Defining Essential Wealth

There are many things in life that is easier for me to explain and understand using an equation.

One of my favorites is:

Perception - Reality = Lack of communication

The definition of Essential Wealth offers us that as well and it is at a level that transcends your unique definition of wealth.

Essential Wealth = Time x Money x Experiences x Relationships

If any of these factors equals 0, then you likely don't have Essential Wealth.  To build and maximize Essential Wealth,  it is important to understand the trade offs among these factors.  For example, if you are so busy working that you don't have as much as you like doing things with your family, your Essential Wealth is likely not at its peak value.

What I like to do with my clients is understand what the "peak" value is for each of these factors.  Time may be going part-time or retiring at a certain age to maximize the other factors.  Experiences could be taking your kids and grandkids on a cruise, or it may be buying a lake house.

Money is the vehicle that will deliver on time and experiences.  The emotion that comes with money typically lead to negative views - worry, regret, greed,  and fear - to name some.  While money is important, it is also important how money will contribute the most to your Essential Wealth.

When we understand how we can define and maximize Essential Wealth, it allows us to define our Essential Life and build an Essential Portfolio.  We will write about those factors next.