What does it mean to be wealthy? Money is clearly important but is money the most important ingredient? This is a question I encounter every day in my practice – a client wants to do better, wants to become wealthy. This is an excellent wish but what does it exactly mean?
When I started out as a financial adviser the answer seemed simple – make my clients more money. This means make their investment perform better – fewer fees and taxes, higher returns and that is still a very important part.
Then I found out there are areas related to finance that make a huge difference to your wealth. The first area is your body – when you are healthy life is much easier than when you are not, be it physically or mentally healthy.
Therefore taking care of your body is a big part of being wealthy. This is especially true for those of us with very demanding jobs like many doctors, mothers, lawyers or bricklayers. When we exercise self-care we are more productive and enjoy life more. Self-care requires discipline to get started but then becomes easier as it is a very rewarding activity. Once you take care of your body, the next part of being wealthy becomes much easier.
For many of us increasing skills can add a lot of value. This may mean a degree, diploma or certificate but more often than not other skills are even more valuable: Learning how to enjoy being with people, learning how to run a business, learning how to be a supervisor, learning how to sell your services or even selling in general, learning a skill or activity that you would enjoy doing for money when retired, learning how to save, learning how to enjoy working – all of these are very valuable skills and make it much easier to increase your wealth.
I have found my chats with clients about their body and their skills can at times be life transforming – just understanding the long term costs for your wealth that 8 cups of coffee a day have or to talk about what is the most difficult area to deal with at work can make a huge difference over time.
The third and very important area is money itself. For most of us our biggest asset is our future earnings and they can be protected through insurance even when cashflow is very tight as for many young families. Most Australians have made most of their money through property so paying off your mortgage is another great way to become wealthy.
Our superannuation laws are crazily complicated but within that complexity there are a lot of opportunities to improve your earnings and wealth.
Then we improve our investments by reducing fees and increasing expected returns which at times can double our investment performance over 20 years.
Therefore by looking after our body, increasing our skills and improving our investment performance we can be wealthy.
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