My financial planner had us play a little game. It went something like this: "I want you to write down your five closest friends. Got it? Okay, now next to their name, I want you to write down how much you think they make in a year. Take your time and give it your best guess - obviously, you don't know. Got it? Okay, now I want you to do some math - add up that column of numbers... and divide by five. No, you don't need to tell me what that number is - let me tell you: "That's about how much you make in a year. Now: shall we talk about why country clubs exist?" "Wealth" is a societal marker that allows a person to judge themselves against everyone else. Countercultures argue that money isn't the best metric to judge success and they certainly make a compelling point. I think Bill Gates has a pretty good handle on it: “I can understand wanting to have millions of dollars, there’s a certain freedom, meaningful freedom, that comes with that. But once you get much beyond that, I have to tell you, it’s the same hamburger. Dick’s has not raised their prices enough,” he said, referring to the Seattle-area fast-food chain. “But being ambitious is good. You just have to pick what you enjoy doing.” Frankly, the discussion gets pretty boring pretty quickly so let me leave you with a video that isn't: http://www.youtube.com/watch?v=u6XAPnuFjJc
I tend to agree with Gates. For example, I am middle class; one of my good buddies is a member of the super rich class (his family owns a professional sports franchise among other things). Our lives are more quantitatively different than qualitatively different. We both get up and drive to professional jobs, he just makes more than me and gets there in his choice of several nice cars. We both have houses; his is just a lot bigger than mine, etc, etc. There aren't many things that he does in his everyday life that differ from mine or most people's. The real qualitative differences in wealth are between the very poor and everyone else. If you have to worry about a cholera outbreak in your village, because your drinking water comes from a polluted stream, then you have a qualitatively different life than our experience.
Couldn't agree more. I can whine all day about how there's a clear difference between a son of rich parents paying for a college and a son of middle class parents trying to do the same, but at the end of the day neither of us has cholera.The real qualitative differences in wealth are between the very poor and everyone else.
Your financial planners exercise was off the mark for me, but then I have a wide range of close friends. The "artists" throw the equation way off. For me, I will feel "wealthy" once I hit that stage Gates is referring to, when anything beyond it is simply gravy. When I can safely say I no longer need to work to earn money, the money is doing that itself. Regarding the management of finances, I am horrible at it. My wife is fantastic at it. I'm good at making money, she's good at managing it. It's a nice symbiotic arrangement. I work with a guy that is fantastic at managing his finances. At 30 he already owned 12 rental homes. He lived with his wife and son in a very modest home and bought other modest homes and rents them out. He buys 2-3 houses a year now. Because they are extremely frugal, he is able to do this. He recently asked me about my iPhone. He was considering getting one but thought they were too expensive. This guy owns north of 15 homes but won't buy a $300 phone and instead uses an old blackberry that he got for free. When I asked him why he didn't treat himself to the "nicer" phone, he took out a pen and paper. As he was showing it to me, he kept saying things like, "buy an iPhone", then he would draw the arrow further, "buy a boat", then he would draw the arrow further, "buy a sports car", etc. He has done the math and by the time he is 38 he can have 25 homes and enough passive income to live very comfortably and continue to reinvest in more houses. I don't have his discipline, but my wife does (thankfully). So his definition of wealth or being "rich" is the day he can stop "working" for a company and just manage the properties he has acquired. His definition is not measured against his peers but is measured against a goal he has set forth for himself.
That's definitely an interesting way of looking at it. I don't have that kind of self discipline, and it's not really helped that I'm both an automotive and tabletop wargaming enthusiast. Both pretty expensive hobbies unless you know what you're doing (especially when it comes to things like Warhammer). I have to wonder if it's possible to do what he did nowadays, where I live the median house price is 500,000 AUD.
A passive income that I could live off of would be great, but all of the passive income in the world isn't worth squat if I can't make music. I'd wager you feel the same about cars/gaming.I don't have that kind of self discipline,
Honestly, I don't either but I was smart enough to marry a women that does. She balances me out. I'm not a car collector or a gaming enthusiast but I am a musician that loves buying new instruments.