What Is "Wealth"?

I want you to think for a moment about when you first learned about money in a formal sense, like someone actually trying to teach you about money in an earnest way. Maybe that was in high school or college, maybe a family member sat you down and tried to impart some wisdom, or maybe, like a lot of people, you learned some things the hard way after making some questionable decisions and realizing that you needed to understand this stuff better.

Are you picturing that experience in your mind? That kind of instruction usually focuses on numbers and math and organization. Maybe there’s a calculator, maybe there’s a spreadsheet, and it’s about getting the numbers right. So perhaps someone told you that keeping a budget was the way to get ahead or taught you about compounding growth to help you learn about saving & investing. That way of thinking about money is important and, even if you’re not great with math or spreadsheets, it’s still very useful to get a sense of what’s going on there.

But there is this underlying assumption that making good financial decisions is just a matter of getting the math right. That if the numbers work out, your decisions will become obvious.

But, in practice, this is almost never the case.

Because there’s another way that we learn about money: by watching how the people around us use it, usually a parent or older family member, and drawing our own conclusions about what is right or wrong, what’s scary or exciting. Those lessons are often subconscious, tend to be much more emotional, and last a lot longer.

If your parents lost a lot of money investing or buying real estate, then you’re probably more likely to think that investing or buying real estate is very risky. If someone you knew in your formative years got into a lot of trouble with debt or taxes or overspending, chances are you’re also very worried about debt or taxes or overspending. And those lessons run deep, even when they’re not actually helpful.

So now I want you to imagine one of those lessons, something you learned about money by observing the world around you. And just sit with that idea for just a few seconds.

Now, with all of that in mind—the numbers part, the emotional part—I want you to pay attention to what happens when you think of the word “wealth”. What comes to mind? Is it a specific person, or maybe a quality of life? Is it the car a person drives or the clothes they wear or the vacations they take? Is it something attainable or is it too big to be realistic? I personally think of the millionaires on Gilligan’s Island, which is silly but true.

Whatever it is that comes to mind when you hear the word wealth, I bet it has very little to do with numbers or math or spreadsheets. And I bet nobody thought of the textbook definition of wealth.

Here’s what Merriam-Webster has to say: wealth is abundance of valuable material possessions or resources. Not quite as exciting as those nice cars and fun vacations, is it? And you’ll also notice that it is incredibly vague. What is an “abundance”? And how do we know when we have it?

I think “abundance” implies that you have more than enough. If you had just enough, that’s not really abundant, right? It’s enough to get by, which is cool, but getting by doesn’t feel abundant. So we need just a little bit more than that to have abundance.

And here’s where that preamble about math & numbers versus emotions comes in: we can use all kinds of tools to figure out how much you spend and therefore how much you would need in order to have more than enough. That’s the math side of it. But “more than enough” is tricky because, c’mon, wouldn’t just a little bit more than that feel just a little bit more abundant?

Here’s what I’ll say: wealth is never a matter of how much money you have. Instead it’s a balance of how much you have and how much you think you need to spend to feel fulfilled.

There are people—maybe you know a few—who have more than enough money to last the rest of their lives, but still worry about running out. They live in abundance, but they don’t feel it. And there are other people with a fraction of that amount who feel totally comfortable with what they have and how they live. It’s not really about getting the math to work out and then your problems go away. Even when you have the “correct” answer from a numbers perspective, it’s the emotional side that is actually running the show.

There’s a question that gets used fairly often by financial planners along these lines: if money was no concern, what would you do? How would you live? And it’s a great question, because it gives you permission to dream big. The answers tend to be along the lines of what we normally associate with wealth: fancy vacations, a nicer house, maybe a second (or even third) house in a beautiful location, that car you’ve always wanted, etc. It’s the stuff that you can see people having or doing or enjoying. And those things are great, no doubt.

But all of that amazing stuff that you don’t currently have or those things that you aren't currently doing start to feel pretty … ordinary once you have them. If you don’t believe me, ask the person you know with the most outward signs of success or wealth what they would change about their lives, and odds are that they have an answer that involves having more money. Because having all the stuff or taking all the vacations provides only temporary satisfaction. A much bigger house becomes a regular house once you’re in it for a few months. The nicest car you’ve ever owned just becomes a car surprisingly quickly. And you can take this from me as an ex-mercenary roadie who lived out of his suitcase for almost four years: when you spend all of your time traveling around the world, even world travel starts to feel pretty normal. Doesn’t mean it’s bad, it just loses its sparkle.

I don’t want anyone to get me wrong: I think having big dreams is totally great. And I’m not immune from wanting all of those nice things. But for a moment, just for a moment, let’s acknowledge that few people reach those kinds of dreams and stop once they get there.

Always wanted to spend a month in Italy? That’s great. Italy is awesome, you’re going to have a great time. But after you’ve done that, after you’re back at home for a few months, I bet you’re already thinking about the next awesome vacation. Again, that’s totally rad; keep aiming high. But let’s acknowledge that dreams like that have no end, and you can find yourself on kind of an “abundance hamster wheel” where no matter how much you have or do or experience, just a little bit more would feel just a little bit more abundant.

I like this definition of wealth, which I’m paraphrasing from the excellent personal finance author Morgan Housel: the ability to do what you want, when you want, with whom you want, for as long as you want. One of the biggest reasons that I like this perspective is that it’s not at all about what you buy or what you own. It’s about freedom to spend your time the way you want with whom you want. That certainly includes vacations, but also applies to your everyday life. Are you doing what you want, with whom you want, in your everyday life.

I ask a question of all of my financial planning clients: if everything works out the way you want, what would you do on an average day? Describe how you would spend your time, who you’d be with, etc., etc. I want you to spend a few seconds right now imagining what this “perfect average day” would look like for you if money was no issue.

What did you think of? I’m going to go out on a limb and say that your vision for a perfect average day is probably something much less grand than world travel or having a big house or any of the other conspicuous signs of wealth that we normally think of. Most of the time, the answers I hear are some version of your current life, but with more comfort and more options.

Maybe you wake up in the morning and exercise and meditate. Maybe there’s time to read a good book. Or take a walk in the woods with a family member or friend. Probably enjoying some kind of nice meal with people you care about. Maybe you still go to work, but it’s because you want to and not because you need to. Virtually never does someone’s answer to that question involve buying things or consumerism. And almost always—let’s say nine times out of ten—those “perfect average day” activities are cheap or free.

So how would it feel if you could have more days like that? How would your life change? How would your relationships improve? That seems like a pretty great life to me, and, dare I say, even one of abundance.

Instead of thinking about wealth in terms of getting so much money that you could do whatever you want forever (which, again, is kind of a tricky thing because wouldn’t just a bit more money be just a bit better?), how about we think of wealth in terms of affording more and more of those “perfect average days”?

Maybe right now you only have a couple of days like this each week or even each month. But now we can think of building wealth or living in abundance in terms of saving and investing to afford more and more of those days in the future. If you could have even four extra hours each week to do those “perfect average day” activities, would that feel like a pretty big win? I know it would for me—and it’s a hell of a lot easier to do than buying a new house.

Here’s something I want you to consider this week: if you save 20% of your income—which is ambitious for most people, but often not impossible—that’s the same as saving one day’s worth of income out of every five days that you work. So if you have a five-days-a-week job and save 20%, that means you saved enough to buy a day off in the future. If you invest some of that money and wait long enough, that one day’s worth of income could grow to two day’s worth, or four days, or eight days. If you stick at it long enough, you’re buying yourself whole weeks free from work. Saving and investing now means buying yourself more and better options in the future.

If 20% is too ambitious for you, then consider that a 10% savings rate is the same as saving one day’s worth of income for every ten days that you work. So if you have a five days a week job and save 10%, every other week you’ll have bought yourself a day off in the future. And again, if you invest some of it and let it grow for a long time, you’ll buy yourself many, many of these perfect average days.

Do me a favor this week, ok: spend a few minutes each morning thinking about how you would spend your day if you didn’t have to go to work. Not what you would buy, but what you would do if today was totally free. Then think about how you’re using your money—how much you’re saving, how much you’re spending—and if your decisions are helping you afford more of those days in the future or not. If they are: gold star for you. You are already on your way to a life of abundance. If your decisions are not helping you afford more perfect average days, don’t despair: this is exactly the right time to start making better decisions.

And good news for you: you already know one financial advisor whose name rhymes with Tim Iseler who isn't going to judge you because you have a weird job or haven’t made only perfect decisions with your money. Perfection is not a prerequisite for making better decisions. Getting on the right track and staying there is the name of the game, not perfection. If you have any questions about how to put your money to work for you to build that life of abundance, then go ahead and drop me a line. For real, I’m always happy to have a conversation.

That’s where I want to leave it for today. What did you think? Did it make sense?

If you want to have a conversation about building wealth and financial resilience, hit me up. This email address is always checked by yours truly.

Thanks,

Timothy Iseler, CFP®

Founder & Lead Advisor

Iseler Financial, LLC | Durham NC | (919) 666-7604

Iseler Financial helps creative professionals remove stress while taking control of their financial lives. We'll help identify current your strengths and weaknesses, clarify and refine your long-term goals, and prioritize decisions to improve your financial well-being now and later. Reach out today to take the first step.