TIME – the true measure of wealth

The True Measure of Wealth

Today, we differentiate between being rich and being wealthy!

We are quite fanatical about this ‘financial independence’ thing. It is our purpose for existence because we believe each and every one of us can build a pipeline of assets to generate sufficient income to cater for our needs, wants and desires.

 This is financial independence!

 “If you don’t find a way to make money while you sleep, you will work until you die.” Warren Buffett

The terms “rich” and “wealthy” are usually used interchangeably. Robert Kiyosaki, of the “Rich Dad, Poor Dad” fame made an interesting distinction between the two, saying, ‘rich is measured in money’ and wealth is measured in time.’ Most people focus on getting rich rather than becoming wealthy.

Buckminster Fuller was a world-renowned architect, futurist, inventor and  visionary (for you Steve Job’s fans out there, Fuller is one of the people featured in the “here is to the crazy ones” apple advert. Alongside John Lennon, Albert Einstein, Mahatma Gandhi etc) Fuller defined wealth as:

‘A person’s ability to survive X number of days forward.

Let me bring this home, if you (and your spouse) stopped working today, how many days could you survive financially on the money you have while maintaining your lifestyle? Just pause for a moment… imagine that for whatever reason, choice or circumstance, your big paycheck stopped coming, how many months will you survive?

The easy way to calculate this is to determine what your total monthly expenses are. Then calculate how much money and assets you currently have. Finally divide your total amount of money by your total expenses to get your wealth number in months.

This equation will tell you with cold clarity, how many months you can survive without a salary. This is a good place to pause and ask yourself what an “asset” is. Kiyosaki’s definition of “assets” and “liabilities” changed my outlook in life 14 years ago:

Assets – what puts money in my pocket

Liabilities – what takes money out of my pocket

I’m sure you have listed your home, cars, the plot in Corner Baridi, your Rolex watch and expensive suits, dresses or shoes. Just ask yourself, do these put money in my pocket, or do they take money away from my pocket?


I have defined financial independence as “having enough assets to generate sufficient cash flows to cater for your needs, wants and desires”. In other words, what your assets bring in, is equal to or more than your expenses.

Let’s’ try the equation again (this time for a wealthy person)

Now because the income from assets (i) is more than expenses and (ii) comes in every month, you can ideally live forever without ever needing to work for money. This is wealth! This is financial independence!

Most people are only familiar with capital gains investing (your plot in Corner Baridi)- buying something at a low price, selling it at a higher price and pocketing the difference. (Warren Buffett says this is not investing – it is speculating). Those who use this method are trying to get rich. I’m sure you have heard of the term “you’re asset rich, but cash poor”.

When you focus on investing for cashflow, you are focused on building your wealth, creating continuous passive income that earns you money (while still getting the capital gains on your asset) without depleting or selling the original asset.

Here’s to your wealth!



This is Leonard Mcharo

Encouraging you to,

Invest in your Financial Independence.

Comment (1)

  • Great article, I definitely put my ka-plot in my initial calculation!


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