How do you measure your wealth? Most people assume there are two typical ways. The first is a simple money calculation that takes everything you own, subtracts everything you owe, and that formula gives you your net worth. Simple. Others say wealth is not a measure of the money one has but of the intangibles such as relationships, time, health, etc.
The trouble with the first approach is that money is simply a scorecard, a measure of available resources quantified in dollar bills. It misses out on everything that the second approach captures: the wealth found in personal connection and freedom of time. But it’s hard to pay your bills with friendship, so the second method misses out on some of the pragmatism found in the first. As a result, I think it’s essential to measure wealth with a combination of the two and with one simple word: value.
Money is a byproduct of creating value for others. We are paid for the value we provide to others, and we pay others for the value they create for us. For example, I have no idea how the water in my plumbing works, but I know that in exchange for a number of dollars, I can hire someone who has spent their life understanding how it works and what is needed to keep it working. They create value for me with their skillset. Likewise, I create value by helping others understand what’s important about money and guiding them toward a bigger future. I receive money in exchange for that value.
So really our wealth is not in the money we have, but rather in our ability to make that money. Our wealth does not come from the dollars themselves but from the knowledge and skills that generate those dollars. That’s our value, and that’s where we find the confidence so many are seeking.
In Total Cash Confidence, author Dan Sullivan refers to the acronym K.A.S.H. or knowledge, attitude, skills, and habit. Taken together, these attributes are what creates confidence. K.A.S.H. confidence comes from understanding that you can provide value to someone when they want something done but don’t want, or know how, to do it.
Going one step further, I think our wealth is a function of our value. Creating value for others often results in payment for that value. Create more value, receive more money. This recurring loop creates an endless marketplace of wealth for those who can help others. That payment may be monetary, but it also applies to relationships. Think about it: we invest our time and energy in those we choose to have around us. We create value by being there when they need us and receiving value when they do the same. In this way, our measure of wealth captures both the tangible and intangible. Whether the deposits go into our emotional bank or our regular bank, we can improve our wealth through the value we create.
This is why so many people struggle with the traditional idea of retirement. When people strive to achieve a certain portfolio balance and then quit their career, they aren’t retiring to anything. They aren’t going to something; they are moving away. When people are in the creation phase, their futures are more extensive. They receive intellectual, emotional, and resource deposits. When they “arrive” at a number or an age then decide to quit creating value and retire, their future tends to shrink. If the value of their portfolio decreases when they are no longer creating value for others, fear often sets in.
We tend to see this in people who have inherited their money. As benefactors, they often don’t understand how the money was created or what it is “worth.” They didn’t generate the value, so the money quickly disappears with no clear way for recreating it. Fear and regret are usually the results.
Having worked with many traditionally “wealthy” people who created their wealth by working, saving, and investing, I can tell you few derive confidence from the value of their portfolio. Regardless of how much they may have, they’re happy when stock prices are up and sad when prices are down (especially if someone they know is up while they’re down). If prices are up, they’re nervous about when prices will drop. The handwringing never stops.
True wealth is about helping others to have a bigger and better future. Everything about your future is about your knowledge, attitude, skills, and habits and the confidence created by using them to create value for others. You no longer have tension about money; instead, you are confident because you can produce it again by creating value and receiving payment. The formula keeps you permanently ahead and in a mentality of abundance. It’s value creation, and it tends to magnetize you to people with similar outlooks on life.
Creating and improving value for others is stimulating. This perspective endeavors to build a bigger future for yourself and those around you. In my mind, that’s the true measure of a person’s wealth.
https://prosperion.us/wp-content/uploads/2021/09/building-confidence.jpg9121500Steve Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngSteve Booren2021-09-21 12:08:102021-09-21 12:08:10How Do You Measure Your Wealth?
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