When you think about someone who is wealthy, what images pop into your head? Is it a fancy car, luxury trips to far-off destinations, or a vacation home on the beach? If so, there is a reason for that. Our minds have been conditioned to think that way.
Our consumer culture screams that the winner is the one with the most stuff. It shows up in every TV commercial and most reality shows. It permeates social media where we are unduly influenced by our “friends” and an algorithm explicitly designed to target ads just for us. For doctors, it even makes it into the parking lot and the physicians’ lounge.
Let’s face it: We are all much more likely to talk about and post pictures of the beautiful spot in Europe where we just spent the last two weeks or the new Tesla we just bought than how we maximized our tax-advantaged retirement account contributions this year.
But the truth is, the stuff we buy doesn’t define our wealth at all. It just defines our lifestyle … and you can live an expensive lifestyle without being wealthy, at least in the way I define it. All you need to live a rich lifestyle is a large source of income, and most doctors sufficiently check that box. The problem with living “rich” without creating “wealth” is that you will always be dependent on that income to sustain your spending habits — and your job becomes your golden handcuffs.
So, if it is not about the stuff we buy, how do I define what it means to be wealthy? Part of the answer is hidden in the question. Wealth is created by the money that you could spend on stuff, but you choose not to. Rather than fulfilling an immediate want, you choose to create an asset instead.
What is an asset? It is something that you own that holds value. You could exchange it for money now, but if you hold onto it instead and let it grow, it will eventually start generating money for you — passive income that keeps coming and keeps growing, whether you work for it or not.
Most of what people buy are not assets, at least not the kind that will ever pay you anything back. They are quickly used up or forgotten and thrown away, after a fleeting amount of pleasure. Some people even go into debt to buy that kind of stuff — a double whammy on your net worth.
A true asset may not be very sexy or something that you Facebook brag about, but it is the key to creating lasting wealth. I am talking about investments: your 401(k), your brokerage account, your income-generating real estate, your small businesses. It also includes investing in yourself by adding skills and experience that make you more marketable, more valuable, and more likely to earn more money with less work in the future. It could even mean growing your net worth by paying off your liabilities (debt) ahead of schedule so that you aren’t saddled with it later.
Building assets and paying down debt requires discipline. It requires you to make choices with your discretionary income that might include skipping some fancy vacations or driving a less exciting car, living in a smaller house, or delaying your country club membership for a few more years. But the beautiful thing is that when you prioritize early investing over spending, you will still be able to get all those things in time, if you want them, and you won’t be bound to your job to make it happen. That is when you are truly wealthy.
So, wealth isn’t really about “stuff” at all — it is actually about buying back your time, accompanied by the resources to be able to spend it on what brings you the greatest joy in life. You have time to spend with your family and friends. You have time to explore new hobbies and passions. You get to choose if you want to keep working or if you are ready to do something else. You have the power and autonomy to say “no” to the things that you don’t like about your job and keep doing the things that you enjoy.
Once your true wealth machine is in place and functioning, you can afford to buy all the stuff that your “rich” peers have come to depend on all along. However, you might just discover that the stuff that you thought would bring you happiness when you had to stretch to accumulate it might not be that important to you once it is readily available.
In his great book “The Purpose Code,” Jordan Grumet, MD, teaches us that money, or even purpose, isn’t the source of happiness. It is creating and cultivating meaningful relationships where we find sustained joy. If the pursuit of financial independence supersedes or even destroys relationships with those that you love, then you are surely missing the point.
True wealth is a mindset as much as it is a target net worth. Money is just a tool to help you get there. It is not the goal! But the freedom of true wealth only happens when you effectively use the financial tools at your disposal along the way. We are fortunate as physicians. Our hard work has provided us with access to everything that we need to become truly wealthy. However, it doesn’t just happen without wise stewardship over our opportunity.
Taking care of your financial house buys you the time and the freedom to explore life to its fullest, but it is in the sharing that you discover life’s greatest pleasures. You are truly wealthy when you give some of what you have to others. Sharing your time, your resources, your experience, and your support demonstrates that you have more than enough and are grateful for what you have.
When you keep money in its proper place, you realize that you don’t need a lot of it to be wealthy. If wealth is more about control over your time, doing what you enjoy, deepening relationships with those closest to you, and giving back to others, you can start experiencing a measure of it no matter what stage you are in life. Don’t wait until it’s too late to realize that you could have been a little wealthier all along the way.
How do you define wealth? Share in the comments.
Bryan Jepson MD, CFP®, ChSNC®, MSF is a semi-retired emergency physician and a full-time financial planner who specializes in comprehensive financial planning for physicians and families with special needs. He works at Targeted Wealth Solutions, an independent fee-only financial advisory firm. He is the author of “The Physician’s Path to True Wealth: 12 Steps To Gaining Control Over Your Money and Your Time.”
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