Are You Rich?
Filed under: Personal Finance
Photo credit: sheilaz413It’s an interesting question, “Are you rich?” It appears to me that “rich” is something that’s hard to define. Is a person who makes $250k a year rich? If he’s in debt up to his eyes, is he still rich? How about a guy with no debt, but is supporting a family on $40k a year? There’s no good benchmark to define “rich” since it really depends on your personal situation.
But even though I can’t make a sweeping definition for the term, I believe you can determine if you are rich by asking yourself some leading questions.
Are you happy?
What good is money if you can’t enjoy your life? Ebenezer Scrooge was extremely wealthy, but he was one of the most miserable souls on the planet. It was only after seeing his future that he realized his misery and found his joy in generosity.
I believe that you are not truly rich unless you are able to enjoy your life and the opportunity it brings. If you make minimum wage but are happy, you are far richer than a millionaire who struggles to crack a smile once a day.
I am content, but I could be happier. It’s not there’s anything disastrously wrong in my life, but there are elements that, if I could change, would leave me happier - my job, for example. I consider going to work every day a sacrifice I make so I can support my family, not something I do because it makes me happy. I hope this will change sometime in the near future, but that’s something that will come if and when it comes.
Are you financially secure?
Just being happy doesn’t make you rich, since money does make a difference when defining the term. I’m not saying you must be able to swim through your personal vault, like Scrooge McDuck, but you do need to have enough that you’re not struggling to make ends meet. I really don’t know what key points need to be met to determine whether you’re financially secure, because that’s something a person can only answer for themselves.
I do know that I feel relatively secure. Our emergency fund is nearly full, we’re driving down our debts, and pushing up our net worth. I have a decent amount of life insurance, but I do need more. My investments and passive income are growing, albeit slowly.
Do you feel free?
You may be happy with your life and you may feel secure, but are you free to live your life the way you want? If you can’t drop everything and move on to something else, you’re not free. If you’re not free to live your life on your own terms, you are a slave to your obligations.
As much as I love my wife and the opportunities I’m providing my family by letting her stay at home with the children, the responsibility of providing the sole source of income and insurance leaves me at the mercy of my employer until the day I have enough money saved up to buy my own freedom. Of course, this is a choice we made and I would make it the same way if we could start over, but the choice has the consequence of leaving me feeling trapped.
But just because you’re a slave doesn’t mean you can’t work toward securing your freedom in the future. By experimenting with ways to supplement (or eventually replace) my salary income, by attacking my debt, and by saving and investing smartly, I’m hoping to find my freedom while I’m still young enough to enjoy it. I don’t begrudge my situation, but I do look forward to being free someday and I’m willing to work hard now to secure that freedom even sooner.
So, are you rich?
After answering the above three questions, you should have a better idea if you are rich. It’s not really a yes or no kind of question, I see it more as a sliding scale. Now that you have a better idea of whether you’re rich, what are you going to do with that knowledge? If you’re not happy with where you are, how do you intend to work to fix your situation?
I believe I am closer to rich than not, but I have a long way to go before I can solidly say that I am rich. How did you answer the questions above? What else do you think should be part of the definition of “rich”?
August 13th, 2008 at 11:20 am
In those terms…not yet, but working my way there. And fortunately, I only rarely feel poor either.
August 13th, 2008 at 12:38 pm
Freedom is very much tied to richness I think, that’s a good point, and there’s also a sense that it’s not a 1 or a 0 type of question right? I mean you touch that point and it’s definitely a good one. You can have everything except that elusive total freedom and still be “rich.”
August 13th, 2008 at 1:19 pm
I would submit that if you have no freedom but all the money in the world, you are wealthy but about as far from “rich” as you can be. After thinking about it more, “rich” sounds more and more like a description of a lifestyle and the ability to maintain that life than about money - at least in the terms I described it.
I agree that these questions are all sliding scale and not yes/no. I believe you’re are definitely very rich if you are happy, secure, and have a reasonable amount of freedom.
August 13th, 2008 at 1:21 pm
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August 13th, 2008 at 5:38 pm
If I am happy and healthy, I am rich. I don’t need money to feel rich at all.
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