Yahoo Finance 6 Signs You’re Actually Rich (and 5 Best Ways To Spend Your Wealth)
Wealth can be subjective, since everyone has different financial and personal goals in life. While there’s no universal number that equals wealth to everyone, there are signs that you may have wealth that others only dream of.
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However, just because you’re rich doesn’t mean you know how to spend your money wisely. Financial experts explain what signs to look for to suggest you’re rich, and some ways to spend your wealth if you’re lucky to reach this financial goal.
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Key Signs You’re Actually Rich
You Have Peace of Mind
The most important subtle indicator is financial peace of mind, according to Michael Ashley, finance expert at Richiest.com.
“If you can weather unexpected expenses or emergencies without significant stress, it’s a sign of true affluence,” he explained.
You Feel Freedom To Pursue Passions
Another sign is having the freedom to pursue your passions and interests without constant financial constraints,” Ashley said. “Wealth is not just about numbers; it’s about the freedom and security your resources provide.”
Discover More: 6 Ways To Build Wealth in Less Than Five Years
Your Passive Income Pays for Your Lifestyle
One of the first signs that you’re truly rich is when your passive income or savings can comfortably cover your lifestyle expenses without the need for active work, according to Michael Kojonen, founder and owner of Principal Preservation Services LLC.
“Many clients who walk into my office are surprised to learn that being rich isn’t just about amassing wealth, but about creating a sustainable plan that offers long-term security and freedom,” Kojonen said.
Another way to put this, according to Taylor Kovar, founder and CEO of Kovar Wealth Management, is, “You don’t have to work unless you want to. Your investments and savings generate enough income to cover your lifestyle.”
You Have No Debt
Another good sign you may be rich is when you don’t have any debt, or, if you do, according to Kovar, “It’s manageable and doesn’t stress you out. You’re able to pay it off without sacrificing your standard of living.”
You Can Make Choices Not Based On Finances
A surefire sign that you’re rich is when you can make life decisions without being overly constrained by financial implications, Kovar said. “Want to switch careers, start a business, or take a sabbatical? You can.”
You Can Help Others
Another, more noble, sign that you’re rich, is when you’re in a position to help others, whether through charitable donations, supporting family, or investing in community projects, Kovar said.
This also happens to be one of the ways that you can spend your wealth, according to Kojonen.
“Giving back not only benefits society but can also be deeply fulfilling on a personal level. I’ve seen how clients experience a new level of richness in their lives by supporting causes they are passionate about. This enriches their lives in ways that material wealth alone cannot achieve,” he said.
Best Ways To Spend Your Wealth
Diversify Your Portfolio
While wealth may seem like an infinite thing, it’s often not. Ashley pointed out that part of your spending strategy can be to diversify your portfolio to mitigate risks and maximize returns.
“This might involve exploring real estate, stocks, or other investment vehicles aligned with your financial goals,” Ashley said.
He also recommended prioritizing financial education. “Continuously learning about money management and investment strategies empowers you to make informed decisions, ensuring that your wealth not only grows but does so in a sustainable and informed manner.”
Kojonen echoed this, adding that diversifying doesn’t just mean spreading your money across different stocks and bonds, but considering other avenues like real estate or even investing in yourself through education and personal development.
Plan for the Future
Don’t just spend your wealth, consider how you want to leave your estate, Kojonen urged.
“Planning for the future is paramount, which is why I emphasize the importance of estate planning. It’s not just about preserving your wealth for future generations but also about ensuring your legacy is carried out according to your wishes. This process includes setting up wills and trusts, considering tax implications, and making decisions that align with your values and goals.”
Spend on Your Retirement
Spend some of that wealth to make sure you’re well-prepared for retirement, even if it’s decades away, Kovar said. “Consider setting up trusts or college funds for your children or grandchildren.”
Attend to Things You’ve Put Off
If you’ve really achieved wealth, it’s probably time to put some of that money back into things you’ve put off.
“If you’ve been holding back on home renovations, upgrading your car, or even moving to a dream location, now might be the time,” Kovar said.
Carpe Diem
Most people covet wealth because it allows them access to things we all want more of: Travel, learning new skills, or taking up hobbies that enrich your life. “Experiences often bring more lasting happiness than material goods,” Kovar said.
One Caveat
Even wealth can dry up if you’re overspending. Loretta Kilday, Esq., a senior attorney with Debt Consolidation Care, cautioned against spending money too freely or impulsively.
She said it’s understandable to feel tempted to immediately splurge on things you’ve had on your wish list for years-especially if having wealth makes those previously unattainable items seem within reach.
“However, I’d urge you to pause and thoughtfully consider the wisest uses for this money before emptying your bank account on consumer goods that may bring short-term satisfaction but little long-term financial benefit.”
Maintaining balance is key, Kilday said.
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This article originally appeared on GOBankingRates.com: 6 Signs You’re Actually Rich (and 5 Best Ways To Spend Your Wealth)
