We are talking about wealth today. We are talking about a question that I get, I wouldn’t say all the time, but it’s a question I get and it’s the question that I think about a lot and its wealth, wealth in general and how is wealth measured.
It’s all about TIME
I think a lot of times that people, I know I did this for a long time and after studying this for a long, long time, really realizing how wealth is measured. Wealth is measured in one of a number of ways to different people, but truly, truly, truly the way that the wealthy and at least my mentors look at wealth and the people that I aspire to, they look at wealth in terms of time. A lot of people look at wealth in terms of money getting to a certain place, a nest egg, having a certain amount, whatever it may be, but truly wealth – wealth equals time. Wealth equal time and in how we look at that differs depending on who you are and wealth truly is time.
Most people last 3-4 months at an average
If you lost your job, if you lost your business, if you lost your income somehow or another, you couldn’t work, you couldn’t get your income for whatever reason, how long would you have to last with the money you have saved up or the money that you’re getting from other assets? How long would you last? Now statistics out there kind of very, but from a lot of what I gathered, most people wouldn’t last more than probably two to four months, so two to four months is the average. That’s average for most people. So two to four months they would last at their current expense rate and their cost of living. So if you’re trying to retire and your income stops, you can’t decrease expenses. Most people plan on retiring poor. They plan on retiring a lower tax bracket. They retire, they retire less. They planned on having less, but you don’t want to change your standard of living. Why would you want to change your standard of living? So you have to think of it in terms of time. So how long will you have if you retire, if something happens, you get hurt, if your job gets lost, whatever it may be, right? So we have to think of it in terms of time and that’s why thinking of it in terms of time is so incredibly important. So we have a goal of an indefinite, right? Indefinite wealth.
Aim for Indefinite Wealth
Indefinite is your assets paying you and indefinite wealth is what the wealthy have. The wealthy have indefinite wealth. They have assets paying for them. They have rental properties, they have patents, royalties, book deals, they have assets, paying them, trademarks, whatever it may be they have. They have things paying them every single month. That way they can keep that standard of living and continue on without having to change that standard of living. Even if something happens, even if they get hurt, even if they retire. That’s why you hear of people retiring so young because they have the ability to make money and money’s coming in every single day when they don’t have to work. Right?
So taking that number, so whatever it is, say you have a number saved up in your bank account, say it’s $10,000, so $10,000, that’s the money you have saved up in your bank account. This might be maybe for a younger person, you only have $10,000 saved up in your bank account and your cost of living every month is $3,000. So you divide that by 3000. That’s your cost of living, right? That equals 3.33 months. You have 3.33 months of wealth. If you got hurt, if you lost your job, you’d have 3.3 months living. Again, you can kind of extrapolate that out if you had a million dollars in your 401k if you’re an older person or maybe you have $100,000 in your 401k and your standard of living is say $10,000 a month, or maybe it’s $5,000 a month, right? So how many months do you have there? You’ve got, depending, you’ve got 10 to 20 months at that current standard of living that you have.
Get Off the Working Income
If things at the fan, if there’s a hurricane, if there’s, you know, the power goes out, the grid goes out. If there are unforeseen, you know, financial things happening, unforeseen physical ailments, whatever it may be, you lose your job, you retire. This is how wealth is truly, truly measured. This is how I had been starting to measure growth over the last few years and it really puts a different perspective on and advises on acquiring assets, acquiring things. They actually pay me every month, my family instead of things that I’m just paying out every month, like a car payment. My car is not an asset, my home that I live in is not an asset because I have to pay for it every month. Just knowing the vocabulary, knowing that difference makes all the difference. So acquiring other assets, acquiring businesses, acquiring a rental property, acquiring things that pay me every single month that I don’t have to work for it. That way I can increase and hopefully get to indefinite wealth. I can definitely live off of the income that I am getting every single month in the mail. I don’t have to work for it, you know, again there’s some work involved, right, with everything, managing the managers. But overall I don’t have to work. My team, my managers under me are managing my assets and those income-producing assets that I have.
So I hope that makes sense. This is something that, again, this is kind of the way, the basis for everything I do in my life and how I think about things, how I think about currency, how I think about money and in what perspective I look at things with. So again, I’m nowhere near where I want it to be and I have very high goals, very lofty goals and this is something that I’m shooting for. This is what I’m shooting and we’re on our way. We’ve started a number of years ago and hopefully, you’re on your way. Hopefully, now this gives you some perspective and just these are the things that my mentors have taught me and are teaching me and I’m continually trying to learn. By teaching these things, it’s ingraining it in my own head. So I appreciate you spending time, hopefully maybe learning a new concept, but also amusing me and letting me teach this to you and all the things that we do, being able to teach others what we’re doing and what we’re learning and what we’re focusing on, that way we can grow ourselves and our families and those around us. So I appreciate your time, your attention and energy as always, and we look forward to seeing you soon.