In this day and age we see all sort of people on instagram and social media showing off cash and fancy cars…but how do you know they’re actually rich? Here are the questions I would ask to determine if someone is “rich”.
How Much Cash Can You Pull Out Of the Bank?
How much money can you pull out of the bank RIGHT NOW? How much can you walk out with?
What Are The Values Of Your Businesses?
Find out what your businesses are worth. I use a couple different formulas.
I take the lowest amount, my salary, and multiply it by five. That’s the payroll number for the ownership and a number you could sell your company for. EBITDA is another metric but it’s a moving target.
What Is The Value Of Your Real Estate?
It’s easy to get an assessment on real estate and figure value. Real estate will not go to zero like a stock could.
What Are Your Company Incomes?
How much revenue does each business bring in? What are your other sources of incomes? (social media, book royalties, etc.)
What Is Your Investments Portfolio?
This is money that isn’t wrapped up in retirement accounts but would take at least a few days to get at it, mutual funds, etc.
What Are Your Retirement Accounts
This is your long-term savings and retirement investment vehicles like IRAs.
What Do You Have In Company Reserves?
This is the money you have in each of your companies that is set aside for a rainy day. It’s technically yours, but it’s an important defense against market downturns and short-term problems.
How Many Passive Incomes Do You Have?
Some businesses may require a lot of time from you for a while but eventually you want to build your way out of the forty-hour week required to manage them.
How Many Passive Income Streams Can Pay Your Living Expenses?
If everything went downhill, how much will you need to cover your living expenses and how many times over is this covered by PASSIVE income sources?
How Many Years Could You Go WITHOUT Having to Work?
If you grabbed all your cash/money and put it in one place, how long would it take you to burn through it?
Do You Have Enough Money to Do Extravagant Giving?
Do you have enough to give tens of thousands to hundreds of thousands of dollars? That’s when you know you’re rich.
Do You Have Enough to Leave Generational Wealth?
This is leaving a legacy. Can you fund several college educations for your kids and grandkids and their kids?