How to know if you’re rich
Australians are among the best off in the world, but are we rich?
A RECENT survey found Australians have a burning desire to be “rich”. But the definition of what is “rich” varied enormously, depending on the lifestyle, values and personality of each individual. Definitions ranged from not having any “money worries” through to buying an island.
International financial institution Credit Suisse ranks the average Australian second richest in the world, behind the Swiss. It doesn’t seem like that with low wage growth and so many making big sacrifices.
So how do you know when you are rich? Ready access to food, clean water, high quality health and education services, plus a safe environment to live and work, are things we take for granted, while the World Bank says more than two billion people live on less than two dollars a day and lack access to even the most basic services. Passive income is money you didn’t directly earn, like share dividends or rental income from an investment property.
Rich people can support themselves and maintain their standard of living with passive income. This sounds like a pipe dream, but we all have to do this at some stage when we retire.
We have a compulsory superannuation system to give us a leg up, but rich people, regardless of whether they live to 82 or 102, have organised their affairs so their money won’t run out. You can do whatever you want, whenever you want, without even thinking about the costs.
A side effect of living off passive income is choosing what you want to do when you wake up in the morning.
While rich people may be employed, they’re free to decide the opportunities they pursue. And they enjoy their work. Truly rich people are not drowning in debt.
Their assets are paid off, while their income is used to fund their lifestyle or invest in growth assets that will continue to build their wealth.
A seemingly rich person who has everything but has paid for it through debt will be in for a rude awakening if their situation changes and they can no longer meet their repayments. Rich people are able to invest in their health.
That means they can afford regular dental check-ups, whatever doctor, specialist or hospital treatments they require, and can take advantage of other health services like the osteopath or joining a gym. Rich people can fully support their kids until they reach adulthood, including food, education and extra-curricular activities.
It’s not about spoiling them or giving them lots of cash. It’s about providing them with the opportunities they need to develop into successful adults in their own right. Whether it’s marriage or divorce, having another baby, or an unfortunate illness, life events aren’t going to affect a rich person’s standard of living. This is the most important measure of being rich.
Plenty of people who prioritise money over their personal relationships or morals live to regret their wealth.
Truly rich people, on the other hand, are grounded, have great relationships with their family and friends and are proud of their achievements. Being able to use your wealth to help others indicates a person is rich in spirit as well as financially. To become a philanthropist supporting organisations which make a difference in the community, or directly supporting others in need, is the ultimate virtue of being “rich”.
It’s acknowledgement that, while we’ve worked hard, others may not have received the same opportunities to be financially independent… and we have an obligation to help.