Wealth is Measured in Time, Not Money.
Ahh, Buckminster Fuller. A man with a fancy name and an even fancier understanding of finance.
Although Robert Kiyosaki popularized this idea in his awesome book Rich Dad Poor Dad, it was Mr. Fuller who gave Mr. Kiyosaki the idea.
And here’s the idea: it doesn’t matter if you are a millionaire on paper if as soon as you lose your source of income, you can’t pay your bills.
What do I mean?
Let’s say you have $1,000,000 in the bank. Awesome right? Well, we don’t know until we look at your monthly expenses. If your mortgage for your fancy Hollywood mansion costs $500,000/month, then guess what? If you lose your source of income, uh-oh: after two months, you’re broke.
On the other hand, let’s say you have only $10,000 in the bank. Not as awesome. Or is it? Again, we don’t know until we look at your monthly expenses. If your rent on your apartment is $1,000/month, then guess what? You’re in a better situation than the “rich” Hollywood celebrity.
Can you see why?
It’s all a matter of time. The longer you can survive with no income, the more wealthy you truly are. The celebrity in the example above might look wealthy, but look what happens when the money stops flowing: he’s out on the street in two months. But the one living in a small apartment? Ahh, she’s got a nice cushy situation, because she’s got a huge buffer of ten months to help her weather any financial storms.
So the key, then, is to not only try to increase your income (of course), but also:
If you haven’t, yet, read the wisdom article here on this site about your emergency fund, now that you understand the concept.
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