If your salary was $160,000/£100,000 per year would you consider yourself poor? Probably not, but Felix Dennis, publisher and owner of Dennis Publishing (Maxim, The Week) would certainly think so. He is also an author, and it’s in his book, How to Get Rich, that he outlines exactly how much money you need to be rich. Before you dismiss his claims as yet another multi-millionaire looking down on what society considers as a good income, first listen to his theory.
His book doesn’t seek to mock or brag, but instead flips the lid on what it means to be rich. You see Dennis would only consider you rich if you owned between £15 – £35 million in quickly realisable assets (£75 – £100 million in Total Assets)*. He describes those with a total asset value of between £1 million and £2 million as ‘The Comfortably Poor.’ (Below £1 million doesn’t even get a mention!)
His reasoning for these seemingly inflated values? Part of it is to do with ease in which you could access these assets, part of it is to do with the taxation you would pay on those sums, but his main point is that you need a vast sum of money to buy two priceless qualities – time and financial freedom.
At first glance, Dennis’s views on what it means to be rich could easily be dismissed as the ramblings of an eccentric multi-millionaire. Although he makes it clear that these figures apply to western societies only, the percentage of people with such assets is so low that it would barely even register. Even the salary figure given above is well over what most people will ever earn (UK average family income is estimated to be around £40,000 a year*, US individual income $26,000 per year*). So how can Dennis claim that you need a vast fortune to just be ‘rich’?
While I would reduce the size of the sums that Dennis uses, I can’t help but think that he has a point. Even when earning a salary that, society would consider, makes you rich, you won’t be financially free. You will still be tied to your job, constrained by your mortgage and preoccupied with setting money aside for your retirement. At best, you’ll be ‘system rich’ – wealthy enough to be the envy of those around you with your bigger house, more powerful car and improved holiday options. However, you will never have the kind of money that grants you the freedom to do what you want with your life.
So if the people society considers rich are really not that rich at all, where does that leave you?
In a surprisingly positive position. You see, you can take one of two views on Dennis’s revelation about what it means to be rich.
Number one; adopt a ‘go for broke’ mentality. If you’re still not going to be rich whether you’re earning £20,000 or £100,000 a year, you may as well go for that crazy idea you have about making your millions.
What have you got to lose?
The chance to live in a better house or drive a flashy car? Even though the difference between those two salaries seems vast, there’s a good chance it will not improve the quality of your life as much as the figure would suggest. However, what would, both materially and personally, is if you were to be successful in turning one of your ideas into reality.
This is exactly what Felix Dennis did, going from penniless street seller to presiding over a £500 million plus publishing Empire. This kind of wealth, Dennis assures us, does improve your quality of life!
Number two; pursue your passion, not wealth. Again, if those who the system wants us to believe are rich, aren’t, then why play the game?
Time and financial freedom are two qualities that Dennis highlights as being priceless, yet you don’t have to possess a vast fortune to claim them. If you do the work you love, then you’re making optimal use of your time (regardless of the amount of money you make). There’s no looking at the clock, wishing you were somewhere else. There’s no regret or frustration at the lack of meaning in your work. Instead, you get to live each day feeling alive, knowing you wouldn’t want to be doing anything else with your precious time.
Furthermore, financial freedom is a state of mind. Of course, being rich in Dennis’s terms means you never have to worry about money again, but no matter how little you have, you don’t have to worry about it.
Although the figures Dennis presents may seem untouchable, they are, in fact, liberating. In setting the bar for wealth so highly, Dennis frees us from the need to fight over the scraps from the system’s table.
Some of us may get more than others, but, when playing by the system’s rules, are we really ‘rich’ in any sense of the word?
*Figures taken from How to Get Rich, Felix Dennis, Ebury Press 2006 p.3 -5. *Figures taken from BBC NEWS MAGAZINE 30th November 2011 ‘Is £40,000 really a liveable income for families in the UK?’ *Figures taken from Huffington Post 5th October 2012 ‘US Median annual wage falls to $26,364 as pessimism reaches 10 year high.’ (Image taken from 401 (k) 2012’s photostream flickr.com)