“Are we going to be poor, mum?” – my teenage son asked.
I was driving us to the gym and we were talking about changing our phones. Naturally, he wants a top-notch iPhone; I understand that. I worship in the temple of ‘Apple’ too.
What was my son about?
I had just mentioned that when our phone contracts are up for renewal we’d need to be careful to keep the cost down – particularly if I decide to take voluntary severance.
It was obvious that the thought of having to be careful with money upset my son. He flipped to the conclusion that we are getting poor and somehow this didn’t sit well with him (I don’t understand this one either but probably this is for another conversation).
I didn’t know what to say. Conversations about money are never easy and it doesn’t matter how open you are generally about it. Having conversations about money when your financial situation is about to become much less certain is…well, difficult.
I said nothing; which I find is the best thing to do when you don’t know what to say.
Then I started running and my mind drifted back to my son and his understanding of wealth and poverty; or the lack of it. On the way back home, we had our chat about money.
I told my son that we won’t be poor and that we’ll need to be careful. This didn’t seem to lift his fear.
This is when I realised that my son is fearful of being poor because he has very little understanding of what being wealthy is about.
The first of our conversations about money, about wealth, boils down to the following:
Being wealthy is not about money!
Are you surprised? Do you think this sounds wrong?
Most people I meet think like my son.
When they think about wealth they think about hefty bank accounts, mansions, soaking the summer sun on a yacht and gold plated door handles. Some, more sophisticated, acquaintances of mine would go as far as including unique experiences and limitless opportunities and choice in the description of wealth.
These are the signs of wealth but not what makes you wealthy.
Which brings us to the fact that being wealthy is not about money.
It is about what makes you wealthy and this is a combination of your ability to create wealth, to keep it, to expand it and to appreciate and share it.
So, I’m not giving you some new age drivel about how money doesn’t matter; how all that matters is love and your soul (for what it is worth, I believe that all these matter for a happy and fulfilled life).
What I’m saying is that becoming, and being, wealthy is not about money; it is about the conditions you’ve created in your life to make it, keep it, expand it and spend it appropriately.
Here is some of what you need to be wealthy.
#1. Understanding of the link between money and value
To be wealthy you need to understand the link between money and value.
Sustainable wealth is a measure of the value you contribute to others and to the society at large.
For instance, your pay is a measure of the value your employer believes you contribute to their business. Hence, if you want a pay rise, you need to make sure that you contribute a lot, that you contribute what your employer values and that your employer knows of your contribution. Simples.
This link between money and value works similarly when you freelance and start your own business.
(You can make money that is not linked to contributing value but, I’d venture, this is not sustainable. When money and value are not in accord, you are likely involved in a form of gambling and even if you are very good at it things can go wrong.)
#2. Understanding money and how it works
To be truly wealthy, you need to understand money and how it works.
I doubt very much that I’ll manage to help with this one here: many volumes and digital space is devoted to this.
What I can do, however, is to tell you that money is to the economy what your blood stream is to your body – it makes all else thrive but to do that it must circulate.
As part of this large body of the economy you make money, use it to nourish your life and store some resources.
Where this gets more complicated is the detail. For example:
- understanding the various ways to increase your income;
- knowing how to make sure that you spend enough to nourish your life and your money goes far;
- learning how to invest so that, in time, your investments become a major source of income.
Equally important is to comprehend some of the simple rules of money like ‘you cannot spend it twice’.
Understanding money and how it works can take a long time. Have you thought of playing some of the great money games to help you along? (I can tell you that playing CashFlow with John and our son made me think and research quite a few things.)
#3. Making choices
Being wealthy is to a very large degree about the choices you make in life – every choice comes with its costs and opportunities.
What did you choose to do for living? How much you choose to read (and what do you read)?
Did you go to university? Did you borrow all you can?
I can go on but you probably get my meaning already. Your choices matter so you ought to choose wisely. And remember that you can change the direction of your life.
#4. Sound money habits
Being wealthy is very much about your habits.
If you’d like to learn more about that you can check out Rich Habits by Thomas Corley. (You don’t have to agree with everything in it; just read it and think about it.)
Being wealthy is also about resilience.
As I tried to tell my son on numerous occasions, this is about what you do when sh*t happens to you.
Because, as we all know, dreadful things happen and often you have little or no control over whether they happen or not.
Being resilient means that you keep going – you adapt, you fight and you find a way. One thing you don’t do is admit defeat.
Being wealthy is also about how flexible you are prepared to be in your life.
What are you going to do when there are setbacks in your wealth building plan? Like you are made redundant?
I believe that being flexible is key to sailing through financial adversity. If our monthly income declines, I’m more than prepared to reduce our monthly spending; and reduce it very seriously.
Because, through challenging my comfort zone, I know that I don’t need much to live on. I can take life as it comes.
No, I don’t mean this literally. Still, being wealthy is about being hungry – for life, for experiences, for glory even.
Indifferent people don’t make a difference in this word, they don’t ‘make a dent in the universe’. Hungry people do.
Conversations about money can be difficult. How do you explain to your teen son that wealth is not about money?
I chose to tell my son that being wealthy is not about how much you have, it is about how well equipped you are to have what you want.
“Are we going to be poor, mum?” – my teenage son asked.
No, son; we are not going to be poor. You can still forget about this shiny, new iPhone – this is what being flexible is about.