Most people define wealth in terms of financial assets. But there are other types of wealth that are just as, if not more, important. A new book warns that, by putting too much emphasis on financial wealth, we risk neglecting what really matters most.
It’s a sad fact that, no matter how wealthy they are, most people feel they aren’t wealthy enough. We live in one of the wealthiest countries on earth, and we earn salaries and enjoy living standards that people in other countries can only dream of. But surveys show that most of us don’t consider ourselves wealthy at all.
If you’re one of those people, a new book might just challenge your thinking. It’s called The 5 Types of Wealth: A Transformative Guide to Design Your Dream Life, and it’s written by someone who, despite being extremely wealthy, spent the first two decades of his working life feeling anything but.
Sahil Bloom was a hugely successful businessman, working in the world of high finance. He served as a Vice President at a private equity fund with $3.5 billion in assets under management, and as a board member at several of the firm’s portfolio companies. “I realized I had achieved all of it,” Bloom writes, “and all I could think was, Is this it?”
Our most valuable asset is time
Then came a life-changing realisation: the most valuable asset we have isn’t money at all, but time.
“When you’re young,” the author writes, “you are literally rich with time. At age 20, you probably have about two billion seconds left (assuming you live to 80). By 50, just one billion seconds remain. Most of us fail to realize the value of this asset until it is gone.”
This epiphany set Bloom on a path of self-discovery. He resolved that making money would no longer be his primary focus. Instead he would build wealth in other areas of his life — principally his family and his friendships, and also his physical and mental health.
“There’s nothing wrong with making money,” Bloom said in a recent podcast interview. “In the early years of your (career) there is a very clear linear relationship between making more money and achieving more happiness. The problem is, that relationship does not continue in perpetuity.
“If you think that (money) is going to be the thing that continues to drive all of your happiness gains, you lose sight of these other areas (of wealth). And if you don’t invest in these things, they atrophy, and they will not be around later.”
Five ways to feel more fulfilled
We are, of course, all different. Bloom doesn’t claim to have the right answers — each of us must find our own — just the right questions to ask.
What everyone needs, he says, is a holistic life plan, of which financial planning is just a part. Here’s how he suggests you go about it:
1. Redefine success and wealth
For Sahil Bloom, the first step to feeling more fulfilled is to redefine what you mean by success and wealth. “Our scoreboard is broken,” he writes. “It forces us into a narrow measurement of wealth, success, happiness, and fulfillment entirely defined by money. And what you measure matters… It’s time we all reject the default definitions of success that have been handed to us and start living by design.”
The key, he says, is not to see financial wealth as an end in itself, but as a means to support other forms of wealth — time, social, mental, and physical.
2. Identify your “enough”
The danger with focusing on financial wealth is that, however much we have, human beings naturally want more. So, for instance, we’re given a pay rise, but then we want to get paid as much as someone else. We also spend our lives on what psychologists call a hedonic treadmill; we dream of buying a better car, the latest smartphone and so on, but when we do, it doesn’t give us the satisfaction we had hoped for.
“We push for more,” Bloom writes, “but really, we need to find our enough. Never let the quest for more distract you from the beauty of enough.”
Let’s be honest, there will always be people who are financially better off than we are. Do we really need more money or possessions than we already have?
3. Live in the moment
Another downside of homing in on financial wealth is that it makes us focus on the future. By telling ourselves we will only be happy when we get that promotion or when we live in a bigger house or smarter area, we rob ourselves of the chance to fully appreciate the lives we have now.
“We waste a lot of energy on the past and future,” writes Bloom, “when the present is all that’s guaranteed.”
So stop making your happiness and fulfilment conditional on some future state that you need to achieve. Be present in every moment, and, as the author puts it, “slow down and embrace the sweetness.”
4. Prioritise time
The most important message in the book is that time is our ultimate currency. “Time,” Boom writes, “is all you have and you can never get it back. Spend it wisely, with those you love, in ways you’ll never regret.”
Again, how we decide to spend our time, and who we spend it with, will be different for everyone. In the author’s case, he decided to spend less time working, and more time with his wife and son, and repairing the relationships with his parents and his sister he had neglected for many years. For you, it might be a cause or a charity you want to devote more time to, or perhaps you want to travel the world.
“Identify the people and activities you care most deeply about,” says Bloom. “Prioritize them ruthlessly. It may be difficult, even painful, but it’s a decision you’ll never regret.”
5. Be flexible
Finally, Sahil Bloom’s book encourages flexibility. The life plan you create for yourself has to account for changing circumstances and priorities. How you spend your time will not be the same throughout your entire life. Just as there is no one way to define wealth for every human living, there is no one way to define wealth within a single life.
“What you prioritise or focus on during any one season will change,” Bloom said in a recent interview. “So maybe I’m in my 20s and early 30s, and I’m in a season of foundation building, and I really want to lean into building financial wealth during that season… Now, I might be in my 40s, and I have young children, and I want to really prioritize relationships with my partner and with my children. So I’m going to really lean into social wealth.”
Building financial wealth
Again, the book doesn’t suggest that financial wealth is unimportant. It’s very important. But it’s a means to an end. It’s primarily a tool to enable other forms of wealth and personal fulfillment, rather than an end in itself.
How, then, does Sahil Bloom recommend that people build financial wealth? There are, he says, three important principles.
1. Build your income
“Focus here first,” he writes. “Invest in building marketable skills that will allow you to build strong primary employment income and establish secondary income streams in the future. Build the income engine before worrying about anything else.”
2. Manage your expenses
“Never let your expenses grow in line with your income,” Bloom warns. “Live below your means for a period of time in your early years and you will reap the rewards in the future. This doesn’t mean giving up on everything fun. It just means being disciplined and making sure there’s a growing gap between your income and expenses.”
3. Invest in compounders
“Invest the gap between your income and expenses in long-term compounders,” he writes. “Keep it simple. 90% of my investable assets are in diversified index funds. I buy every week and hold. I don’t think about timing the market… Let your investments compound for the long-term.”
If reading this has inspired you to redefine what wealth means for you, and to work out how wealthy you really are, the best way to start is by taking this short quiz that Sahil Bloom has devised. Apparently the average wealth score is around 67. See how you get on:
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