Jesse Meijers

As I explained in my previous post, I have a definition of wealth that may not be the same as yours. Many people think of wealth as an equivalent to being rich. In a certain extent they are right, because riches are a part of wealth. However, people who merely define being wealthy as being rich, miss the big picture. The true definition of wealth is much more subtle.

Three axis of wealth

Wealth for me is made up of 3 things. These three things combined make a person wealthy; happiness, health and riches, in that order. If any of these three is missing, you are not wealthy.

Consider a person who has all the riches in the world. Now consider that next to being the richest man on the planet, this person is also healthy as a fish. Sounds like this person is wealthy, right? But now picture this person being as depressed as you’ve ever seen someone. How can health and riches ever make up for that? You cannot trade your health for happiness, nor would it be wise to trade your riches for happiness.

But wait, why wouldn’t I trade my riches for happiness?

Happiness is indeed the number one priority in life. Being happy but living shortly is better than living long and unhappy. Being happy and poor beats being unhappy and rich. Therefore happiness is the number 1 criterium for being wealthy.

The number 2 priority is being healthy. It is better to be healthy and poor than it is being unhealthy and rich. Combine this with the number 1 priority to deduce that riches is the number three priority: happy, healthy and poor beats happy, unhealthy and rich any day.

There are no other axis that I define. For me, these axis are mutually exclusive. Most other things which are important to me fall under the happinessaxis (e.g. girlfriend, family, vacations, entrepreneuring) or the health axis (e.g. eating well, working out). Some activities share axis (e.g. playing sports, which falls in both health and happiness for me).

Wealth formula

Please note that an updated version of this formula is discussed in the article ‘Wealth Formula‘.

These three axis can be represented in a simple formula. But first we need to define riches. Riches is such a ambiguous term… I define riches as the difference between income and expenses. That means that if I earn more, but spend less, I increase my riches in a very efficient way. The value that is left is money that you are free to spend on whatever you like. I would always suggest to invest this money, instead of buying luxuries for example. So this gives us the formula for riches (R) as a value of income (i) and expenses (e):

R = i – e

We can now insert this formula into a more general formula, which will define wealth. Since we identified that happiness is most important, then health and then riches, we apply multipliers to these values. We now get a formula for wealth:

W = (3H * 2h * R)

This formula is built up of the following:

• W means wealth, ranging from zero to infinity
• H means happiness, ranging from zero (very depressed) to 1 (as happy as you’ve ever been)
• h means health, ranging from zero (dead) to 1 (there is nothing wrong with you)
• R means riches, ranging from negative (expenses are higher than income) to infinity (remember R = i – e)

With this formula we can now easily calculate our current wealth easily. For me this calculation would be roughly like this, based on monthly income and expenses:

W = 3(0.6) * 2(0.9) * (5000 – 3000) = 1.8 * 1.8 * 2000 = 6480

This value in itself will not mean much, but it allows you to objectively assess your wealth level. For example I can now see that in order to increase my wealth the easiest and most effective way would be to invest in my happiness. Next would be cutting expenses and increasing income.

My road to wealth

This formula reminds me of the fact that, like many things in life, wealth is transient. It is also somewhat subjective, since it depends so heavily on how you feel. The past year I have learned a lot about my own feelings and how I can use them. That is the main reason why my happiness indicater is somewhat low. However, this can increase because I know that it is low and I know how to change it.

In my efforts to post about my road to success, I will be posting my wealth as an graph to my posts once a month. Each month I intend to update you on the status of my wealth. This way we will hopefully see a pattern emerge where it will be evidend that certain actions increase my wealth, while others decrease it. This should provide some powerful insights into how you can build wealth too, learning from my success and my failures.

Please note that an updated version of this formula is discussed in the article ‘Wealth Formula‘.

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2. The one definitive way to get rich
3. The road less traveled
4. Why traditional freelancing doesn’t make you rich
5. The 1-2-3 problem solving guide