If You're Worried, You Aren't Wealthy

Wealth means different things to different people. Some think it’s the amount of money you have in the bank or an investment portfolio. Some judge wealth based on material possessions. While others may think you need a high income.

All of these metrics tell parts of someone’s financial picture, but not the whole story.

According to the new proposed tax plan, wealthy is defined as households that make $400,000 or more a year. For reference, less than 2% of the country makes $400,000 a year so that seems like a reasonable measurement. However, there are plenty of people who make $400,000 who don’t save because their lifestyle outpaces their income and others who earn $50,000 a year and have more than enough because they live within their income.

Gauging wealth through material possessions doesn’t really work either because, as Morgan Housel teaches, wealth is what you don’t see — it’s not keeping up with the Joneses.

Bank accounts and investment portfolios also don’t show the whole picture because how much you need to become financially independent depends primarily on your spending habits and time horizon. For some, a million-dollar investment portfolio could sustain them for years while for others with more lavish lifestyles, a million dollars is just the starting point.

So, rather than trying to measure wealth with numbers, I think it can be useful to think of wealth in terms of your relationship with and mindset towards money. There are ways to be wealthy that don’t involve a certain dollar amount.

I came across this quote from Nick Murray from his book Simple Wealth, Inevitable Wealth and it really resonated with me:

“No matter how much money you have, if you’re still worried, you aren’t wealthy.”

If you flip that sentence around I think it’s one of the most accurate definitions of wealth I’ve found. Being wealthy means not worrying about money.

Isn’t that the whole point of wealth? Isn’t it supposed to make our lives less stressful?

Yet, there are people who’ve already achieved financial independence or are well on their way to achieving it who still constantly stress over their financial situation.

This is a headline from MarketWatch:

This person has a net worth that would put them in the top 5% of Americans but they’re still losing sleep over financial worries.

I understand that some people are naturally more prone to worry and anxiety about money than others. Anything that deals with uncertainty about the future will bring some level of anxiousness, but you’ll go crazy worrying about all the potential financial pitfalls that may or may not affect you.

If you know where you currently stand, have a solid plan going forward, and are doing what you can to save and invest for the future, there’s no need to be overly worried. You can’t control everything.

A large part of controlling financial stress is having a sense of enough. “Making as much money as possible” is not a financial plan. There will always be more money to be made and there will always be someone richer than you are. The pursuit of more is a never-ending journey.

There’s nothing wrong with trying to make more money and improving your lot in life. But it needs to be balanced with the ability to be content with where you’re at.

Someone with modest savings who is content and grateful for what they have is far wealthier than someone with millions of dollars who’s unable to enjoy their money or to stop worrying about it.

Thanks for reading!