Most people misunderstand what it means to be Wealthy. We attribute wealth to money or displays of status such as cars, houses, watches, etc. We view wealth as a measure of how much money one has.
Most people misunderstand what it means to be Wealthy. We attribute wealth to money or displays of status such as cars, houses, watches, etc. We view wealth as a measure of how much money one has. But I think this is a false premise. Truly, I believe one can be rich financially but still not be wealthy. So what exactly defines Wealth? A dictionary defines Wealth as An abundance of valuable possessions. This is both false and true. Personally, I think there are 2 major criteria that determine if someone is wealthy or not. Those two criteria are:
Does the person live below their means?
Does the person have control of their time?
I’ll explain further what I mean by these, but these two criteria ultimately determine what Wealth is and who is wealthy. These are the criteria that most miss or misunderstand. Do you Live Below Your Means?
Money is a tool to purchase goods and services or gain access to exclusive settings or scenarios. An abundance of money can allow one’s means to be exponential. However, many people, despite having a high income, can still live above their means. Yes, it is possible to make an excellent income and still be broke.
Therefore, the amount of money one has is irrelevant. What truly matters is how someone is spending their money. For example, imagine someone makes $150k a year. Let’s call him Jerry. This is an excellent income for someone like Jerry to have. However, if Jerry spends $200k consecutively year after year, he is effectively poor. He’s always in bad debt and his income isn’t increasing to overtake the extra costs. Because of this, he is not living below his means. Ultimately, this means that he cannot be considered wealthy. Now, take someone that makes $40k a year. Let’s call her Sarah. Sarah somehow only needs to spend $25k each year and lives comfortably with no debt. She’s also not living paycheck to paycheck.
Sarah is certainly living below her means. This means that, according to my rule, she checks off one of the boxes to be considered Wealthy. But why are these metrics so important?
As I’ll explain in a moment, time is a key variable to wealth. And in order for one to have time, they need to have a degree of Freedom. But freedom can only be obtained when one doesn’t have to work. If one is constantly in debt or living paycheck to paycheck, that person needs to constantly be working just to keep up.
Now, keeping that theme of Time in mind, let’s check out the second criteria.
Does the person Have Control of their Time?
This is the reason why most people aren’t truly wealthy. Most people, even the rich, lack time even if they have money. Therefore, they lack Freedom. Let’s say that Jerry, in the example above, is a director at a company. Sure, he makes a lot, but what if Jerry also had to work 12-hour days, 5-6 days a week? Well, he only really has a single day to truly use on his own.
However, in the real-world other factors will impact his quality of living.
Does Jerry have chores that can only be done on his day off?
Are his friends available when he’s available?
Can he go to the places he enjoys on his one or two days off?
Can he enjoy them as much as he’d prefer?
Despite his high income, Jerry lacks control of his time. All of his decisions are contingent on his career and the schedule his career gives him. The reality is that Jerry’s company owns him. They own him because they dictate how he’s able to spend his time. This means that they dictate how he’s able to spend his life.
Now, let’s take a look at Sarah again. Perhaps Sarah is a freelancer. She has consistent clients and the work is fulfilling. It’s also remote. So, in exchange for low pay (relatively speaking), she can live effectively wherever she wants. And, because her job is project-based, once she completes the task in a time frame, she’s all set. Perhaps Sarah is so skilled, time-efficient, and experienced that she can complete what is, for most, a 4-day project in 1 or 2 days maximum. Ultimately, this allows Sarah to work 3-4 days a week. Who would you say has more control of their time? Personally, I’d say that Sarah has more control. She has more flexibility in where she can work. She has flexibility in how much she can work. And she has more money that she can use as she pleases.
In my opinion, Sarah is truly wealthy. And this is the distinction that I think people miss. Many people are tricked into believing that Wealth is being rich. While being rich is a great standard, having Time is the true measure of Wealth. With that being said, I highly encourage you to take my Time Management Mastery Course which will help you reach your Wealth goals by allowing you to take back your day and control your time and life more effectively.
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