What is Wealth: ‘So and so has a lot of wealth. Earns well. You must have heard this from someone somewhere in your life. But what is the scale to measure wealth? How do we know that Ram has wealth and Shyam does not. Generally, people estimate wealth by looking at the lifestyle of the person in front of them. Shyam has a car, a bungalow and a good salary, which means he has a lot of wealth. Ram also has a car and a bungalow, but his salary is less than Shyam. Meaning Ram is not as rich as Shyam. That is, no one can tell by looking at someone’s superficial appearance whether he is rich or not.

After all, what is the real definition of wealth?

Wealth, in English, does not just mean money in pocket or bank balance. Wealth is the total value of all those assets that a person has and which can be converted into money when needed.

Lines like demonetization will be formed outside ATMs! Cash shortage is going to happen, big strike announced

What is included in wealth?

• cash
• House
• land
• gold Silver
• investing in stock market
• or any ongoing business

Now understand, is Ram who earns one lakh richer or Shyam who earns two and a half lakhs?

Situation.	Ram
monthly earnings	one lakh	two and a half lakh
living house	Own house, no loan.	Have a luxurious flat or house on rent, but heavy home loan on your head
Vehicle	A simple, reliable car (fully paid for)	An expensive luxury car (with huge EMIs)
investment	Fixed deposit of Rs 50 lakh in shares and gold	zero savings
Loan	no debt	Heavy credit card bills and personal loans
status of wealth	Ram has wealth.	Shyam has no wealth.

If you look at it above, it will seem that Shyam is rich if he earns Rs 2.5 lakh every month.

Now let’s face the truth

Shyam He just earns more money, but he is not rich. Because Shyam spends more than what he earns in maintaining his lifestyle and paying loan installments. If tomorrow he loses his job or his business closes, he will immediately be in financial trouble, because he has no wealth behind which he can sell to survive.

Ram, Earns less than Shyam, but is rich in real sense. Ram saved money wisely and built assets. Even if Ram stops working today, the FD interest and share returns can help him survive. Meaning, he will not need to extend his hand to anyone.