5 min read

Do You Have What It Takes To Be Independently Wealthy?

Money is just the start of it, perhaps not even the hardest part
A wealthy-looking man in a cashmere coat standing before an impressive entry gate. Why yes, that is my castle.
Why yes, that is my castle | Image by Author via Lensa

Greetings friends!

Two types of people wonder what it would be like to have enough money to never worry about it again: those with only a little money and everyone else.

If you are poor or have been poor, it’s no surprise you will be focused on money as a means to improve your life. But even people who are rich by all objective standards fall into the trap of thinking they need more money to feel secure.

Money’s many meanings, and what they say about us

Money creates paradoxes because it means different things to different people, and different things to the same people at different periods in their lives.

  • I know people who are rich but not wealthy (and never will be).
  • I know people who are poor but far from impoverished.
  • I can tell you that one need not be independently wealthy to be financially independent.

Rich versus wealthy

In monetary terms, a rich person earns more money than they need to pay for life’s necessities (food, shelter, clothing) and has enough remaining to buy luxury items. You should consider luxury items as anything beyond the necessities; only some luxuries are expensive.

Many rich people never become wealthy. Wealth requires an accumulation of assets that retain their value and (typically) increase in value.

  • Plenty of professionals pulling down high salaries save little or nothing. Very often, they spend lavishly because they live in expensive places, say New York City or Zurich, and lead expensive lifestyles (private schools, exotic vacations, costly hobbies).
  • Now take a person who consistently saves $1,000 a month from their modest salary and invests it in the stock market. They may build wealth over time that will serve as a genuine buffer in ways that their “rich” friends would envy.
An expensively-dressed man standing in front of a blue luxury car with an impressive mansion behind him. This man is both rich and wealthy
This man is both rich and wealthy | Image by Author via Lensa

Poor versus impoverished

Note also that just because a person’s lifestyle has become expensively inflated, this does not mean living frugally is impossible. And it’s not solely a function of whether they live in an expensive country or city, which is a common objection I hear. It’s rather a consequence of what a person considers necessary to meet their desired standard of living.

It takes far less income to satisfy basic daily needs than many people realize or would like to admit. If you cover your basic needs and are content, you may be poor but you are not impoverished. If you dine on champagne and caviar but find yourself hungering for more, you are worse off than many others with far less.

What’s a high net worth individual?

I researched what thresholds people usually use for determining wealth. I’ve written about global wealth metrics before, which reveal the amazing fact that if you have more than $10,000 in assets, you are in the top half of all adults.

I know many readers won’t be satisfied with that, and think of “real” wealth as more like being a millionaire. It takes a wealth of $1 million to crack the global 1%. That’s the threshold at which financial advisors will start calling you a high net worth individual, or HNWI.

A sliver of the HNWIs makes it to the next threshold, which is the very high net worth individual, or VHNWI. This requires a wealth of $5 million.

And an even smaller fraction qualifies to be called ultra-high net worth individuals, or UHNWI. Some surveys set the threshold at $30 million, while others start at $50 million. (Note, if you find yourself between the two figures, I give you permission to choose the lower threshold. Your self-esteem may otherwise suffer.)

Although there are less than 300,000 such UHNWIs in the entire world (or a bit over 600,000 if you use the lower threshold), there is one level higher, which is the billionaire. There are only around 3,000 of these so far, but their numbers are growing.

Who has the potential to be “independently wealthy”?

Independently wealthy is typically taken to mean a person who need not rely on any external source or support for their livelihood. They don’t have to work for income (although they may work), and they don’t need any financial assistance (although they may receive some).

When I started this article, I thought I was going to talk about the money one might need to achieve this exalted status. Is an HNWI already there, or must one be a VHNWI or even a UHNWI? Surely some amount along this spectrum is sufficient to allow one to say they are independently wealthy.

But if the test includes the amount of money a person needs to not worry about money, it turns out that money is not the only or the toughest obstacle. It’s not worrying about money that is remarkably difficult to achieve.

Man in suit and expensive coat wearing a baseball cap looking pensive. He’s not worrying about money. Or is he? We can’t tell
He’s not worrying about money… or is he? We can’t tell | Image by Author via Lensa

That’s because no matter how much money a person has, it is common for people to feel they need more to feel satisfied. I wrote about the problem in On Wealth:

  • Those HNWIs who had saved $1 million felt that they’d be secure if only they amassed $5 million.
  • The VHNWIs with $5 million thought that $10 million would be just the thing.
  • And even people who had accumulated $10 million felt that it would take $25 million to feel safe.

What drives this feeling? I think the Buddhist concepts of grasping and aversion might hold the answer.

What prevents people from becoming (and feeling) wealthy

Grasping means holding on to things, including craving worldly things. We think we want shiny cars and fancy houses, and all the other luxuries that more money affords us. So we spend money and do not become wealthy.

Aversion means fearing the effect of something. In this context, a person fears how they will feel not having enough money. No matter how much they accumulate, they fear it will not be enough. So they never feel wealthy.

For those who know their history, the Buddha began life with privilege and wealth. He attained enlightenment only after turning his back on them both.

If you seek to become independently wealthy, no matter how much you amass, you risk failing if you define your pursuit only in terms of money.

Be well.

To avoid the problem of piling up too much money that will not make you feel wealthy, I recommend giving as much as you can to me. If you’d rather hold on to what you have and seek wisdom instead, subscribe to read my stories.