When you hear the word wealth, what is the first thing that comes to mind? Mansions? Designer clothing? Luxury cars? Dining out at exclusive restaurants? Growing up, I probably would have had the same answers. After all, I grew up in a house that cost just $8,000. Yes. An eight followed by three zeroes. Also, my parents filed for bankruptcy twice.
However, throughout my financial career, my definition of wealth isn’t about material items. It’s all about net wealth. Why? Because looks can be deceiving.
Here’s an example from a couple who were potential clients of mine.
They made $500,000 a year. Not too bad, right? The thing is, they had the house, cars, boats, jet skis, and whatever else you think rich people buy. Guess how much they had in their checking and savings accounts? $17,000. Yikes. They might be giving off the impression that they’re wealthy. But their net worth tells a different story.
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