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Rich versus wealthy: As author Morgan Housel states here, “Rich means you have cash to buy stuff.” On the other hand, “Wealth means you have unspent savings and investments that provide some level of intangible and lasting pleasure – independence, autonomy, controlling your time, and doing what you want to do, when you want to do it…” Striving for a “rich” lifestyle is synonymous to an endless chase. Take the famous Vanderbilt family, for example. In the late 1800s, Cornelius Vanderbilt left his heirs somewhere around today’s equivalent of $300 billion, and within 50 years it was diminished.
Managing your money mindset: For the Vanderbilts, a “good life” was related to status, social standing and being known as “rich”. Their possession of money was prioritized over holding onto wealth, and in the end, it left them with nothing. Essayist Nassim Taleb reinforces the downfall of the rich-obsessed by once saying, “...The richer we become, the harder it is to live within our means.” At the end of the day, “Abundance is harder for us to handle than scarcity.” Rather than building a life around money, utilizing money to build a life of independence is where the concept of true “wealth” lies.
Stop the goalpost: Your focus should be on getting off the hedonic treadmill. Stop using your net worth and income as a score card, and enjoy a state of wealthiness instead.