I certainly don’t mean to boil the ocean and get into the discussion of how much money is enough money. For money only provides wealth, not richness.
I don’t also mean to get into the philosophical discussion of “be happy with what you have”. My biased opinion is this is for settlers.
Here’s my definition of rich — if you can continue and make reasonable ascent on the lifestyle you now have, without your active income, you are rich.
So, if you own a house with 100% equity and that fetches $100 a month in rent — and if your lifestyle costs $100 or less, you are rich.
Conversely, if your lifestyle costs you $5000, you would have to have a debt-free investment that fetches you at least $5000, in order for you to be considered rich.
Readers of Kiyosaki and some long friends of mine know that this concept is not mine — but one that stops the buck on the perpetually relative definition of rich.
Active Income– Something you have to work for. Day after day. Month after month. In other words, you stop working, the income stops flowing. There is nothing wrong with active income, just that your lifestyle should not depend on it.Passive Income — Something you don’t have to work for. Think of the interest your bank deposits accrue. Passive income is the true income and you should always plan to convert your active income into a source of passive income.
Lifestyle Cost — Cost of necessary things (food, cloth, shelter, internet) and unnecessary things (swanky lifestyle, unwanted possessions, the vacations, the concerts, Apple products etc…)
So, next time you spend on lifestyle, the only question you need to ask yourself is: Is the money coming from my passive income?
Well, is it?