Defining Wealth: What it Means to be Wealthy and How to Get There

Defining Wealth. Wealth is a term often associated with money, possessions, and financial success. But is that all there is to wealth? In this framework, we’ll explore the multifaceted nature of wealth, uncovering its deeper meanings that encompass not just monetary gains but also health, relationships, and enriching experiences. Plus, we’ll delve into practical strategies to build and protect your wealth. Buckle up; it’s time to redefine wealth!

exploring wealth and what it means
Defining wealth and what it means

Defining Wealth

The secret to truly understanding and defining wealth lies in recognizing what genuinely matters and brings joy to your life. It’s about looking beyond the common misconception that wealth is solely measured by material possessions and financial assets. Believe it or not, you might be a billionaire and still be the unhappiest person in the world. How many wealthy individuals are out there, defined purely by their ‘achievements’ and possessions, yet find themselves lonely and unhealthy? Conversely, there are those who might have very little in financial terms but are always smiling, laughing, content, and genuinely happy. Their wealth is found not in their bank accounts but in their rich lives and fulfilled hearts.

Monetary Wealth: The Financial Aspect

Wealth is commonly perceived in terms of financial prosperity, whether it’s a hefty bank account or valuable assets. While money plays a vital role in providing security and options, it’s just one piece of the wealth puzzle. We live in an era where we’re bombarded with representations of wealth, particularly via social media – so its easy to lose sight of the real value and meaning of wealth. How you go about defining wealth for your own life should go beyond just the financial.

Health as Wealth: Investing in Yourself

Your body and mind are the most valuable assets you own. Investing in proper nutrition, regular exercise, and mental well-being can pay dividends in the form of energy, happiness, and longevity. In this sense, good health is indeed a form of wealth. What’s the point of having all the riches in the world when you don’t have the health to enjoy them?

Relationships and Wealth: Emotional Richness

What’s a rich life without friends, family, and meaningful connections? Positive relationships contribute to emotional wealth, bringing joy, support, and a sense of belonging. Like a warm hug or a hearty laugh with friends, these connections enrich our lives in priceless ways. You can have barely a cent to your name but be surrounded by people who love you and will always be there for you no matter what. That is far more valuable than having a few extra zeros tied to the end of your net worth.

Experiences as Wealth: Life's Treasures

Ever enjoyed a simple hike in the mountains or a barefoot walk on the beach? These experiences often cost little to nothing but provide a richness that money can’t buy. Creating memories and cherishing life’s simple pleasures is a treasure that adds depth to our definition of wealth. In fact, most of the real treasures in life are absolutely free. Spending time in nature or watching that magical sunset cost nothing.

Financial Strategies for Building Wealth

There is no perfect strategy for building wealth. The most reliable way remains to live within your means, invest a set percentage of your income consistently across a diversified investment portfolio that can generate inflation beating returns, and let the power of time and compounding work its magic. Sadly, we now live in an era where the idea of ‘get rich quick’ seems to be fashionable – instead of discpline, consistency and time.

Understanding Your Wealth Goals

Building financial wealth begins with clear goals. Whether it’s buying a home, funding a child’s education, or planning for retirement, identifying your short-term and long-term objectives sets the stage for a personalized wealth roadmap. That’s why having a customised financial plan or strategy to achieve what matters to you and how to go about achieving financial freedom can be so powerful.

Investing Wisely: The Path to Long-Term Wealth

Investing is not a one-size-fits-all game. From stocks and bonds to property and unit trusts, understanding various investment vehicles and aligning them with your risk tolerance and goals is crucial.

The Power of Consistent Long-Term Investing:

One of the most predictable ways to generate wealth is to invest consistently over an extended period. Imagine investing R5000 per month, or R60,000 per year, with a 10% annual return. Compounded over the following time periods:

– 30 years = R9,869,641.36
– 40 years = R26,555,553.34

Diversification and professional guidance can help you navigate the investment landscape with confidence, but steady, long-term investing is a proven path to building substantial wealth. The magic of compounding works over decades, not years (as is illustrated above by the jump in value between years 30 and 40)

Saving and Budgeting: Foundations of Wealth

A wise budget and disciplined saving habit lay the foundation for financial growth. Living within your means, prioritizing savings, and managing expenses wisely can turn dreams into achievable financial and lifestyle goals. But for many, the idea of a budget or tracking cashflow is daunting or simply seems like a hassle. It doesn’t have to be. There are so many tools and apps available today that make it simple. And with awareness and knowledge, you have the power to make smarter decisions. Developing financial literacy is critical. Every household or person should aim to have 6 months worth of living expenses in an emergency fund and a strategy for getting out of debt. Because it feels good and liberating. Instead of wasting money on unecessary toys and status symbols, aim to spend money on cool stuff – experiences that enrich your life. 

Protecting Your Wealth

Insurance and Risk Management: – Protecting wealth isn’t just about growing it; it’s also about safeguarding it. This is the less sexy side of the wealth equation. Insuring your life, income and heath, as well as your assets, act as financial safety nets, minimizing risks that could erode your wealth.

Estate Planning: Preserving Wealth:–  Estate planning ensures that your wealth is passed down according to your wishes. From wills to trusts, planning for the future guarantees that your loved ones are cared for and your legacy preserved. This is often a key area of financial planning that is overlooked or neglected. People don’t like thinking, let alone talking, about death and its implications. But it can have devastating consequences if not managed well.

Protecting Non-Monetary Wealth:– Wealth protection isn’t confined to finances. Nurturing relationships and maintaining personal well-being are equally vital. Striking a balance between work and life helps preserve the true richness that makes life worthwhile.

Net Worth as a Measure of Wealth

Net worth, calculated as assets minus liabilities, is often used as a snapshot of financial wealth. But does a higher net worth always equate to more happiness? Elon Musk, one of the richest people in the world, isn’t necessarily happier than someone with far less. We often make assumptions and judgements of other people based on their carefullly crafted public image, where they show off all their toys and material possessions. 

Wealth doesn’t always translate into increased well-being. We work with a range of clients with totally different degrees of net worth. Some can be regarded as very wealthy, others less so. But what we can confidently say is that the measure of a person’s happiness, sense of well-being, or fulfilment has absolutely nothing to do with the size of their balance sheet or the amount of money they have.

The Wealth Happiness Paradox:

Studies on wealth and income have shown that happiness does increase with income, but only up to a point, around USD 70,000 per annum (to cover things like shelter, food, access to healthcare etc). Beyond that, more money doesn’t equate to more happiness. Sure, that’s by developed economy standards. What’s that number in South Africa where we have such a big divergence between rich and poor? R300,000 p.a.? R500,000 p.a.? The point is, income doesn’t significantly contribute to overall happiness, illustrating that money is not the sole key to a fulfilled life.

Having a significant net worth on paper may not always translate into financial freedom or happiness. Most of your net worth might be tied up in unproductive or illiquid assets that have significant value on paper, but don’t produce anything tangible. Aligning wealth with lifestyle and personal values ensures that your assets are not just impressive on paper but genuinely contribute to your life’s quality.

Defining Wealth: The Essence of Financial Freedom

Financial freedom is about having sufficient wealth to generate the income you need to live the lifestyle you desire. When your investments can yield an income of 3-4% per annum to support your chosen way of life, you’re essentially free. Because it means that your capital, if managed well, shouldn’t run out. That income might be R20,000, R50,000, R100,000 per month or more to support your lifestyle – and then you simply reverse engineer that to model the value (and type) of assets you need to produce that. So for example as a rough guideline if you want R50,000 per month and have investment capital yielding you on average about 3% p.a. – you need about R20 million. That capital could be invested in dividend yielding shares, property generating rental income etc. 

The path to financial freedom varies greatly based on where you live. Living in South Africa, you might achieve financial freedom with a smaller net worth compared to someone in Europe or the US. A net worth of R10 million in South Africa puts you in the top 1%. To be regarded as rich or wealthy by European or American standards means having a net worth of a lot more. It’s all relative. So, chasing some illusory figure makes no sense at all – just so you can fuel your ego or sense of self-importance? Decide on the lifestyle you need or want and then figure out how to build the wealth you need to support that.

Consider Reading: Personal and Private Wealth Management Strategies To Achieving Financial Security.


Defining wealth and financial freedom is different for everyone. Whether it’s a journey you are happy to undertake yourself, or you find value in working with a professional to help you create a strategy and hold you accountable – remember that it isn’t just about the money or accumulating more stuff. Real freedom is a state of mind and being. The rest is just ice cream with a cherry on top. The journey to wealth is not a straight path but a winding road filled with insights, strategies, and personal discoveries. From understanding net worth to embracing financial freedom, wealth is a multifaceted concept that transcends mere numbers.

Whether you find richness in relationships, health, experiences, or the freedom that financial stability brings, may your journey to wealth be as unique and fulfilling as you are. Here’s to your journey, and here’s to living life on your terms!

Read Next: Top Wealth Management Companies in South Africa 

Carl-Peter Lehmann

Carl-Peter Lehmann

Carl-Peter is a Director and Partner at Henceforward. He is a CERTIFIED FINANCIAL PLANNER, has over 20 years industry experience and likes talking to his clients about wealth and what it means to them.

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