Definitions of Wealth I Like

My favorite definitions of wealth are the ones that aren’t a number.

I’m not interested in wealth targets like $500k, $1M, or $10M.

These numbers are arbitrary and, alone, say little about the person who strives toward them.

The definitions of wealth I like say something about the human condition or the desires of the person who abides by them.

Saying “I want to make enough money to never think twice when buying a book or ordering an appetizer,” is a far more interesting definition of wealth to me than saying “I want to be worth $1M”.

Ultimately I’m fascinated by why someone wants a specific amount of money? What do they plan to do with that money once they earn it? How would their lives change when they hit that number? Whether that number is actually the solution to the problem they’re solving for? Where does happiness and satisfaction play into their definition of wealth?

So here are some of my favorite definitions of wealth that don’t include a number.

Morgan Housel

“The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.”

Housel clearly places a high value on independence and I think it’s rightly placed.

Money should be used as a tool to get what you want and something that, presumably, everyone wants is happiness. As Housel has previously written, “What really gives people meaning and happiness is a combination of four things: Control over what they’re doing, progress in what they’re pursuing, being connected with others, and being part of something they enjoy that’s bigger than themselves.”

And the funny thing about independence is that I don’t think it’s directly correlated with wealth. I think the relationship between money and independence looks more like a bell curve.

I would be willing to bet that Tim Cook, the CEO of Apple who is worth $2.4B, has very little control over his time.

His duty is to Apple shareholders; his time and effort are beholden to them. Though running a 164,000 person company that is among the most valuable in the world comes with many perks, I don’t think control over your schedule is one of them.

But on the flip side, someone working multiple shifts a day just to cover their living expenses doesn’t have control over their time either.

The sweet spot for wealth that maximizes independence is somewhere in the middle of the wealth spectrum.

Nassim Taleb

1. Worriless sleeping

2. Clear conscience

3. Reciprocal attitude

4. Absence of envy

5. Good appetite

6. Muscle strength

7. Physical energy

8. Frequent laughs

9. No meal alone

10. No gym classes

11. Some physical labor

12. Good bowel movements

13. No meeting rooms

14. Periodic surprises

I love how specific and orderly Taleb’s definition of wealth is. It isn’t vague or philosophical, it’s a direct prescription.

It’s also remarkable how many of these things are free.

Charlie Munger

"I remember talking to someone. I said I wanted a lot of children, a house with lots of books, enough money to have freedom.”

In the Munger biography Damn Right! by Janet Lowe, Munger recounts a time in the army when he told a comrade what he wanted out of life.

The answer was simple, lots of children, lots of books, and freedom.

Similar to Morgan Housel, Munger knew that independence was extremely valuable to him.

Ultimately, independence is the reason Munger quit practicing law despite being brilliant at it. He disliked client work dictating how he spent his time and the constrained, rigid, hierarchical structure of a white collar law firm. He also felt that the clients who needed the most legal work were often people of less than strong moral fabric.

So Charlie worked hard on the side, investing his money in equities and real estate projects, eventually earning enough money to become independent, leaving the law all together to run his own investment partnership.

H.L. Mencken

“A rich man is one who earns $100 more than his wife’s sister’s husband.”

I don’t necessarily love this definition, but it is so true.

It perfectly captures the fact that our perception of wealth is completely relative to who we are comparing ourselves to.

The sensation of feeling wealthy has little to do with the things you can buy with your money or what number shows up on the screen when you log into your investment brokerage account. Your sensation of wealth is dictated by your surroundings.

Michael Shermer, the author of The Mind of the Market, once wisely said “people would rather earn $50k when the average is $25k than earn $100k when the average is $250k.”

Kurt Vonnegut

“Enough.”

Novelists Kurt Vonnegut and Joseph Heller were once at a party hosted by a billionaire hedge fund manager.

Despite the resounding cultural influence of Vonnegut and Heller’s writing such as Slaughterhouse-Five and Catch-22 (two of the greatest war novels ever written) - Vonnegut couldn’t help but point out that their host had made more money in a single day from his investment fund than Heller made in total from Catch-22 sales.

Heller replied “Yes, but I have something he will never have; enough.”

Enough.

That’s a pretty great definition of wealth.

So often the more wealth and money we accumulate, the more complicated our lives can become. As The Notorious B.I.G. once said “Mo money, mo problems.”

But what is the purpose of money if not to alleviate problems? What is the purpose of money if not to bring satisfaction? What is the purpose of money if not to gain some sense of enough?

(Shout out to Morgan Housel and John Bogle for this story. It was originally featured in Bogle’s book Enough and later referenced in Housel’s book Everyone Believes It; Most Will Be Wrong.)

Ryan Holiday

“I’ve never met a person who ever reached ‘their number’.”

The hedonic treadmill is an excellent cultivator of human progress but a terrible cultivator of human happiness.

As I’ve written previously, it’s the reason why Elon Musk is the most productive person on Earth, yet happiness still evades him.

The pursuit of the false belief that a “number” will one day bring happiness and satisfaction reminds me of the quote from John Ruskin that begins Michael Lewis’ Moneyball, “Lately in a wreck of a Californian ship, one of the passengers fastened a belt about him with two hundred pounds of gold in it, with which he was found afterwards at the bottom. Now, as he was sinking - had he the gold? Or the gold him?”

Have we the gold? Or the gold us?

Alexandre Dumas

“Those born to wealth, and who have the means of gratifying every wish, know not what is the real happiness of life, just as those who have been tossed on the stormy waters of the ocean on a few frail planks can alone realize the blessings of fair weather.”

Just like Christian Bale’s Bruce Wayne is defined by the moral opposite of Heath Ledger’s Joke in The Dark Knight, the ability to appreciate wealth is often defined by the experience of having lived without it.

Shelby Davis, one of the greatest investors of the 20th century, turned $50k into $900M over the course of 47 years at a CAGR of 23%. But not only were Davis’ investment returns unique, so too was his philosophy on passing wealth on to his descendants.

Chris Davis, the grandson of Shelby and a great investor in his own right, did not receive a cent from his grandfather. The senior Shelby’s justification was this “I’m not going to rob you of the opportunity of earning your own income.”

Wealth earned through your own work is valued more highly and therefore treated with greater respect.

It’s the reason John D. Rockefeller was so stingy with his wealth and why the Hunt Brothers were so brazenly careless with theirs. The former toiled tirelessly for his money, the latter didn’t.

“How little a thing can make us happy when we feel that we have earned it.” - Mark Twain

Epictetus

“Wealth consists not in having great possessions, but in having few wants.”

Famously in America, everyone believes they’re in the middle class. Whether you make $50k or $500k, people rarely “feel” rich.

Every time you get a raise or hit a goal in your business, your expectations and desires readjust further ahead.

This is human nature - the infamous hedonic treadmill.

It’s why Scottie Scheffler said that winning doesn’t satisfy him and why, I assume, Tony Robbins wrote a book promoting his financially predatory investment funds despite already being worth hundreds of millions of dollars.

As I wrote in February 2024, “Robbins may be worth $600M but he hangs out with billionaires. His friends include Oprah Winfrey ($2.8B), Robert Smith ($9.2B), Marc Benioff ($10.3B), and Ray Dalio ($15.4B). His fortune pales in comparison to those of his friends. So Robbins, who is rich by an metric other than the one he is likely using, decided to employ this scheme to boost his net worth into the billionaire echelon.”

So often we think the answer is to start running faster on the hedonic treadmill, to make more progress, more quickly, at a larger scale, so we can financially reach satisfaction.

But Epictetus took a different approach.

Maybe the answer is to slow down the speed on the hedonic treadmill. To compare ourselves to others less, to refrain from social media where people are advertising a false reality about the desirability of their lives, to reduce sources of envy.

That is a better recipe to “feel” rich.