Saturday, May 19, 2007

An Empowering Definition Of Rich

Most sane people would prefer to be rich than to be poor. However, when I ask attendees at my seminars to define what they really mean by being rich it is clear that most of them do not have a clear definition. It is difficult to hit a target if you don't really know what that target is.

Aiming for a specific net worth or a specific income is not generally a good way to ensure that you become rich. Inflation erodes the value of money over time and the amount of money that seems like wealth today may be well short of wealth in the future. You only have to look at what houses were selling for 20 or 30 years ago to get my point.

It is far better to have a definition of wealth that does not tie in to a specific number .In order to achieve this we have to ask ourselves what exactly we are trying to achieve in our quality of life when we say we would like to be rich.

When I ask people what they really want from wealth the most common answers I receive are freedom from debt and financial worry, enough money to fund a pleasant lifestyle, the ability to quit working, and freedom over their time. My simple definition for being rich encompasses all these desires without the need to tie it down to a specific lump sum or income.

Here is my definition. You are rich when you can continually fund the lifestyle you want to live without the need to work.

There are some important elements contained in that simple definition. Firstly it talks of the lifestyle that you want to live. This means that when setting your goals you have to spend some time determining what that lifestyle will be for you. Some people only want a very simple lifestyle covering the basics of living. Others would like to spend a lot of time traveling first class and staying in 5 star resorts. By my definition these people would need very different financial circumstances in order to be rich.

When the definition talks of funding lifestyle it implies that you are receiving a regular passive income. This is an important consideration when setting wealth building goals. So many people are investing their money in capital growth type investments that will be difficult or costly to convert to income generating investments. Realizing the amount of regular income you will need to fund your lifestyle can help you choose the types of investments that will more likely provide this for you.

The word "continually" in this definition implies that you have a secure source of wealth. This is important to consider when you set you plans for wealth creation. You require a passive income source that is going to last for at least as long as you live. This may lead to you choosing to include a risk management strategy such as balancing your investment portfolio.

The definition states that when you are rich you will not have the need to work. This does not mean that you won't choose to work; it simply means that you have that choice. Many people who create their wealth through business prefer to continue working when they are rich. These people enjoy the cut and thrust of the business world. What being wealthy provides for them is the opportunity to work while ever they want to or to stop when they have had enough.

If you have a spouse or life partner then this definition of being rich will allow you a simple but empowering framework for discussing your life goals. By discussing the lifestyle that each of you desires and by discussing whether working will remain an ingredient in that desired lifestyle or not will enable you to set goals that you are both happy with and to enthusiastically work together toward these goals.

This simple definition encompasses all you need in order to be wealthy, it makes it is easy to measure your progress and is empowering because it gives you very clear goals that cover both the human side and the financial side of life.

By: James Delrojo

James Delrojo would like to help you by giving you his ebook "Unleash the Success Power of Your Mind" (valued at $27) completely FREE. Go to http://www.blog.jamesdelrojo.com/

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