What is financial success?
It seems that everyone has financial success as a goal – either specifically or in the back of their mind. But what does financial success really look like? In reality, it may look very different from one person to the next. As a fee-only financial planner, I’ve noticed there seem to be three main groupings of how people look at and measure financial success.
- Many people, when asked, respond that financial success to them is being able to acquire that nice big expensive house, or a certain fancy sports car, or perhaps being able to take upscale vacations to exotic locations.
- There are also a lot of people who would consider financial success to be out of debt, a comfortable savings buffer (emergency fund), and positive cash flow each month (never short on paying expenses).
- Others would define financial success as having the resources to pay cash for their children’s education, or to retire with dignity and an enjoyable lifestyle from their investments, or to be able to give generously to causes that they’re passionate about.
“The world” – certainly based on the level of marketing and advertising and the consistent messaging that we’re bombarded with – seems to define success like the #1 described above: The more stuff you have and the fancier it is, the more financially successful you are. It’s pretty easy to see someone with really nice things and think to ourselves, wow, they must be successful!
The problem with the world’s definition: group 1
What many people don’t think about though is that “stuff” really isn’t a good measure of financial success. Take Warren Buffett as an example. He lives in a modest home that he purchased in 1958, and he doesn’t own a yacht or a fancy sports car. He lives very frugally yet most