So, getting back to our example, is Mr. $60-an-hour guy rich? Well, if you only look at his income, then no. Because if anything happened to his job (downsizing, bankruptcy, firing, etc.) or if anything happened to him (accident, health, etc.) he would not be able to sustain himself. In fact, he would have to quickly take whatever job comes his way because he OWES $200. And after 28 days he owes interest on that $200 and whatever late fees tacked on for not paying the minimum in a timely manner.
But, if Mr. $60-an-hour guy sold all his stuff . . . you see, his "things" have some worth. Much more worth than the $60-a-day guy.
When we are talking exclusively about sustaining ourselves with "income," then man who receives $60.00 a day is worth more . . . he’s richer. He owes no one money and if he lost his job he could at least live for a couple of days before needing to find a job.
But, if Mr. $60-a-day has no "stuff" that is of value to sell, he's not in a very "wealthy" position now is he?
Perhaps we should rethink "the measure of wealth" that we hold dear in America.
An interesting look into this concept is a series of articles by Punny Money that outlines everything a person should consider when working on "wealth."
- How to Determine Your Total Measure of Wealth
- Age and Net Worth
- Income, Personal Savings Rate and Rate of Return
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