In the early days of my career, I met with an ambitious girl let's say her name is Shivangi. Shivangi wanted to achieve many things in life one of her prominent goal was to live a luxurious life she once disclosed in one of our discussions. She wanted to make money and get rich just like everyone. But when she can call herself rich?
There are many levels of richness you can be the richest man in your family and friends, or in your city, maybe you could make it to the top 10 world richest persons list, or you could reach or surpass the level of Mansa Musa the richest man who ever lived in the history of mankind. But what is the very first level of richness? When can you call yourself rich? When will people start referring to you as a rich person? for this, The Threshold of Being Rich is the question to answer.
There can be multiple answers to the above questions according to different people's views. Some people will see your house or car, some will see your Lifestyle and Travel, and some will make a decision based on your Career to judge whether you are rich or not.
But I have a different view let me share my answer to the question when you’ll be rich? what is The Threshold of Being Rich? According to me, you are rich if you fulfil 4 conditions. What are those 4 conditions? They are-
- You are earning while you are sleeping.
- You go to your job because you want to not because you have to.
- You can quit your job at this very moment and you have enough money or assets that can take care of all of your future expenses for the rest of your life.
- Your passive income is more than what you are earning from your job.
let's understand these conditions one by one.
You are earning while you are sleeping.
There is a famous quote by legendary investor Mr Warren Buffet “If you don’t find a way to make money while you sleep, you will work until you die.” Let me add something more to this “If you don’t find a way to make money while you sleep, you will work until you die and still, you won’t be rich”. But why?
If I ask you what is your biggest asset? most people will refer to their stocks or mutual fund portfolio or real estate etc. But the correct answer to this question is your biggest asset is none other but yourself, Because your returns are infinite.
But as a human, you have limitations you can only work and earn for a certain amount of time of your day and up to a certain age. So it becomes very important to earn money while you sleep. How to earn money while you sleep? The answer is very simple let your assets work for you in the background rather than you actively doing your job.
You go to your job because you want to not because you have to.
Ask yourself this question do you go to work because you want to or because you have to? I’m sure most of the people reading this will answer I go to work because I have to. Because you have no other choice you have to take care of your expenses, you have to maintain the lifestyle you are living. if you don't go to work you will not have money to spend. To be rich this is a very important condition to fulfil you have to reach a point where you go to your daily job not just because you have to but because you want to. But how? The answer is by building the assets.
You can quit your job at this very moment and you have enough money or assets that can take care of all of your future expenses for the rest of your life.
If I ask you to quit your job right now most of the people with say a big NO. Because you are heavily or entirely dependent on your job for your expenses. Some of you may have a family to look after and you can do so because of your job only. But remember as long as you are dependent on your job for your expenses you can afford a good lifestyle but you won't be able to call yourself rich.
The idea here is not to quit your job but to use the money you are getting from your job to make assets that can then make enough money in the future to cover up your expenses that will come later in your life even if for some reason you can not work or you don't want to work. So that you can be financially free, you can retire early and enjoy your life.
Your passive income is more than what you are earning from your job.
Another condition that you have to fulfil to cross the Threshold of being rich is your passive income is more than you are getting from your active income. The reason is your active job income will always go hand in hand with your lifestyle the more you earn the more you will spend. Let me give you an example when you start your job you can only afford to travel via public transport but as you progress with your job sometime later you can afford to have a motorbike as you progress more in your job you may afford a car and if you can afford that you will buy that.
So it's very important to have passive income that can contribute to your wealth and once your passive income surpasses your active income you are actually adding more and more money to your wealth.
Now if you have read this blog this far you should be able to understand what is The Threshold of Being Rich? When you can call yourself rich. If you fulfil these 4 conditions you have crossed The Threshold of Being Rich. You can call yourself a rich person. And remember this is only the first level of richness. As I mentioned at the start of this blog there is no end to the level of richness but now you know the very first level.
Some of you might have a different thought of being rich if you have so please share it with me in the comments. Let me know if you agree or disagree with whatever I’ve mentioned in this blog.
Some of you may ask Have I achieved the first level of richness? The answer is no I’m still very far away from filling these conditions. Even though I feel I’m earning while I sleep, but I still have to go to work not because I want to but because I have to. I can not quit my job not just because I am dependent on my job for financial needs but also because I’m one of the rare people who is loves and happy with his job. And my passive income annually is only 54% of what I get paid from my active job. So a long way to go but I feel on track to cross The Threshold of Being Rich one day.