How Do YOU Define Wealth? A Discussion About How We View Money

How do we define and measure wealth for ourselves
and for others? Is it merely through the number of dollars
we have accumulated throughout our lifetimes? Does it have anything to do with the amount
of possessions we have, the size of our house or how prestigious our cars are? Or do we measure wealth through some other
means entirely? In today’s video, I’m going to be going
over 3 commons ways I see wealth defined as well as how I personally choose to define
it for myself. Hey everyone Daniel here and welcome to Next
Level Life a channel where you can learn about Investing, debt, retirement, and many other
general financial education videos because the school’s aren’t going to do it for us. So if any of those topics sound interesting
to you or if you want to learn how to better handle your money and have more financial
freedom be sure to hit that subscribe button and the bell next to my name to be notified
every time I upload a video. And if you want to further support the growth
of this channel you can check out some of the links I’ve left down in the description
below which includes a 30-day free trial of Audible and 2 free audiobooks of your choice
as well as a list of some books on money I’d recommend checking out, or you can share this
video with a friend, and leave a comment below letting me know what topics you’d like me
to cover in future videos. So the 3 commons ways I’m going to be talking
about in today’s video is wealth as measured by dollar value (or whatever currency you
happen to use), wealth as measured by the duration for which you can sustain your lifestyle
without continuing to earn an income, and wealth as measured through the “Wealth Trinity”
as discussed in MJ DeMarco’s book “The Millionaire Fastlane.” So the first way that we often define wealth
is through sheer raw numbers. If you have $10 million in your bank account
we could pretty safely assume you would be considered wealthy by a large portion of the
population, but with only $10 to your name maybe not so much. For the longest time having a net worth of
$1 million dollars was considered to be wealthy and was for many a goal to strive for, and
still is to a certain extent. However, the downside to viewing wealth purely
through the lens of raw dollar values is that depending on the lifestyle of the individual
in question $1 million may be an extraordinary amount of money that can fund their lifestyle
and then some for many, many years to come, but for others it might not be able to last
them a decade under their current lifestyle. Location also plays a large role, I mean $1
million dollars living in New York City or Los Angeles isn’t going to get you quite
as far as that same $1 million will in Minneapolis. So while using a raw dollar value approach
can give us a general idea of someone’s wealth, it can also be misleading unless we
also have more information to go along with it. The second way that we often define wealth
is by figuring out how long that money can last us if we weren’t able to or just chose
not to continue generating an income. This is often the approach you see when retired
people or their early retiree counterparts are discussing how they managed to retire
in the 30’s or 40’s. They figured out that they would be able to
live off their savings for however many years they figured they’d need in the case of
the retired person (or just for as long as they live in the case of the early retiree). This approach of basically asking yourself
“how many days forward can I expect to live this lifestyle on this amount of money”
solves the primary issue I was talking about with the raw dollar value approach because
it allows us to adjust for differing levels of lifestyle and come to a more uniform number. Someone living in New York and spending say
$100,000 a year with $1 million in savings would have accumulated 10 roughly years’
worth of wealth for themselves. Whereas someone living in a lower cost of
living area such as Minneapolis may only be spending $50,000 a year. Meaning, assuming their savings were the same
of course, they would’ve accumulated roughly 20 years’ worth of wealth for themselves
unless you want to consider things like inflation, and rate of return if they invested that money
somewhere (which of course we would in reality, but I’m just trying to focus on the pros
and cons associated with the definitions today). The point is this approach gives us a more
uniform way of analyzing the wealth of ourselves and others than just looking at the net worth
figures of each individual does. However, what this approach fails to do is
take into account things other than money. Some may disagree with me here and that’s
fine, but I personally feel that a person’s wealth incorporates more than just the amount
of green pieces of paper they have accumulated or even how long they can make those pieces
of paper last. While that is an important part of the equation
it is not the entire equation, which brings me to the third way that we often define wealth. The third way we often define wealth is through
what MJ DeMarco calls the “Wealth Trinity” in his book “The Millionaire Fastlane.” In the wealth trinity one’s wealth is measured,
not necessarily by how much money they have (at least not directly), but by how strong
your relationships are with friends, family, and your community. How healthy and vibrant you are as an individual. And how much freedom you have in life. In the book, these are referred to as the
three F’s: Family, Fitness, and Freedom. And I personally like this definition of wealth
the most out of the three. When I look back at the richest moments of
my life, the memories and moments I cherish the most, none of them have much to do with
money (again not directly at least). They usually have to do with late game nights
at a friend’s house, or those rare trips with my family growing up, or going out west
and visiting a bunch of national parks for the first time in my life. Certainly I couldn’t have done much of that
stuff without money since, at the very least food, gas and some form of lodging would’ve
been needed at some point during all of those experiences, but my life wouldn’t have been
as rich, and I wouldn’t have been as wealthy, had I just left all that money in my bank
account. Now that’s not to say that saving money
isn’t a good idea or that it’s unimportant, because of course, it’s very important,
just not for the mere sake of saving. It’s important so that you can develop a
passive cash flow that gives you the freedom to choose what you want to do with your life. It gives you the choice to be able to retire
or maybe go to part-time (if you are following the coasting financial independence path to
retirement). It gives you the choice to maybe take some
extra days off beyond the vacation that your company may give you so that you can go on
an extended vacation with your family. You get the point, savings gives you that
freedom of choice to fill in the blank here. And it’s those freedoms of choice, time,
and location that, when used properly, allows you to best strengthen those other aspects
of the wealth trinity and become a truly wealthy person, both with money and beyond it. And I think that’s a much more comprehensive
and accurate definition for wealth and it’s the one that I use… at least until I find
a better one to replace it with. Which leads me to my question of the day. How do you define wealth? I know that there are dozens of definitions
that I didn’t cover in this video, and for all I know one of them that’s even better
than any of these three has escaped my attention. Let me know in the comments section below,
I’m really interested to see how others view this question. But that’ll do it for me today once again
if you enjoyed this video be sure to subscribe and hit that Bell next to my name so that
you’ll be notified of all my future uploads. I generally upload every single Monday, and
if you have a friend that would be interested in this kind of content be sure to share it
with them and let’s really get this information out there and start our own Financial revolution.

24 thoughts on “How Do YOU Define Wealth? A Discussion About How We View Money

  1. I define wealth by identifying what i leave behind for my kids… If i leave a legacy for my girls, i have all the wealth in the world.

  2. Great video. How you define wealth can influence how you prepare for your future. Always account for necessities and investment proficiency.

  3. You couldn’t have chosen a better cheap place to live than Minnesota? The cost of living is 4% above the national average according to one website I checked. Also, Minnesota is considered one of the least tax friendly states to retire.

  4. My views align with Chris Hogan and Dave Ramsey on what it means to have wealth with money and assets. I also believe having great health is wealth if you know you can afford to eat the right foods and use the proper diet proven to improve and reverse any health issues related to poor eating habits.

  5. Wealth to me is heavily tied in with actual net worth, assets, and "play money" (certain amount of cash in the bank). If I'm only able to spend quality time with friends/family or have nice experiences but didn't have 'money', I wouldn't consider myself wealthy. On the other hand, if I didn't have quality time with friends or had nice experiences BUT had 'money', I would consider myself wealthy. Best to have both, but if I had to choose one or the other, I'd rather have the latter. You made me think long and hard on this one! As always, thank you.

  6. I usually go with the typical net worth definition because it's easy to quantify, which generally means it's more useful.

    Family and Fitness are great too, they're just too personal to be practical or measurable in a wealth discussion.

  7. I would say #1 would be health richness #2 spiritual richness this is because people who are spiritually unstable tend to not feel happiness regardless of monetary status, #3 richness of family, friends, people that you share the best moments in life, #4 the stability to provide for those you love as well as yourself.

  8. its not just about the numbers (net worth and salary)
    Its the combination of free time, income, net worth, family friends relationships, etc.

  9. Wealth to me means having time and freedom. Wealth is measured in the number of years I don't have to work, if I were to start now.

  10. "The New Rich", a term coined by Tim Ferris in his book the Four Hour Workweek, is what I personally define as wealthy for myself. Having enough money to not worry and sustain my current lifestyle, and be rich in having free time to spend with family and friends! 🙂

  11. Wealth feels like a status of resource acquirement. Resources include: money, assets/property, time, and freedom (to work how you want to, connect with loved ones, etc) to have a wealth of resources to spend, give/share however you want to without worrying the resources will dry up. When we’re younger we’re weathier on time and hopefully when we’re older we grow wealthier with money. What’s most important is wealth of love and connection and freedom to make choices wherever we are in life.

  12. For me=
    Having gd health,
    Enjoying the small & big things in life daily,
    Leaving a decent legacy to ur love ones when u die🤘🏽

  13. My definition of wealth is when you don't need to worry and also have enough time and resources for your family friends and you hobbies.

Leave a Reply

Your email address will not be published. Required fields are marked *