable.
#3: You Are Able to Happily Live Under Your Means
Being frugal and saving is the easiest way to financial independence and freedom. Being cheap is the slowest way because you end up spending more on cheap depreciating assets than those that help you grow.
You have a comfortable safety net and are able to spend on discretionary items when you need to do without hesitation. You have life, house and car insurance to back up any unexpected expenses and stay frugal by choice not forced to.
#4: You Donât Mind Saving Money
You can be poor and have a high salary because itâs not how much you make, rather how much you keep.
Most people forget that key lesson in life.
An investment banker straight out school making roughly $60-$110k seems to be earning more than the average marketer or artist freelancer online but most are blindsided by all the lingering hidden costs and fees because they are obsessed with the salary.
Paying yourself is about hiding what youâve earned so it doesnât affect how you spend. In other words, setting up automatic withdraws will allow you to resist the urge to spend your salary.
This is a basic step that most graduates donât consider fascinated by their first juicy paycheck.
Hereâs why a job tends to make people worse off (mentally, emotionally and financially) than when they started:
-Taxes-the more you earn from your job = the more you pay + location cuts into cost-most top industries/companies are located in the most expensive cities = higher cost of living
-Transportation
-Time waisted-slave to your time
-Working overtime with no reward
-Slim bonuses
-Mental health dillemas-companies just throw money to the problem instead of fixing it because they care about their clients more
-Anyone and everyone is replaceable
Your income is capped as an employee, you have less freedom, control and fulfillment working for someone else who dictates what you are worth and when you can leave.
But donât get me wrong, a stable/corporate job is a great profession straight out of school to dip your toes into the corporate environment, earn a base salary and understand what you enjoy before propelling your career further.
#5: You Spend Money On Assets & To Become A Better Person
You are very aware of the negative consequences money has on distracting your brain.
Keeping up with the Joneses is a dangerous act because you never know how much debt someone took out to pay for that couch, shiny new car, etc. Pay attention to what you need and want. The grass usually isnât greener on the other side.
You also donât feel the need to rush with any purchase or compare yourself to others. You know the best investment is in yourself but doesnât come right away. The beauty about education is that you never know when it will be helpful. The lesson you learn today can benefit you tremendously in 30 years for your next venture. Stop being a student memorizing facts, start learning and applying knowledge.
#6: You believe cash is king and enjoy responsibility checking in monthly with your finances
The small things in life really matter and keep us grounded. A major part of feeling financially free is being able to allocate a set portion, roughly 20% of your income into cash (most liquid asset) in case an unexpected emergency happens such as you get laid off from your job, a hurricane hits, need to relocate or out of a job for a few months before securing one.
What is certain is uncertainty.
Those who are rich arenât joyful and positive 24/7 because that is simply unrealistic. Being positive is great but being strategically optimistic is better.
You need to plan for the worst and hope for the best to become safe.
For those who criticize holding cash, you are partially right. It does devalue, loose its purchasing power and doesnât help you earn anything but remember, no other asset will help you better survive during a crisis and they are bound to happen eventually we just donât know when.
Being able to pay for something when you need it and retire before age 65 when 20% of the workforce is still working is a luxury.
Luxuries arenât found in the yachts or junk, they are found in the choices we make that are necessary to survive.
Money cannot be a taboo anymore.
It needs to be talked about in order for you to make these money moves a reality before itâs too late.