Just what is wealthy?
The dictionary definition of “wealthy” is having an abundant supply of money or possessions of value; “an affluent banker”; “a speculator flush with cash”; “not merely rich but loaded”; “moneyed aristocrats”; “wealthy corporations”.
However, in my mind, being wealthy is to be in control of one’s time on this earth. All of us have only a certain number of days that we can truly enjoy ourselves; in good health, with wonderful family and interesting friends, surrounded by an appealing environment.
In order to determine just how we spend our time, we must not just have adequate disposable income, but time off from the drudgery of earning that income to enjoy ourselves.
So, this article is more than merely how to retire wealthy, but how to be wealthy.
Aside from those lucky individuals that are born into wealth, the majority of us have to find a way to earn our livelihood. To acquire wealth we need to get ourselves in a situation or situations consisting of three attributes; measurement, leverage, and residuals.
First, the position we choose to acquire must be one in which our performance can be easily measured. Otherwise, there is no way to get paid more by doing more.
Second, we must have to have leverage, in the sense that the decisions we make have a significant effect on the economic worth of our efforts.
And finally, our efforts must generate more than a mere salary. What we do to create wealth is in direct correlation to our ability to parlay our efforts into residual income (Note 1).
One of the best examples of an individual achieving the three attributes of creating wealth is Microsoft’s Bill Gates. Some argue that since Gate’s family was wealthy (his father was a prominent lawyer, his mother served on the board of directors for First Interstate BancSystem) that his success was predestined. However, Gate’s is a truly “self-made-man”.
He wrote his first computer program on an ASR-33 teletype terminal, time-shared to a General Electric (GE) mainframe. An implementation of the childhood game tic-tac-toe, it allowed users to play games against the computer. Gates was fascinated by the machine and how it would always execute software code perfectly.
From that humble start, Gates exhibited the first attribute of generating wealth, engaging in efforts in which his performance could be (easily) measured. Then, as his software development efforts were having big effects on the economic worth of his efforts (attribute #2), Gate’s first blockbuster effort, Altair BASIC, lead to his initial strong-hold on the PC software marketplace.
The residuals became to flow, which ultimately led to Gate’s enormous wealth.
We all strive to amass wealth. To succeed, at all times, our efforts must focus on
1. measurement,
2. leverage,
3. residuals.
Note 1. Residual Income (also called Passive Income) is income earned on an ongoing basis for effort done once in the past.
search for : disposable income, residual income, Altair BASIC, Passive Income
Posted May 12, 2008
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