Monday, August 10, 2009

The Measure of Wealth

Frater R.O. posted a fantastic article on understanding wealth. We have both been working on perfecting wealth magic in our own way, and it seems that we once again have arrived at a similar place – yet different enough to make an exchange worthwhile.

R.O. quotes his teacher Frater S.L. as giving a great definition of wealth:

To live a life where your actions are determined by your will and not by your bills.

Nice. He than goes on to note that most wealthy peoples riches are not tied to their paycheck week to week. This is an important point. Remember it.

I would like to accept the above definition of wealth, and offer a unit of measuring same. I got it from Robert Kiyosaki, author of Rich Dad Poor Dad. He claims to have gotten it from Buckminster Fuller, though I cannot find the reference:

“Wealth is the ability of a person to survive any number of days forward… or if I stopped working today, how long could I survive?”

This unit of measurement: the number of days that you would survive without working, hits right to the heart of the wealth definition above. When that number is infinite, you are rich. Wealthy people largely do not rely upon their job for their income. This is the big difference between the upper and middle classes.

Now, R.O. has taken a look at famous and wealthy magicians of centuries past and concluded that benefactors and wealthy friends are the key. While that is true for some, its not quite as reliable as I would like. Though I will say that reading Baltazar Gracians “Art of Worldly Wisdom” is worth everyone’s time. It is a guide to currying favor and pleasing benefactors written by a Jesuit Priest. While I agree that it is important to have wealthy friends, and aquaintences, its not because I seek their money directly. I seek their advice. They are the ones that have the inside scoop on what is going to be a good investment or not. They are the ones that have the know how on how to protect assets in an LLC and lessen your tax burden by incorporating. And yes, they are the ones that will front some money, but only if you offer than a good investment. The days of someone sponsoring your magickal career are over.

Anyway, if we cannot rely upon a rich family or benefactors, there is still a way that we can channel our meager means into wealth that frees us from the drudgery of bills, or, using Kiyosaki’s measure: sets the amount of days that we could survive without working at infinite. I know this not only because the books say that it is possible, but because I know people that did it. Its what my Grandmother did. I was just to stupid to really see the pattern.

Poor people channel their paycheck directly into basic needs. That’s all they have. Middle income people however have money to cover basic needs and than some. The problem is that we dump it into liabilities rather than assets. We buy new cars, a big house, fast computers, two vacations a year, etc. My Grandmother, and most other really successful people that didn’t start off the game with a rich family, buy assets instead of liabilities.

Assets are basically anything that can make you money without you having to work by the hour to earn it. Intellectual property, real estate that you don’t live in, stock investments, companies that you do not work at, bonds, mutual funds, etc. In other words, your money should make money for you.

In the past I have talked about the need for mercury to circulate money and grow your jupitarian pool. This is the flip side of that, rather than Mercury leading to Jupiter, it is Jupiter leading to Mercury. It’s a cycle that, once started, perpetuates itself and grows.

My Grandmother and Grandfather owned a Hardware store and a house – these are NOT assets, at least not purely. My grandfather bought lots of land around his house and used that to make extra money, that was an asset. They bought the building that the store was in and started collecting rent – that was an asset. They purchased stocks, Bonds, and mutual finds, some of which were higher risk investments – assets. When they were ready to retire, they moved the investments into low risk portfolio’s, sold the building that the store was in to one of the tenents, sold the store itself to my dad, and retired rich: they could survive an infinite amount of days without working and still leave a healthy chunk of change as retirement.

In my new book, I give five basic steps for setting finances straight that you should hang your magick upon: 1. Spend less than you earn 2. Spend less 3. Earn more 4. Manage wisely 5. decide on the right amount of wealth for your self.

While all five of these are important, it is number 3 and 4 that really hold the key. If your day job is just barely making the bills, start a secondary income stream going. Could be anything from being a re-seller, to reading cards, to hocking arts and crafts. Once you get some money coming in from that stream, DO NOT spend it on Bills and DO NOT spend it on luxuires. Spend it on assets - things that will themselves make more money.

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