How to determine if you are wealthy!

[LuxLiving]

Okay, read all of these - have them in my own personal 'financial library' here at the house, all highlighted and dog-eared! Who else are you reading?

[Mathew Green]

Originally Posted by wannabefree

I have this coworker who constantly tells me that you can't get rich working for someone else yet she makes 3 times the median income but she blows it as fast as it comes in. The book for me just dispels the myths about who is really wealthy.

One of the key points of Millionaire Next Door is that most of the self-made millionaires own their own business, so in that sense your friend is right and the book proves it.

In a larger sense, you're right because the key to becoming wealthy is spending less than you make. Without wise money management those millionaires would never have built up enough capital to start the businesses that eventually made them wealthy, and living below their means allows them to continue building up capital.

But the fastest and surest way to become wealthy has always been to make a lot of other people do the work while you sit back and skim a percentage off the top of everything they produce. As an individual, you can only work a certain number of hours per day; but as a business owner, you can earn money off the labor of all the workers you can keep busy. So the cliche that "you can't get rich working for sombody else" has more than a grain of truth in it.

[wannabefree]

Matthew I didn't mean to imply that I think it's a bad idea to work for yourself but my point was simply that she makes 120k per year but she travels all over the world constantly and has all the latest greatest computers, cars, nice house. There are plenty of business owners who don't net 120k per year. I agree with you about owning a business and I would love to own my own someday

[TinyFish]

Yes, I'd say this works better for older people. According to this, my young DH and I would need to have over 600 grand to qualify! Eeeeeeep! Depending on what you consider to be the value of our house (this is always a bit subjective, but I looked up the range on Zillow, a useful tool by the way), we are either a little below or a little above.

Are we 'wealthy'? Well, in some ways we are. We are very fortunate to have good jobs, reliable cars, and a (very small) home that has appreciated in value. We enjoy some luxuries, but I don't see us being the subject of a 'lifestyles of the rich and famous' anytime soon! Most of this wealth is tied up in the value of our home and in our retirement accounts. It is great to have it there, but it isn't exactly the kind of 'wealth' that does one much good in the short term.

I'm sure a lot of casual aquaintances think we are very poor as we dress quite modestly, have modest cars, and I am often declining to do things because they are not in the budget because we are saving towards some bigger goal. I love that smug feeling when someone is condescending or scornful towards us though. My favorite guilty pleasure!

-TinyFish