Wealth is a funny concept. There are many different ways to view it, so to get one universal definition can be just a little bit difficult.
Although it can be defined as how much you have sitting in the bank, or how well you’re doing financially; it can also extend to your levels of happiness in life, with family, comfort or your lifestyle.
In discovering the meaning of wealth, the last thing you should do is compare yourself to anybody, at all. It’s never fair to compare, as it can be so easy to find people that are far richer than you, living a better life – whether for real, or faking it on Instagram – and who are ultimately happier than you are able to be in the present.
So, How Does Spillly Define Wealth?
I know people that many would consider ‘rich’, earning close to R500,000 a month, with the best car and access to almost anything you could ever desire; but find themselves so unhappy and miserable in their personal lives: living life divorced with two kids, with maintenance-bonded houses (some on their 2nd and 3rd properties), cars and assets that they can’t afford, private school bills, parents and siblings that are financially dependent on them.
These are people who are capable of going on over two overseas holidays a year and have lives surrounded by complete luxury, but still live on edge and in constant fear of financial insecurity.
A friend of mine is an example of this, earning a massive salary, owns the latest BMW 3 Series, and loves the extravagant lifestyle; however, as soon as Covid shattered life as we knew it, his business was struggling and he barely had 6 weeks’ worth of cash in the bank to pay for that lifestyle and all of those expenses.
From the outside, these people seem rich, but are certainly not wealthy and lack a certain level of financial freedom in their minds.
In contrast, my mother is almost 70, earns roughly R40k per month and spends around R30k every month on her lifestyle costs (car, rent, medical aid, etc), but her investments and assets give her more than her annuity every month. Her interest and rentals that she gets from her properties cover more than her monthly expenses. She is an example of what I would call wealthy – her monthly burn (expenses) is covered, while making more money than what she spends.
The fallacy is that just being rich results in being wealthy.
I define wealth as passive income greater than your burn. The key is to avoid measuring revenue, but rather the burn – what you spend your money on is just as important as what you earn.
Are you bringing in more than what you spend?
Now, how wealthy do you want to be?
If your answer to that question is to be R100 Million richer in the next 10 years and you’re just an employee, then do yourself a favour and just resign today.
It’s simply not going to happen.
The chances of you succeeding as a business owner are also very low. For the most part, the odds are stacked against you. The stats prove just how few businesses last past 3 years in this day and age, especially in a BEE-regulated, post-covid environment and research has proven that most entrepreneurs have a 1 in 5 chance of succeeding.
You need to be aware of where you are in the world and have realistic expectations. It’s impossible to become an overnight success. It may seem like some may achieve such a feat, but the anecdotes tell you how they’ve been around for many years before that success came knocking.
In order to get to a stage of being wealthy, there are certain measures that need to be taken. This starts with setting a financial goal that relates to savings, or annuity structures that will eventually produce more passive income than what you spend.
Pick a lifestyle that you believe is reasonable and in harmony with what you earn.
Identify how much wealth you need and by when, then work backwards and reverse-engineer those numbers.
I’ve come up with an easy and practical equation to help find the answer to your desired wealth:
If, A = Work;
And, B = Life;
Then, X(t) = Projected Wealth by when.
We have the equation A+B = X(t)
By starting with and setting a number for your wealth and when you want to have it by, you can work backwards to plan A (cash, revenue, savings, investments) and how much B (life balance) you will get out of it.
Plan Ahead to Achieve Your Goals
Unless your plan is to become an earth-foraging hippy, or live in an Israeli kibbutz ( which I’m sure as hell you aren’t, as you’re here right now), then understanding exactly what you need to do today in order for you to lift yourself up for tomorrow and achieve your financial goals – should be a priority.
While salary is comfort; equity is wealth.
Always try to find what brings the most equity in your life (investments, assets, etc), try not to focus and rely on the comfort of salary.
As with my theory of work-life balance: put in the hard work now to reap the balance later on in life. Pay close attention to what will bring you a passive income, long after salary has reached its due date.
Think it through.
And if you’re feeling a little bit anxious, anxious about where you’re heading and how big your X(t) is, you know how to reach me:
083 253 3999
I promise you: My X(t) isn’t as big as yours.