More than 50% of rich people don’t even know they’re rich! Crazy Hey! So do you have hidden wealth? Are you secretly rich and don’t know it? Read on to find out.
I need you to consider a question. What does being rich or wealthy mean to you? Most people who I ask this question to give a response that associates being rich to having monetary possessions such as fast cars, big houses, and taking lavish vacations. Their definition of being wealthy generally fall into one of the following three categories:
1) You’re wealthy if you earn a certain amount of money each year. For example, someone who earns in excess of $1 million in annual income is likely to be considered wealthy by many people. We’ll call this wealth by income.
2) You’re wealthy if you have accumulated a certain amount of net worth (the value of a person’s assets less the value of their debts). This definition is interesting in that someone who earns a high income but who spends most of their earnings on depreciable goods such as designer clothes, fancy cars and lavish vacations might not be considered wealthy by this definition. By contrast, a person who earns a modest income but who also lives a modest lifestyle saving and investing most of their earnings can have a sizable net worth and could be considered wealthy. We’ll call this wealth by net income.
3) You’re wealthy if you live a lavish lifestyle such as owning designer clothes, fancy cars, an expensive house, and take lavish vacations, even if you have a low net worth. This definition focuses on the living of a wealthy lifestyle and considers you to be rich regardless if you have anything to show for it at the end of the day. We’ll call this wealth by lifestyle.
Here’s the thing, given the above definitions, one could be considered rich by one definition but not rich by another definition because being rich means different things to different people. That is why you first need to determine what being rich means to you before you can determine how to best work towards becoming rich. The awesome part is that some people are going to discover that they are already rich and didn’t even know it. Don’t worry I’m going to show you how to determine this.
How Much Money Do You Need To Be Rich?
Okay, so now that you’ve figured out what being rich means to you we can look at how much money you need to become rich. Interestingly enough, the amount of money you need to become rich is directly related to what being rich means to you. In a report by UBS, when asked “Do you consider yourself wealthy?” an overwhelming 72% of millionaires with a net worth of between $1-$5 million said “no.” As shocking as this may be to most people, these millionaires don’t consider themselves to be rich because they still have financial constraints. They cannot afford to do everything they desire. Their definition of being wealthy is the freedom to live their life however they want, without financial constraint.
The question you’re probably asking yourself is: So how much money do these millionaires need in order for them to feel rich? To be among the richest 1% in the USA takes an annual income of $389,000 or a net worth of approximately $8 Million. It takes an annual income of $215,700 in Canada or a net worth of approximately $1 Million. According to numerous studies including one by Fidelity, people generally say they need twice their current net worth or income level in order to feel wealthy, regardless of their current net worth or income level. So, while $1 million can make you rich compared to most people, there is not one specific amount of money that will make everyone feel rich. Part of the reason so few millionaires feel rich is likely partly attributed to their social circles being filled with other millionaires. This gives them the false perception that they are not rich because those they spend most of their time with have just as much or more money.
Defining Wealth As Freedom
Whats the bottom line? If you are someone who associates to one of the three definitions of wealth that I outlined at the beginning of this article: wealth by income, wealth by net income, or wealth by lifestyle and your goal is to become rich, you may be chasing a dream that is hard to attain.
After all, 72% of millionaires with $1-$5 million in net worth said they don’t consider themselves wealthy. But wait. I have a possible solution to this problem.
Lets look at the definition of wealth that most millionaires reported being able to relate to: the freedom to live their life however they want, without financial restraint. This definition describes wealth as freedom. The freedom to (1) do what you desire; (2) to work at a job you love; (3) to not have to worry about how much money you earn; (4) to quit work altogether to pursue an interest if you so desire. This is the definition of wealth that I relate to and I will suggest to you that if you adopt this view of wealth, becoming rich is very attainable, and you will be able to achieve it sooner than you think.
The thing about viewing wealth as freedom is that it measures how rich you are based on your level of freedom and happiness. STOP and think about this for a minute. What do we really want out of life? I will suggest to you that freedom and happiness are very close to the top if not at the top. Over the years we have been misled to think that money will automatically lead to freedom and happiness. This is not true. Sure having a lot of money could help lead to freedom and happiness, but you just have to watch the news any day of the week to see endless examples of people who have oodles of money but who are miserable.
You could have $10 billion dollars but if you are locked up in jail or have no way to spend it, it means nothing. Similarly, $10 billion dollars isn’t going to buy you happiness. Money is worthless without freedom and happiness. How much money you need in order to consider yourself rich is relative to what lifestyle you desire. You also don’t need to be a millionaire to be rich, you just have to be living the life that you desire. If you can achieve freedom and happiness through a modest, comfortable lifestyle you don’t need the net worth of Bill Gates to achieve it. By contrast, if you desire the flashy life of a Kardashian you better have a large fortune to back it up. I know I don’t need a flashy lifestyle to obtain freedom and happiness, and I will suggest that you also do not need a flashy lifestyle to be happy and free.
Calculating The Cost of Your Desired Lifestyle
So lets say you’re convinced that your dream of wealth is actually a dream of freedom and happiness. A dream of living life the way you want and free from worries about money. The first step to reaching this dream is to figure out what your ideal life looks like. Jot down what needs to be included in your life for you to be free and happy. You can then calculate the annual cost of that lifestyle and determine how much you need to make and/or save to make that dream a reality. This handy calculator will assist you in determining the level of wealth required to support your desired lifestyle.
Some of the important questions you need to ask yourself are:
-Where do you want to live?
-What type of lifestyle do you want to live?
-What type of home do you want to live in?
-What type of vehicle will you drive & how often would you want a new vehicle?
-How many kids will/do you have?
-Who will care for the kids?
-How much do you like to spend on your appearance?
-How will you spend your free time?
-How much do you intend to travel?
-Will you continue to work or quit your job?
Hidden Wealth: Are You Secretly Rich?
Income wealth, net worth wealth, and lifestyle wealth are different ways people measure wealth, but wealth isn’t about how much money you have, The real essence of wealth is the freedom it brings you. The freedom of being able to live your life the way you desire. Wealth means the ability to live life the way that will maximize your happiness.
Want to know the best part? The thing about looking at wealth in this way is that you don’t have to have millions of dollars to achieve it, you only need enough money to meet your needs. If you can live a happy life on just $25,000 a year, then $25,000 a year is all it takes to make you rich.
If you remember nothing else from this article, remember this: pursue your passion and freedom, happiness, and monetary riches will follow. Congratulations to those of you who just discovered that you have hidden wealth and are already secretly rich! Share your story with us. We want to hear all about it!
If you’re not yet rich, I hope you realize that you’re closer than you thought. Implement an action plan to make it a reality and be sure to pursue your passion! And remember, we’re here to provide you with the guidance and motivation to make your dream a reality!
Not yet rich but want a quick and easy way to get started on the path to financial freedom? Download your FREE copy of the Get Fit Get Rich Kickstart Guide. It is packed with Fitness, Nutrition, & Money-Saving Hacks that will help you to achieve better health and greater wealth.