Being rich is a timeless topic. In every generation of history people have defined who is rich by what they have and by the lifestyles that they live and although everyone has a somewhat different idea of exactly what rich is, today we are going to try to create a timeless definition of what exactly “rich” is.
Rich Anywhere?
First off, the definition of wealth will be very different depending on what city, town, and country that you live in. For example, you might have enough money to be considered rich in Nigeria, but that same amount of money would not be considered rich in New York City. So for the purpose of this article we will consider rich enough to be “rich” anywhere in the world, even the most expensive of places.
Being Rich: Lifestyle, lifestyle
The second point here, and probably the most important is the type of lifestyle that you wish to live. For instance, if you wish to have a nice home in a suburb by the city and a family with some vacations here and there you will feel rich with less money than someone that wants to own 5 homes, 10 Ferraris and go on crazy trips every week to a different part of the world.
Rich: Passive Income (LET FREEDOM RING!)
Lets make one point very clear here; the real rich people are not those that make a lot of income. The real rich are those that either own their own business, or are already so wealthy that they have enough income from investments to live a rich type lifestyle. This sounds crazy right? Why is that? You would think if someone works as a lawyer and makes one million per year, they are pretty rich right? Well sure they might be rich, but if they stop working, they wont continue to be rich for much longer. However, when you own your own business, you can be spending time with friends and family while your business makes you money. Similarly if you’re already rich, you can invest in bonds (fixed income), primarily U.S. treasury securities (which are essentially you loaning money to the U.S. government) and receiving a passive fixed income.
You’ll notice that we have not once mentioned an exact $ amount defining what rich is. That is because being rich by our definition is to live your desired lifestyle without the need to make a living physically. In general there will be a minimum number here, as people (we’ll consider the U.S) will find it tough to live off less than about $20,000 per year, so at the minimum you’ll need around $1 million in the bank. Keep in mind this amount means that you’ll live entirely off of your passive income, you can likely live off of less if your have a career as well.
Got Family?
If you have a family, you should double the cost of the life style that you are comfortable with. Having a family is indeed a gift to be cherished, but I don’t recommend having a family if you don’t think you can afford to. Think about it this way, the last thing that you want is to be working all day and night when you have kids; you’ll never see them!
Health
Lastly, we all need to remember that the most important is our health. If we do not have our health, then all the money that you have does not mean anything because you wont be able to enjoy it. So when we say: how much money does it take to be rich, lets take a step back and realize that it really takes just enough money to keep you healthy, to be rich. Until next time.