When I was young I thought that money was the most important thing in life.
Now that I am old, I know that it is.
Before we determine what the definition of wealth is, let's discuss what it definitely isn't. Monetary wealth is not a pile of cash sitting in a bank account. Even if you have money in a savings account, the amount you earn in interest is not likely to be anything to get wildly excited about. And if you find the need to dip into it to supplement your monthly outgoings, and you're not constantly topping it up, it will be depleted very quickly.
No, cash in the bank is the very last thing that makes us wealthy.
So is your wealth simply whatever you own in assets? Well, only those that are appreciable assets, such as your house, your art collection and your business (potentially) should be counted. But you still have to subtract your liabilities to come up with a figure that is your net worth.
What is your net worth?
Write down the value of all your assets (everything you own), then write down the total amount of all your liabilities (everything you owe). The difference between these figures is your net worth.
Many people think they are wealthy because they have a big bank balance and some equity in a property, but when they subtract their mortgage, their car loans, their credit cards and other debts, they realize that they are ...