4. Wealth Includes Many Things
Having an individual income means you have spending power, but it does not necessarily mean you’re rich. You can spend that entire income maintaining a lavish lifestyle and still be paycheck to paycheck. But then you’re no better off than someone who makes much less. Without assets, investments, and other forms of wealth in place, any economic downturn that causes you to lose your income can devastate your finances. And little things matter. If you don’t have adequate insurance and have a medical catastrophe or your house gets destroyed, you immediately lose that investment.
And no, a luxury car is not an investment. Cars lose 20% of their value the second you drive them off the lot. A vehicle has the job of getting you to where you need to be safe. It is not an investment. Make sure that when you are considering what wealth is, you are considering all factors. Income can disappear just as quickly as you can spend it. Wealth has to be built over a lifetime or over generations.