A more quantifiable definition of wealth is the total financial net worth of a person: the difference between assets and liabilities. For most people, this would be the dollar sum of the value of their home, their cars, their savings and their investments minus the sum of all their debt (home loan, car loan, credit cards etc.). A total net worth calculation returns a fixed dollar amount of, say, $100,000. But again we have to ask ourselves: what does this mean?
In order to answer this question once and for all, we first have to establish what exactly we want from our wealth. Once we have answered that question, we can better assess how much we actually need before we can consider ourselves to be wealthy.
The first two elements, security and freedom, can give us that which all of us should strive for: as many happy life years as possible for ourselves and our families. The third element, power, can give us something which is a bit more enigmatic and a lot harder to achieve: a lasting legacy.
It is very important to note that these three elements of wealth require very different quantities of money. Even though embarrassingly few people in today’s world can honestly call themselves financially secure, the dollar amount needed to achieve this outcome is actually quite modest. Everyone should strive to achieve at least this level of wealth. The two higher levels, freedom and power, require much greater sums, but are not strictly required for attaining a happy, healthy and wealthy life.
Over the next three posts, we will discuss each of these three elements in greater detail, focusing not only on what they imply for individuals, but also what their effects on society can be if many individuals commit to building financial security, freedom and power. A better understanding of these three elements will help you answer two very important questions:
Why do I want to reach this particular level of wealth?
The answer to the first question will give you a goal and the answer to the second will give you a reason for achieving it. If the first answer is realistic but challenging and the second answer is sufficiently compelling, you are virtually guaranteed to succeed.