Are you wealthy?

A friend of mine, Garth Airey recently asked a very interesting question. His question was – “If someone makes a lot of money, does that mean that they’re wealthy?”

Well, I read someone who said that if you make a million dollars a year and you spend the same million dollars on your lifestyle, you are just a consumer – and, if you make a million dollars a year and you spend a million and one dollars, then you’re and idiot.

According to Kiyosaki and Lechter and as illustrated in their book “Rich Dad, Poor Dad”, wealth is measured as the number of days the income from your assets will sustain you, and financial independence is achieved when your monthly income from assets exceeds your monthly expenses.

The wise person takes 5 to 10% of their monthly income and builds (buys) assets which appreciate in value and produces a continuous and sustainable residual income.

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