What is the measure of your wealth?
There are different ways of calculating an individual’s wealth but universally, we use the concept of net worth. i.e. the amount of money you get when you subtract liabilities from assets - what you owe from what you own. Specifically, today, you might hear someone say, “He has a net worth of £5,000,000.”This tells you how much should be left if the person in question sold all of his assets, settled all of his debts, and put the remainder in a checking account at the local bank. This was popularized by the rise of men like Rockefeller and Carnegie, who captured the public i magination. We can call this the “American” way to measure wealth.
In contrast, a century ago i n Great Britain when London served as the financial capital of the world, you would have heard, “He has a private i ncome of £500,000 per annum.”. This refers to the household income generated by the i nvestment portfolio and represents the money the owner could spend without ever touching his principal. This in a way, is the“British” way of measuring wealth-The total absolute and relative amount of income you earn determines your place among the hierarchy of the rich.
The British way of thinking about wealth is much more conducive to becoming successful and financially i ndependent. One’s wealth should be calculated based on disposable or private i ncome as opposed to total assets. If we all thought of our wealth in terms of money earned each year from investments instead of the total wealth , then maybe lottery winners and poor relatives who inherit fortunes would not go bankrupt so easily.
So what then constitutes a wealthy man or woman? Is it in the number of children or wives he has? Apparently so in the old African context. Or is it in how many buildings or companies he has built? Or perhaps, there is another way to measure wealth which would look at how wealthy you are based on how much you are willing to give…….
If we take a look at the top five billionaires on the 2014 Forbes list of the world’s richest, then the measure of your wealth could very well be in how much you give to making the world a much better place. Bill Gates and Warren Buffet top the list of billionaires and donors. Could there be a correlation between how much money you donate and how much money you make? Here is an excerpt from a Forbes journal in 2013…
‘’Warren Buffet, inarguably one of the world’s most benevolent billionaires, just keeps on giving. This time he has donated approximately $2.6 billion to t he Bill and Melinda Gates Foundation and four other charities. In accordance with his annual charitable pledge, Berkshire Hathaway announced Monday that its chairman and CEO gave away 22,870,529 shares of his class B common stock in the company, which were trading at about $115 per share.
According to his filing with the Securities and Exchange Commission, Buffett converted 14, 000 class A shares to 21 million class B shares July 5 to complete the donation. He i s now worth slightly more than $59 billion, despite the gift, up from $53.5 billion in March, due to the rising value of Berkshire Hathaway shares.
Splitting the gift were the Gates Foundation, Susan Thompson Buffett Foundation, and his children’s charities, the Howard G. Buffett Foundation, the Sherwood Foundation and the NoVo Foundation.
Buffett has pledged to give away 99% of his fortune in his lifetime and Forbes calculates that this latest donation puts his lifetime giving at nearly $20 billion, making him the second most generous person on the planet, below his good friend Bill Gates, who has given away $28 billion.
Buffett, the second-richest American and the third-richest global billionaire on Forbes’ lists, has been a leading advocate for philanthropy among the wealthy. Buffet and Gates launched the The Giving Pledge in 2010, encouraging the world’s wealthy to commit to donating 50% or more of their fortunes to philanthropy during their lifetime or after they die.’’
I don’t know about you but this is serious food for thought. How can anyone suggest giving away 50% of your fortune i n your lifetime? Not many people will be willing to hear the suggestion or even consider it. But did you notice something here? After he gave away a whopping $2.6bn to 4 foundations, the price of Berkshire Hathaway appreciated so much, that his net worth increased by $5.5bn. He more or less made back what he had given away and more.
On an individual level, though I hate to sound like a cliché, the truth is all of your wealth means nothing if you do not have compassion for others.
In recent times, Corporate Social Responsibility (CSR) has become the buzz word for several l arge organisations who want to show they are giving back to the community. Almost all of the listed and large corporations have a foundation that’s f unding boreholes, school blocks, building hospitals, educating the girl child, awarding scholarships, providing solar lamps for rural communities, supporting cross border medical interventions etc. The list is endless and sometimes I wonder the intent of these gestures. Is it for the attractive photo opportunity it gives to present the firm in the center pages of leading newspapers or to genuinely help a community i n need? I n five years time, will we find that borehole still pumping water or would it have become a dumping ground for trash and rubbish. What is the measure of your corporate wealth?
On an i ndividual l evel, though I hate to sound like a cliché, the truth is all of your wealth means nothing if you do not have compassion for others. Christianity (and dare I say all other faiths) teaches us to l ove our neighbours as ourselves, to share what the Lord has blessed us with amongst others so that we make the world a better place. We are exhorted to feed the hungry, visit the sick and those in prison, lift burdens from those we see are overwhelmed, to give our excess to those who do not have…. etc.
And so in this new quarter, are you ready to walk with compassion concerning your finances or is all that you have been blessed with for you, your spouse and four children alone. All others can go work for theirs!! What is the measure of the wealth you have? Have a great week ahead everyone. Excerpts from www.Forbes. Com and www. JoshuaKennon.com Ononuju Irukwu is the Managing Director, Chapel Hill Denham Management Limited and the Chief promoter of the Women’s Investment Fund, Nigeria’s first gender mutual fund. She is passionate about increasing financial literacy and investment participation levels of women and youths in Nigeria.
The real measure of your wealth is how much you would be worth if you lost all your money.
– Anonymous