Wealth Reduces Stress Instead of Causing It
Posted on August 10, 2007
Recently I was part of a program on wealth building at a large national convention. After the program, I was confronted by one of the participants who wanted me to know that there was more to life than building wealth. I listened intently as he told me about the people he knew or had known that had ruined their health or died at an early age from stress because they were constantly trying to earn more money. He said that given the choice, he would prefer to be poor and healthy than rich and not able to enjoy it.
My first thought was that he didn’t understand the difference between earning a living and building wealth. I invited him to join me at an empty table because I wanted to hear more about his way of thinking. Once we were seated, I asked him to explain what wealth had to do with health. For the next several minutes he told me about how hard he was working, how much he was making and how he had learned to be happy with what he had. He said he wasn’t interested in working any harder, but he did add that he could always use some extra money. The longer he talked the more he confirmed my original thought.
I wanted to jump in and say, “Wait a minute, you’re talking about earning a living,” but he was on a roll. He told me a story about his friend James who had moved his family into an expensive home in an exclusive neighborhood and was working two jobs in order to make the payments. He said his friend never had time to play golf, go boating or do any other fun things and he was concerned that he was going to have a heart attack because of the stress he was under.
He finished that story and went right into another one about a friend who had recently died from a stroke. He said he had always considered his friend wealthy because he seemed to have so much and appeared to be living a charmed life. After his death, he learned that his friend was heavily in debt and in serious danger of his home being foreclosed upon at the time of his death. Had it not been for a life insurance policy, his family would have been forced out of the home. The gist of our conversation was that he had learned to be happy living within his means and wasn’t interested in adding stress to his life by working harder or going in debt.
I commended him on being financially responsible, but told him I still couldn’t understand why he thought having wealth was unhealthy. When I asked what percentage of his income he was saving each month, it was obvious I had touched a nerve.
“I’m saving very little right now,” he replied, “but I’m not going in debt either. We’re living comfortably, but it takes nearly everything I make to do so which is why I don’t want to add more stress by trying to act wealthy.”
This gave me an opening to point out that wealth comes from the money you save and invest, not from how much you spend. We both agreed that striving to earn more and more could be very stressful, but when I explained that investing could produce income without having to work for it, I saw a light go off. What seemed to trip the switch was when I told him I had only increased my standard of living from the income my investments produced, not because I was working harder and earning more. I jokingly asked him how stressful could it be to wake up each morning knowing the day was paid for whether you earned any money or not.
Here’s a tip! If you spend everything you make today, even though you aren’t going in debt, you will be forced to work the rest of your life. However, if you start early, live on less than what you make and invest the difference, chances are very good that over time your investments will earn enough so you don’t have to work at all unless you just want to. What’s nice is that depending on when you start and the amount you invest, this could happen at age 30, 40 or 50. There’s no age limit on achieving financial independence.
What’s important is that you develop the habit of saving early enough to allow your investments to enjoy the benefits of compounding interest.
There are a variety of ways to get started. Many people begin by simply making regular deposit to a savings account. Others buy stock, bonds and other publicly traded securities. Some invest in their own businesses. My favorite was investing in rental real estate. What happens with most people is that once they develop the habit of saving and investing, they start learning ways to improve their rates of return.
Whichever method you choose, the sooner you get started and the longer you keep at it the more financially secure you will become. As your investments begin to produce income the pressure to keep earning lessens. Wealth is not measured by how much you earn, but by the length of time you can maintain your standard of living if you suddenly can’t work and earn. When you no longer have to work a job to live the standard of life you want, stress levels fall dramatically. That’s why I say wealth reduces stress instead of causing it.
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