Earlier today on my lunch break I opened up the PDF first chapter of Ramit Sethi's "I Will Teach You To Be Rich" and read through it quickly.
One part that stuck out was early on when he poses the question "what do you define as rich?" He argues that you first must figure out what rich means to you in order to get there.
What does "rich" mean to me?
- Having enough passive income to not have to work.
- Having enough passive income to fund my own business.
- Having enough passive income to fund my own business and fail. Maybe 3 times.
- Being able to work when I want, for who I want.
- Having enough money to donate large sums each year without feeling like it hurts my ability to achieve above goals.
- Manage to do this while also having a family with 2-3 kids and supporting an upper middle class lifestyle and occasional splurges.
A few years ago, I would have said "making over $50k a year." Well, that was never rich in my mind, but it sure came close. I recently reviewed my social security statement for the past six years and realized that with the exception of last year, my largest yearly income to date was $25k. Last year I made about $63k. This year, I should hit $80k-$100k. And that still doesn't feel rich. I feel less rich now than I did when I was making $25k because instead of wealth being impossible, it instead is a hard, yet achievable road of long hours, late nights, working for 'the man', or finding the right startup to get lucky at.
If I never have kids, never buy a house, avoid graduate school, and maintain my current level of saving ($50k per year) with a 5% rate of return on average, I'll have over $1 million by the time I'm 40.
But is that rich? Not at all.
What does "being rich" mean to you?