As we’re going back to first principles for financial planning, we’re going to look deep into the fundamentals of personal financial success. And if we’re going to do that, then we’d better start by defining what that actually means.
The problem, if you want to call it that, with personal financial success, is that it takes so long. But that’s actually a good thing, because rapid wealth-creation from a lottery win, or the wages of an 18-year-old football prodigy, so often ends badly.
However, because it takes so long, it can be hard to look far into the future with any kind of clarity. That means that when defining financial success, we’re going to be using some generalisations, which you then need to apply to your specific situation.
Everything You Need to KNOW – for Financial Success
1. Defining What Wealth is
Wealth is about so much more than money. The American essayist Henry David Thoreau said: “Wealth is the ability to fully experience life.” What might that mean, ‘to fully experience life'?
It’s fair to say that it’s clearly about much more than amassing stuff, and it’s also about more than money. So what is it? Experiencing life might mean to explore everything that life has to offer, without financial constraints.
If, for you, that means travelling for six months at a time to far-flung destinations, whereas for me it means three or four European city-breaks each year, your version will probably cost more. But if we both get to do those things, then we’re both equally wealthy.
For me, fully experiencing life would mean being able to help my kids at whatever stage they are at without it impacting my own financial situation. It would definitely mean enjoying a nice car – not because of the status, but because I’ve always loved cars.
Fully experiencing life for me would mean enjoying lots of theatre visits, freedom to pursue interests such as MeaningfulMoney, without having to think about where the money was coming from.
I’d also want to impact others in some meaningful way, either by financial giving in some form or turning MeaningfulMoney into a non-profit of some kind. So what about you? What does fully experiencing life mean to you? Start thinking about it now.
2. Defining What Wealth isn’t
Sometimes it can be helpful to define something by stating what it isn’t. Again, I can give you this from my own perspective. For me, wealth would mean having sufficient resources not to worry about living expenses or capital expenditure. It would mean having such control over my day to day finances, that they take negligible intervention.
Wealth is not being concerned about anything financial-related. The human life is never without worry. Wealth is not about having limitless resources. You could spend £1,000 per month or £10,000 per month and be wealthy enough to sustain your chosen lifestyle – the word chosen is key.
Any external standard of what it means to be wealthy is clearly irrelevant. I don’t believe it is possible ‘to fully experience life’ if you’re always concerned about measuring up to someone else’s view. Wealth is not about money, or not on its own, because money can never be seen in isolation. It’s always connected to our human inclinations.
To me, wealth is harmonising all aspects of our lives – including our finances – to the fullest extent we are able. We cannot control everything, but true wealth is about bringing together our money, our health, our family, our outlook on life and our relationship to the world in which we live.
So often, money can be at odds with those other things that are important to us, usually because we can’t fully enjoy those things because we don’t have the means to do so. My definition of wealth, after all the rambling above, is that wealth means that our financial position supports our life’s purpose.