Most people go about defining wealth in the traditional way – by stating that you need to have X amount of pounds to be considered wealthy. I’m not saying that this conventional way of thinking is wrong, but I’m not saying that it is right either.
Personal finance guru Robert Kiyosaki has come up with an interesting way of defining wealth. Rather than basing his definition around a fixed monetary value, he centers his definition around time. Kiyosaki compares this approach to that of renowned futurist Bucky Fuller who said wealth is “ the ability to survive X number of days forward.”
Kiyosaki defines wealth by stating that “ Wealth is the number of days you can survive without working while also maintaining your lifestyle.”
For example, if your monthly expenses are £5,000 and you have £20,000 in savings, your wealth is approximately four months or 120 days.
In this definition of wealth, Kiyosaki excludes most people that derive their primary income form a paycheck. The wealthy are described as those with money generating assets. So for example, if you have assets that generate you £40,000 a year and your expenses are only £30,000 a year, you are considered wealthy as your wealth is infinite.
On the other hand, if you earn £80,000 and have expenses of £100,000 a year through your extravagant debt fueled life style, you are not considered wealthy.
Ultimately, it’s not how much money you make that matters but how much money you keep—and how long that money works for you.
As Kiyosaki puts it, “Many people think that being rich and being wealthy are the same thing. But there is a difference between the two: The rich have lots of money but the wealthy don’t worry about money.”
To be considered wealthy, you need residual (or passive) income sources that continue to pay you after the work is done. You need to accumulate assets that give you a steady paycheck whether you’re working or not.
(Wealth can also be defined with three F’s – Family, Fitness and Freedom. Have a close nit family of friends and loved ones is important. Having good health is essential for you to enjoy life. These two coupled with freedom make you truly wealth. Freedom to not be woken up by an alarm clock, freedom to not fight traffic every morning and freedom to treat each day like a Saturday.)
So what’s your definition of wealth?