As I prepared to write an article called “What is Wealth Management”, I realized that we all have different notions of what constitutes wealth. When an old acquaintance saw the name of my business, Stoffer Wealth Advisors, he said, “As soon as I have some wealth to manage I’ll give you a call.” Clearly he was thinking of wealth only in its most narrow definition: an abundance of material possessions or money.
Origin of the word wealth
We tend to look at wealth as quantifiable goods and assets. Yet the early usage and etymology of the word stems from Middle English wele or well-being, described in the Online Etymology Dictionary as: “‘Happiness,’ also ‘prosperity in abundance of possessions or riches’.” This suggests that wealth is that which contributes to our overall well-being. Everyone has skills, knowledge, talents, health and energy that clearly can be considered wealth, and our definitions of wealth will probably directly relate to our values. Creating a rich family life, raising kids with good values, commitment to one’s church, or service to a meaningful charity are ways of creating well-being, not just for oneself, but for others and the community at large. And giving to others is directly related to increased personal happiness, as shown in a recent study published by Nature Communications.
What is wealth…more than just financial assets!
I’m reminded of a couple of funerals I’ve attended in recent years. I was touched by how many people were in attendance (over 250 people at each!) The two women who had passed away were of modest financial wealth, yet they had profoundly touched so many lives! Using the forms of wealth available to them—their insight, wisdom, energy, generosity—they clearly left the world a better place than they found it. People who live in accordance with their values can experience wealth and well-being without an abundance of monetary assets.
Generally, when we speak of wealth accumulation we are referring specifically to the acquisition of physical assets. An asset is something of value that can also increase in value over time, like a piece of property, a work of art, or an ownership position in a business. And certainly accumulation of assets can be assigned a numeric value. Assets can provide for our future physical well-being. They can appreciate in value and/or create income, ideally enough to provide the goods and services we need to live comfortably as we grow into old age. However, if we wish to consider our overall well-being, we must broaden our definition of wealth.
Why your definition of wealth is important
Our definition of wealth influences how we feel about wealth and how we go about building it. Focusing solely on growing assets may not lead to a greater sense of well-being or satisfaction with the wealth we have. Connecting the use of our resources and assets to our values, as we plan for our future, is likely to lead to a greater appreciation for the assets we have. If our intention is to maximize our wealth to provide greater well-being for ourselves and others we need to bring a conscious approach to building it.
Next up, What is Wealth Management?