When Do You Finally Feel Rich?

By  Financial Samurai

There’s a saying that goes something like this: To feel rich, take whatever you earn and triple it. Once you get there, triple it again, and again, and again. In other words, due to hedonic adaptation, it’s impossible to ever feel rich!

But I’ve noticed on my path to financial freedom that there were several times when I felt incredibly rich. The Dow reaching 20,000 wasn’t one of them by the way. Perhaps you can share when you finally felt rich as well.

When I Finally Felt Rich

1) When I went back to Malaysia. I used to live in Malaysia from 5th grade to 8th grade in the early 1990s. At the time, the exchange rate was ~2.3 Ringgit to 1 USD. When I finally paid a visit more than 20 years later, the Ringgit had depreciated to 3.7:1. One Ringgit bought the equivalent of $1 worth of stuff in the States. Therefore, I suddenly had almost 4X the amount of purchasing power during my week-long stay. So perhaps making 3X more doesn’t really make you feel rich, but making 4X more does!

In addition to the increased purchasing power aspect, it felt particularly moving to visit my old house and to realize I didn’t fall through the cracks. I was an undisciplined kid who got into way too much trouble. If I was my own father, I’d have considered sending myself to military school.

2) When I finally hit my passive income target. It took 17 years to achieve my passive income target, but when I finally got there, I felt rich because there was no more fear of running out of money anymore. Growing up in developing countries and experiencing many boom bust cycles working in finance always keeps me a little paranoid about losing everything.

Passive income feels like free money because you’re not doing much to earn it. You almost feel guilty collecting a rent check or dividend payment, which is why I have no problems paying a management fee or going to a rental property to fix a problem.

The amount of passive income generated is less important than whether or not it can cover all of your living expenses plus a nice cushion. In my case, that cushion allows me to save at least 30% of my passive income because I’m a savings addict. Every dollar you after achieving your passive income target feels like you’re playing with the houses money.

3) When a new income stream comes out of nowhere. I firmly believe none of us are maximizing our income potential. I’m going to guess that if we could make a maximum of $100 a month, most of us are really making only between $10 – $30. It’s kind of like how none of us utilize more than 20% of our brains. If we did, perhaps we’d find a cure for cancer.

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