Most people associate being wealthy to being rich. However, there are many ways to be wealthy without ever being rich.
Watching everything that’s making headlines lately, I think to myself that we often focus on things that shouldn’t matter as much as we think they should. When it comes to money and the things it can do for us, most of us often focus on wanting or needing “more” without really thinking about why more is necessary, or exactly how much more is needed. Wealth can be described as an abundance of valuable possessions or money, or as plentiful supplies of a particular resource. What most people fail to realize is that “abundance” and “plentiful” are relative terms. The real question is are you able to live the life you want with the resources you have? Since lifestyle is an individual choice, the concept of wealth is also unique to everyone. Let’s look at two examples to make this point. First, we have Ms. Jones who isearning several hundred thousand dollars every year and has over one million dollars invested in retirement accounts. Next, we have Mr.Smith who worked all of his life to save enough money and buy a small seasonal restaurant for a few hundred thousand dollars. Who’swealthier? The millionaire or the restaurant owner? The millionaire certainly seems richer but, in order to answer who’s wealthier, we need to take a look at how these two use their money. Ms. Jones uses her abundance of cash flow quite liberally. With full confidence in next year’s earnings, she knows to set some money aside for retirement butspends most of her income to maintain herlavish lifestyle. The restaurant owner has built up many frugal habits in order to save up the money for his dream restaurant. He’s been debt free for a long time and lives a nice modest lifestyle with little desire for fancy things. The profits he expects to make during the restaurant’s summer season is more than enough to support his lifestyle costs. So, who’s wealthier? The millionaire or the restaurant owner? If we define wealth as having sufficient resources to live the life you want, then without any lifestyle changes, Mr. Smith has more abundance than Ms. Jones. With the restaurant profits covering more than his lifestyle costs, he has an abundant supply of money. He can leave his job, live his life, accumulate any extra profits earned and still has the value of the restaurant to fall back on.On the other hand, Ms. Jones does not appear to have sufficient resources to continue to live the life she wants in perpetuity.If she stopped working, her lifestyle would eat up her savings in a matter of a few years leaving her with very little to maintain her desired lifestyle. As you can see, being rich and being wealthy aren’t synonymous. Find your own financial balance and you can find what it takes for you to become wealthy. Author: Marcel LeBlanc, BBA, CFP, CIM is a Financial Planner with Louisbourg Investments. Comments or questions may be submitted to Marcel at marcel.leblanc@louisbourg.net, or he may be reached at (506) 383-5204.