Like many people that I speak to, one of the first authors to grab my attention on the idea of independent wealth creation was Robert Kiyosaki. For my fourteenth birthday, I was given a copy of his first book – “If You Want To Be Rich & Happy, Don’t Go To School”. Mind-blowing stuff by anyone’s standards let alone for a headstrong teenager, and needless to say my grades suffered a little after that!
One of the key concepts from the book that I still remember all this time later, was how Kiyosaki measures one’s level of wealth. Often, the first response is to think in terms of dollars.
That might be a figure such as your:
- net worth,
- gross assets, or,
- passive income
The problem with using absolute figures like these, though, is that they are relative.
Let’s look at is this way; a net worth of even $1,000,000 might not be considered sufficient for a doctor who earns a $400,000 salary and lives in a $2,000,000 home. On the other hand, the same net worth might be a pretty cool achievement for someone on a much lower income, such as a janitor.
Those of you who have played the Cashflow game will know all about the difference between the amount of passive income required to get out of the rat-race, too. (And if you haven’t played, I highly recommend it!)
So, Kiyosaki suggests, we should use a relative measure that is specific for a particular person, but can also be used universally against any given person’s circumstances.
Remember that old saying, “time is money”? I think there’s a hint in there. You see, one way of looking at all this is to change our thinking about how we measure wealth. Instead of viewing wealth in terms of dollars, what happens if we view wealth in terms of time?
Given your current assets, loans, passive income and ideal lifestyle; how long will you last if you quit your job today and didn’t ever work again?
Our doctor in the above example might only last a few months, maybe a little longer if she sold his home. Our janitor friend on the other hand might have infinite wealth, as her passive returns and available equity from her $1,000,000 net worth could be enough to keep her current lifestyle indefinitely without having to stay employed.
So, maybe take a few moments to think about how wealthy you are, in terms of time. Can you last a month without working? A year, perhaps? Or, indefinitely…?
If you’d like to chat about where you’re currently at and how to improve your wealth – in terms of both time and dollars – or even just want a recommendation on a good book for you or your kids to get excited about, then we’d love to hear from you. Get in touch here when you’re ready.