The culture we live in tells us to see financial success as simply having a large income. That’s why so many people watch the Forbes list. But just because someone is good at making money, that does not mean they are using and deploying those riches in a way that brings peace of mind and the life that makes their family happy.
To put it simply, riches and financial success are not the same thing.
For instance, one family I know has a net worth close to $10 million, and recently they were wringing their hands over whether they could afford to pay $8,000 for a much needed insurance policy. The breadwinner of another rich family I know retired recently. Fear of running out of money led the family to shopping at discount stores, where before they had shopped at Whole Foods.
That’s not financial success.
By way of contrast, some of the most financially successful families I know are not necessarily the richest.
A rich family has something it can count—dollars. But a financially successful family has a financial foundation that is strong and protects from life’s unexpected downturns, big and small. That creates things that can’t be counted, such as confidence and peace of mind.
A rich family might build a showplace home they can barely afford. A financially successful family quietly donates to charitable causes they believe in.
A rich family might judge their self-worth by their household income, which can be a fleeting thing. A financially successful family is emotionally detached from their money and not dependent on it for their happiness.
A rich family might fail their children by teaching the habit of excessive spending. A financially successful family teaches their children to respect the value of work and the dollar.
A rich family might live at the edge of its means, shackled to financial obligations and required payments. A financially successful family has an abundance of resources compared to their outlays, which gives them the freedom to spend as they choose.
Are you financially successful, or just rich? To decide, think about all of the unfortunate events that could impact your finances, from a stock market decline to a lost job. Think about the lessons you are teaching your children about money. Ask yourself questions: Do you know where you’re going financially? Does your spending (and your spouse’s) line up with your family’s values? Are you saving as much as you should?
With all of those things in mind, a financially successful person will feel pride and peace of mind. A merely rich person will feel anxiety. Which are you?
If you want to make the transition from being rich to being financially successful, I’d like to help. At PARTNERSINWEALTH, you will have a PERSONALCFO who takes a 360-degree view of your family’s financial life. We work with your other advisors and report directly to you, increasing collaboration and optimizing all of the financial moving parts of your family’s life. We place you in control, bringing together the diverse aspects of your finances so you can make better decisions. For more information, please contact Jim Waters, CFP®, at PARTNERSINWEALTH, 713.964.4028 or firstname.lastname@example.org.