Updated: May 8, 2020
Everyone I’ve met wants to retire rich. But when it comes to financial planning, “to retire rich” is not an acceptable goal because it’s vague and subjective.
Ask yourself this question: At least how much money does a person need to have to be considered rich? Is it 1 million? 10 million? Or maybe 100 million?
Furthermore, go and ask a friend next, or raise this question on social media. What numbers did you get? I’m sure you got different answers.
As you should realize, it’s a complicated question. Because everyone will have different interpretations of what they consider as wealthy.
For example, I’ve heard someone tell me that they’d feel rich if they only have 1 million. But a friend disagrees and thinks that’s too low. He claims that he’d need 50 million before he considers himself rich.
So again, how much money do you need to “be rich”?
Maybe it’s better to look at global numbers. Perhaps, you’re rich if you belong to the top 1% of income earners in the world, right?
If that is so, then at least US $32,400 a year, or in today’s exchange rate, if you earn around P140,000 a month, then you belong to the top 1% of the world’s rich according to the Credit Suisse Global Wealth Report 2018.
So if you’re working at upper management or an established professional in the Philippines, then you’re rich by this standard.
However, I’ve met doctors, engineers, and CEO’s who don’t consider themselves rich at all. At best, they think they’re upper middle class, but not rich.
Living a Rich Lifestyle
Maybe, what we can define as rich is someone living like what we see in movies. You know… big house, sports car, designer clothes, and all that gold and glitter.
Yes, they are definitely rich, but how much money do you need to afford that lifestyle? Now that would depend on which country you live in.
I talked to a real estate broker and he claims that a large house and lot in the Philippines would cost around P16 million. But the same property would be around P140 million in Singapore; and that’s why most Singaporeans live in apartments.
Moreover, each person can also have a different definition of living a rich lifestyle.
I’ve met someone who thinks that being healthy is what makes you wealthy. While a manager once told me that living a spiritual and stress-free life with your loving family, is what it truly means to be rich.
How I Define Rich
Clearly, being rich is not solely based on how much you earn or how much money you have. Other factors need to be considered, especially one’s spending habits.
Because it doesn’t matter if you’re earning P100,000 or P1 million a month if you’re also spending at the same rate. You may look and live like a rich person today, but once your income stops, you’ll struggle financially sooner than you think.
Thus, my personal belief is that, a person can be considered rich if they can afford to stop working and still manage to live a healthy and comfortable lifestyle.
How? Either they’ve built enough passive income to pay for their needs and wants; or they’ve accumulated enough wealth to fund their preferred lifestyle until they die. And of course, it can be a combination of both.
Be Rich in Your Own Terms
To be “universally rich” – as I’d like to call it – means being able to afford the life that you want.
Whether it’s living in a big mansion or a simple house; whether you have a sports car or a mountain bike; or whether you live in the fast-paced urban city or in a rural farm in the province — as long as it is what you desire for yourself, and you can sustain that lifestyle for as long as you want, then you are rich in my definition.
Don’t be caught up with society’s general definition of being rich. You’ll most likely end up disheartened trying to reach an impossible standard.
However, you can also even disagree with me on what it means to be wealthy. Maybe you think it’s not really about being able to afford the life that you want.
If so, then that’s okay because you are allowed to define rich and wealthy accordingly. And in fact, I believe it’s more important to define it with your own terms and parameters, rather than just accepting what other people say it should be.
And then ultimately, making a personal commitment to achieve that goal.
So how would you define someone who is rich and wealthy? Is it the similar or different to how I define it? I’d like to know your thoughts in the comments section.