In response to this article: Australians believe it takes $5.3 million to be rich by Dana McCauley
26th July 2017
According to a recent study by comparison site Finder, Australians believe it takes $5.4 million to be rich. Financial adviser Alexander Brownbill has described that figure as laughable, saying the study fails to understand what people actually want.
Adviser Alexander Brownbill said that a focus on ‘net wealth’ as an indicator of success hides the real key behind someone feeling or indeed being rich.
“In today’s society, people very much look to their bank accounts, their houses and other possessions as a measure of their wealth,” said Mr Brownbill.
“However, I believe that this approach is incorrect. The point is to concentrate on income that can be earned without you trading your time for it. What most people want is the time to spend their lives how they want. This can be done with $500,000 or $5 million.”
Mr Brownbill went on to say that those who were TRULY wealthy in society were not necessarily the ones with the biggest houses or nicest cars.
“They are the ones who have learned how to replace their income as quickly as possible and live within that income,” he said.
“Driving a Toyota Corolla is not as obvious to you as someone driving a Lexus, but that Corolla driver may just be off to Pilates instead of work, ” he added.
“If you were given the choice between living in an average house and driving an average car but owning your time 100%, and living in an expensive house with an expensive car but working 50 hour weeks to afford it all, which would you choose?”
“Those who worked hard to have $1 million in the bank, and now work part time and live off their net wealth are a lot richer than those who have $3 million in cars and property but have to miss important life events due to their work schedule,” he said.
In his career, Alex has dealt with doctors earning $1 million a year who yet felt trapped by their work and careers. They had prioritised holidays, private schooling and a multi-million dollar mansion instead of creating the income that could ultimately free them from their stressful and time consuming work.
This shows that even those with money and wealth are not necessarily any better off and that a new definition of ‘rich’ should be made.
Alex suggests that instead of focusing on having millions on the bank, those wishing to create wealth for themselves should first concentrate on freeing their time first.
This can be done in the following ways:
- Figure out exactly what your current financial position is: Without knowing where you are, getting to a destination becomes impossible. Start with this as a priority
- Get comfortable driving around an older car and reigning in your spending: Instead of getting jealous at friends’ houses and new cars, realise the trap they’ve created for themselves by entering loans for assets that will never pay them back.
- Cut your debt: Get rid of all consumer debt ASAP. It’ll reduce expenses and allow you to start building your cash balance quickly.
- Measure your success differently: Measure it by how close you are to having your living expenses covered by working 2-3 days/week OR by income from other sources
- Use your time: Use the time you now have available to work on starting a business or coming up with creative income producing ideas that align with your passion.
About Alexander Brownbill
Alexander is a financial planner and mortgage broker based in Fremantle, WA. He with his business partner Matt Grant are on a mission to educate Australians on how to better manage their finances. They believe that doing so is the single biggest contribution to reducing instances of stress, anxiety, marital breakdowns and unhappy people.