RULE 2

Decide on your definition of wealth

So, what, to you, is wealth? This is one you have to sit down and work out in advance if you are going to get wealthy. My observation is that wealthy people invariably have worked this one out. They know exactly what, to them, wealth means.

I have a wealthy and extremely generous friend who says that he knew long ago when he was starting out in business that he would consider he had made enough when he wasn’t living off the money he had amassed (which we will call his capital). Nor would he be living off the interest on his capital. No, he would consider himself wealthy when he was living on the interest on the interest on his capital. Sounds good to me.

Now, this friend knows how much his interest on the interest is making him, pretty much by the hour. Thus if we all go out for a meal in the evening he knows (a) how much the meal has cost and (b) how much he has made while eating the meal. He says that as long as (b) is more than (a), then he is happy.

This is setting the definition of wealth pretty high, you might think. Maybe you wouldn’t want to set it this high. And that’s fine of course. Then again, maybe you’d want to put some kind of figure on it. In the old days everyone wanted to be a millionaire. That was an easy one to judge if you’d got there or not. Today there are a lot of people who have houses worth more than that and they wouldn’t consider themselves wealthy at all and yet haven’t quite got around to upping the ante to wishing themselves billionaires.^*

My own definition, for comparison, is having enough so that I don’t have to worry about having enough. How much is that? I never know. There always seems to be more to worry about – and less coming in. But seriously, I feel that I have been ‘comfortable’ since I started counting in thousands rather than in pounds. I know to the nearest thousand how much I’ve got, how much I need and how much I can spend.

For some people, not worrying might mean having enough to pay for any emergency that might arise in their family or home. So how will you define it? By the number of cars you own? Servants? Cash in the bank? Value of your house? Portfolio of investments? There are, of course, no right or wrong answers, but I do feel that until you’ve worked this one out you shouldn’t read on. If we don’t have a target we can’t take aim. If we don’t have a destination we can’t leave home or we’ll be driving around in circles for hours. If we don’t have a definition how can we monitor or judge success? If we don’t do this how will you know if this book has been helpful to you?