- There is a society-wide misidentification of what wealth means
- Wealth should be defined by: emotional wealth, time wealth, and location wealth
- Instead of accumulating money or assets, we should be focusing on wealth of happiness
- Maximizing the three types of wealth will give you satisfaction that money can’t buy
OK, that might have been a little mean. I’m sure everyone clicked on this post looking for a “get rich quick” scheme. In fact, so did I!
But what if I told you that you don’t need a get rich quick scheme? Or what if I told you that you’ve been wealthy all your life and have been squandering your riches? I’m sure your head might explode, or at the very least your stomach would drop.
Well, I’m telling you: you’ve been rich all your life. Feel free to pause a moment while you catch your breath (and piece together your head).
The problem is that we have misdefined what “rich” and “wealthy” means. If you read my post on financial mindsets, you’ll know that we place too high a value on money and things, and not enough value in passion or happiness. This misplacement of value is caused by the fact that we believe material possessions will bring us our happiness, which is a backward way to view life.
In fact, it’s our happiness that actually produces money and things, or more importantly, produces the right amount of the two. This is because there’s a diminishing return on the happiness we receive from material possessions. How much satisfaction, for example, will you receive from owning 3 cars vs 2 cars?
Look at the graph below, which depicts the idea that things can only produce so much happiness. The first car you own has a massive impact: this new mobility literally is life changing. As you add cars to your “carsenal” (sorry, bad joke: an arsenal of cars), it’s overall impact on your life is less, and therefore you can see how you receive less and less happiness:
Car number 4 has such a minimal change on your life that you barely even feel the effects. By car number 5, you’ve had to focus so much time and attention on building enough wealth to afford it, that it actually decreases your happiness. Not to mention the hollowness you feel since you’d thought all along that car number 5 would be the differentiating factor to increasing the quality of your life.
But don’t fret, all is not lost! There are three units of wealth that never have diminishing returns. The more you invest in them, the greater the returns are to your life. In this way, we shouldn’t focus on wealth in the traditional sense, but rather on these three:
1. Emotional Wealth
The first step to true wealth is the accumulation of positive emotions. It’s the amount of uplifting thoughts and decisions you have that directly tie to how wealthy you are emotionally.
To build this wealth, there needs to be a focus on mindset. No matter where you are in life, it’s possible to come immensely wealthy in this aspect. All you need to do is train yourself mentally to seek out and spread positivity. Positive thoughts lead to positive experiences, which cause uplifting emotions, which leads to positive actions, which then leads to an increasingly positive mindset, and so on and so forth.
Before any other wealth is achieved, you need to increase your emotional wherewithal. Think of it as the emotional savings account of your net worth. It’s your baseline, and is liquid enough to be drawn upon at a moments notice. No matter who you are, you should always have a savings account full of emotional wealth.
2. Time Wealth
In one way or another, this type of wealth is the ultimate aim for everyone. Whether we know it or not, when we set goals, the end result is our ability to use our time in the way we see fit. “Time wealth” is the wealth we receive from owning our own time. The more time you own, the wealthier you are.
What’s great is that each minute you’re able to take as your own, the happier you’ll be. Now, time wealth doesn’t mean the amount of downtime you have, but rather, the amount of time you’re able to allocate in ways that move your life in the direction you want.
Whether you want to work 16 hours a day in a business you love or spend the day meeting people in Taiwanese hostels, as long as you’re spending your time doing what you want, you’re wealthy.
What’s important to note about this example is that if you’re building a business so you’ll have enough money to pursue other interests, re-read my post on scalability. Building a scalable business will give you the time wealth you were after.
Resource: The 4 Hour Work Week
3. Location Wealth
The final wealth is the wealth of location, or more broadly, the wealth of freedom of decision. Seeing as the combination of these three aspects of wealth add up to true ownership of your decisions, I’ll break this one down further by sticking with location wealth.
Once your emotional wealth is in balance, you’re able to game plan a way to increase your time wealth. Through your positive emotions, you’re able to see with clarity and build a life that maximizes your time (and therefore your passions). Once your time is maximized, the last pillar is the ability to live wherever and whenever you want (barring a time machine, of course).
With the wealth of your time, you are now ready to pick and choose where you live, or travel between. I’d suggest trying mini-vacations in different areas of the world, until you find place that resonates with you. In fact, it may be the travel itself that is the most resonating.
It’s crazy to me that people still don’t talk about the power of the sharing economy to achieve wealth like this. If you’ve really built a life full of emotional wealth and time wealth, it should be natural to leverage platforms like Airbnb to travel around at minimal cost. For me, location wealth is the ability to be multi-location independent (blog post to come).
Renting out your home while renting someone else’s home in a new and exciting new place is truly owning your emotions, time, and locations. The best part? Location wealth directly leads to greater emotional wealth, which leads to greater allocation of your time wealth, which leads to an even greater ability to live where you want:
If you have your eyebrows raised, you’re not alone, mine are raised too. For some of us to achieve these three units of wealth, we need wealth in the traditional sense. This isn’t true for everyone, of course, as Rolf Potts quips:
“Of all the outrageous throwaway lines one hears in movies, there is one that stands out for me. It doesn’t come from a madcap comedy, an esoteric science-fiction flick, or a special-effects-laden action thriller. It comes from Oliver Stone’s Wall Street, when the Charlie Sheen character — a promising big shot in the stock market — is telling his girlfriend about his dreams:
‘I think if I can make a bundle of cash before I’m thirty and get out of this racket,” he says, “I’ll be able to ride my motorcycle across China.’
When I first saw this scene on video a few years ago, I nearly fell out of my seat in astonishment. After all, Charlie Sheen or anyone else could work for eight months as a toilet cleaner and have enough money to ride a motorcycle across China. Even if they didn’t yet have their own motorcycle, another couple months of scrubbing toilets would earn them enough to buy one when they got to China.”
But for people like me, we do need money to go achieve wealth in these three categories. I love building assets, and I know I’ll only be happy if my time wealth and location wealth are a direct result of the semi-automated and recurring income I’ve been able to create. For others, 5 dollars in their pocket and a backpack on their back is all they need to take control of their emotion, time, and location.
The key is to allocate your traditional wealth in a way that maximizes the three true wealths for you. This way, money isn’t the goal, but is the end to a greater mean. I’d say the greatest.