My Favorite Definition of Wealth

Xperience Growthblogposts

By: Carter Williams, Director of Xperience Growth Coaching & Consulting

How do you define wealth? For some, it’s a balance in bank accounts. For others, it’s things: home(s), car(s), jewel(s)… the trappings of wealth. It can also be a net worth number. There are a number of definitions and ways to look at wealth.

My favorite way to define and look at wealth is freedom. Freedom of choice to do or not do as I please for as long as I please. Choosing how I spend time, how I spend money, how I spend my energy are all encompassed in my definition of wealth.

The common trap that many of us fall into is having our financial responsibility increase with our earnings. The more we make, the more we spend. And not just spend, we commit the money, as well. In his book The Psychology of Money, author Morgan Housel explains that the median income in 1955 was $29,000, when adjusted for inflation, compared to $62,000 in 2019. During the same timeframe, the median home size increased from 983 SF to 2,436 SF. Since the majority of homeowners have a mortgage, we have committed the money into the house. While our incomes have drastically increased, so have our fixed expenses. That translates to not being able to choose how I spend that portion of the money I earn.

Plus, this forces us to spend our time and energy keeping our income at a level that supports our lifestyle. How we spend our precious time and our energy is dictated by the expenses that we’re committed to. Our freedom of choice is no better or likely worse than it was 70 years ago.

If this feels like you, take the start of the new year to turn the tide. Wealth is a long term game that requires a long term view. Here’s a couple things that you can do to begin the process of earning back your time, energy & money.

Reduce your committed expenses. What expenses are you committed to that you can remove? Subscriptions that you no longer use, services that don’t really need or what high rate loans can you pay off? This is a business and personal conversation. Go through your expenses by line item and make cuts and plans to pay loans down off.

Stop trading time for money. If you have a job where you spend time somewhere or doing something that you get paid for, you’re trading time for money. Yes, this includes just about everyone and you likely cannot actually stop. That’s okay! Start looking at investments that make money without you having to spend time – like real estate and stocks/money markets. For business owners, who can you hire to help make more revenue for your business? Owners can hire salespeople to make sales that they are not a part of. Salespeople can hire junior salespeople to work under them. The more income that you can generate for activity NOT performed by you will begin to shift the time and energy equation in your favor.

Wealth is not elusive and it’s also not quick. Yet, when you look at it in ways and make plans that are attainable, you’ll achieve the freedom of it faster than you think.