#12 What does Wealth Mean to You? 💷⌛
If we're all different, why do we assume wealth is a definite concept?
So, after last week’s accidental experiment success, I have decided to permanently move the newsletter to Saturdays. It allows me to create better content for you guys based on my schedule and it allows you to read this without rushing to be anywhere as you would on a working day! A win-win in my eyes!
This week we’re going to be getting personal. Everyone wants to be wealthy, but does everyone have the same definition of wealth?
When I was younger, like most kids, I wanted to be rich. However, I had a very different idea of what that meant then than I do now. In my case, yachts and expensive cars were not for me, and instead what was far more interesting was figuring out how much I would need to have in order to afford an actual legion of toy roman soldiers and accompanying cavalry.
Thankfully for everyone’s sakes, my ideas changed somewhat as I grew older. But if my own ideas about what being rich actually means can change, then surely “wealth” is a different concept for everyone?
The Wealth Trap
Wealth is often presented as expensive cars, watches, glamourous restaurants, mansions, yachts, private jets and cars that cost more than most houses. Is it any wonder then that for many of us we associate being wealthy with owning those things?
As a result, we chase these items, thinking that once we have them we’ll be happier, that our lives will be more fulfilled and we’ll be able to say that we made it.
The problem is that these things don’t actually build wealth, and our desire for them keeps us trapped in a cycle of endless consumption whereby there will always be something more expensive, more exclusive to chase after.
Instead of investing it, the hard earned money that we dedicate to these displays of “wealth” only serves to make us less well-off, with enormous mortgages and finance plans, all while forcing us to stay in jobs that we hate to simply pay it all off.
Finding your Why
“Why do you want to be wealthy?”
The first time I sat down with a financial advisor, this was one of the first questions that they asked me.
Not “How much money did I want to have?” or “What was my attitude to risk?” or any of the other questions that I had prepared answers to.
And it completely threw me, because I didn’t have an answer.
You see, I didn’t actually have a plan for what I wanted to use that money for. I thought that once I was rich, the rest would sort of figure itself out.
This is where I first came across the idea of Goals-Based Investing.
Rather than wanting to have money for the sake of money, you look at what you want from life. Money is important, but by itself it’s pretty pointless. You give it value by using it to achieve what you want.
Your why is your rocket fuel.
Setting your Goals
So, rather than focusing on how much money you can make or earn, stand back and allow yourself to take a holistic view of your personal finances. Not something we do very often when it comes to money, that’s for sure.
What do YOU want from your life?
Not what your parents want you to do, or you think you want to do because it’s what celebrities do. How do you want your life to look in the next 10, 20, 40 years? How do you want your retirement to look?
Because once you ask yourself these questions, you can work backwards.
A bit like adding numbers to a dot-to-dot, once you know where you’re supposed to end up, it’s much easier to see the route there.
Do you even want to go on a cruise when you retire? Do you want to live in a small flat in the middle of the city? Will slaving away for most of the year to go on holiday to the Caribbean every summer really make you happier?
When you actually decide what you want to do, you can figure out how to achieve each goal. You can choose the best investment options to maximise your contributions and make sure that the money is there for when you need it.
Finally, and probably most importantly of all, when you choose your goals for yourself, you’re more likely to stick with the program. And as we’ve seen, your wealth and ability to reach your goals is dependent on one thing above all others.
Consistency.
So, have an honest conversation with yourself.
What does wealth look like to you?
If it genuinely means fast cars and an expensive lifestyle because that’s what you enjoy, that’s fine.
But maybe it looks more like a small house by the sea and being able to go surfing everyday. Or renting and living in a different city every few years.
The best thing about your goals is just that.
They’re yours.
Until next week!