I asked a few friends, which they liked better and unanimously they decided that Gen Y Wealth was superior. I, on the other hand, still liked Gen Y Rich.
I went back and forth for a day and finally settled on Gen Y Wealth. (Tip: Always listen to your target audience.)
Wealth vs. Rich
Looking back, I’m glad I listened to my friends. I couldn’t be happier with the name of Gen Y Wealth. As I learn more about financial planning, I’m seeing that there is a big difference between being rich and being wealthy.
I think of being rich, as having a high net worth. Even though being rich is envied by many, it’s not hard to achieve.
I think of being wealthy as a more difficult but more worthwhile goal. I’m not sure where I heard the following quote from but it was important enough that I wrote this quote and underlined it in my journal, “Wealth is what’s left over, when everything is taken away”
The Accumulation of Wealth
Who would you rather be?
John works 80 hours a week. This year, John will make more than $150,000 for the first time. John bought a house that he pays 40% of his monthly income into. Since John works so hard, he doesn’t have much time to do routine housework, so he has to pay someone too clean and cook for him. John also bought a new car to reward himself for his work and because he has to commute 30 minutes each way to work. John contributes up to the employer match on his 401K, but that’s it for savings. At the age of 28, his net worth is about $100,000.
Jim works 40 hours a week, sometimes even less because he uses all of his vacation days. Jim expects to pull in $60,000 this year. Jim rented a small apartment close to his office so he can walk to work. Since he is close to his office, Jim sold his car and takes public transportation everywhere. Jim contributes up to the max to his 401K and has also maxed out his Roth IRA for the past 5 years. At the age of 28, Jim’s net worth is around $60,000.
If your goal was the accumulation of net worth, it would make sense to trade places with John.
If your goal was the accumulation of wealth, you would want to trade places with Jim.
What’s included in the Wealth Equation?
One thing that’s nice about net worth, it’s a statistic. By taking your assets minus liabilities, you can measure your riches.
Wealth, on the other hand, can’t be measured. Not only do you have to include your net worth in the wealth equation, there are other factors that may vary.
Personally, four important factors to me are career, time, mobility, and health. I could have a net worth of $10,000,000, but if I hated my job and didn’t have time, mobility, or health, I would be the poorest man in the world.
How to Generate Wealth
The goal of Gen Y Wealth, is to make it’s readers the wealthiest people in the world, not the richest.
In the comments, I’m interested to know what wealth means to you. If you could measure your wealth, what factors would you include?
Photo by Mykl Roventine