Do you want to be rich or wealthy?

Capital Asset Management Future Map

My Mother-in-law, Angela is retired and lives in a comfortable apartment in the Home Counties. Her total income is around £26,000 a year, made up of various pensions and modest drawings from a small investment portfolio.

Her monthly expenditure is around £1,500, a little more when she wants to treat herself to a trip to the theatre (free travel on public transport and discounted tickets for senior citizens).

Angela is not financially rich, but she is wealthy. Her predictable, guaranteed income exceeds the total cost of her ideal lifestyle and she wants for little if anything. Money in is greater than money out.

She does as she pleases, plays her piano, meets friends for coffee, does the crossword, travels to see her grandchildren, or has them for ‘sleepovers at Grandma’s. She goes on a couple of holidays a year and enjoys a calm pace of life. She is time rich.

One of my friends, let’s call him David, has a lot of money. He lives in a large, detached house in what the estate agents refer to as ‘highly desirable and sought-after part of London’.

He runs his own business and works every hour God sends him – usually 12 hours a day, including some weekends. In return for this heroic work schedule, David earns a high six-figure income, closer to seven figures. He’s up there with professional footballers, hedge fund managers and investment bankers on the money front.

However, David likes to spend his money too. He has an eye-watering mortgage on his palatial home, another on the holiday pad just outside Juan Les Pins in the South of France where his tiny (his word) yacht is moored.

David is on his third marriage and has four children, all of whom are schooled in some of London’s finest education establishments. The divorce settlements were expensive, and the ongoing school and university fees would fund a small country’s defence budget. 

Once you add in the annual ski trip for the entire family and winter in the Caribbean, David’s financials are stretched. Very stretched.

He claims that this is his chosen lifestyle, and he won’t change it, despite how hard he has to work, the sacrifices he makes every day and the general wear and tear on his life and health. 

David is rich, but not wealthy and when it comes to time, the most precious commodity of all, he is poor.

He’s has found himself on something called the hedonic treadmill1 and every new toy, house car and exotic holiday, quickly becomes the ‘new normal’ and he strives for more and better.    

You probably know a David (or Davina) in your own life.

“Habit converts luxurious enjoyments into dull and daily necessities,” 

Aldous Huxley

A better way to get wealthy

True wealth means different things to different people. For some, it’s a brand-new Ferrari and a house with a swimming pool. To others, it’s camping out in the back garden with the kids and the ability to take a month off work every Summer.

Regardless of your definition of wealth, there is an economic impact. Do you really want that shiny red sports car (and the insurance, tax, and service costs)? No problem, you just need the resources to fund it.

Taking time off work, travelling, staying in charming hotels or cool Airbnb’s? Not a problem if the funds are in place. And you have the time available.

To decide what true wealth looks like to you, start by asking yourself ‘how do I want to spend my time, where do I want to be, with whom and what will we do? 

In other words, simply ask yourself ‘what is a life well lived for me and my family?

It may well be working, keeping busy on projects and passions. It may be travelling, exercise, family, friends, hobbies, and interests. It’s likely to be a combination of all the above.

Once you’ve designed your ideal lifestyle, some number crunching will determine how feasible your plan is – and how time wealthy you really are. You may be surprised by the results.

Some financial modelling can be done to bring together your lifestyle choices, the resources needed to fund it, and other variables such as tax, inflation, investment returns and the biggest unknown – how long you’re going to live for.

Sounds boring, but if you’re a whizz on Microsoft Excel you could pull together a basic model if you know what the inputs are and how to manage the data.

Alternatively, a good Chartered Financial Planner will be able to build your plan and provide you with a clear vision of where you are now, and whether you are on your way towards your own personal definition of True Wealth.

‘Life is So Rich’ 

Scott Galloway

We call this FutureMap™ and it does what it says on the tin. It is a map of your future, a vivid image that identifies in detail how realistic your plans are and will lead to some vibrant discussions about how to make your desired future become a reality.

If you’re a business owner or executive, you should have your own personal FutureMap™ to help you build your wealthy life. A life of True Wealth – as determined by you.

 To learn more, and have your own one designed and built, get in touch (CLICK HERE) and book your 15-minute call with us.

Alan Smith

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