Growing up, I heard that my grandfather often said that he was a wealthy man. My little mind wondered why he would say so when all that he had were a few goats, sheep, poultry of not more than 30 chicken and guinea fouls, and his farmland where he undertook peasant cropping of millet, groundnut (peanut as the Americans say). If I can recall correctly, his goats and sheep did not number more than 10. We lived in a traditional home built of mud/sandcrete and roofed with either touch grass or beams of logs and sealed with mortar in the village. There were not less than 15 mouths to feed from the produce of the farmland and the little my father and his older sibling managed to bring home from their tailoring business. Why then did he say he was wealthy?
On the contrary, there lived another Oldman in the village who had all the above mentioned animals in plentiful numbers. He even had a herd of cattle probably about 20 in number. He lived with his wife and their 2 children adult children none of whom was married, and certainly did not have children. So they had much fewer mouths to feed than did my grandfather. So obviously they would have more food to last them throughout the year compared with our family. Yet my grandfather often talked of the fact that he was wealthier than this Oldman. Again my little mind asked why my grandfather would make such an assertion. This family clearly had more possessions than ours. So they must have been richer than us. And if they were richer than us, does it not mean therefore that they were wealthier than us?
The question to ask then is “what is wealth” and what is “riches”? Is there any difference between wealth and riches? To be able to answer this question, let us seek an understanding of the meaning of the two words.
WHAT IS THE MEANING OF WEALTH
In Wikipedia, wealth is described as “the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions”.
Similarly, investopedia.com states that “wealth measures the value of all the assets of worth owned by a person, community, company, or country. Wealth is determined by taking the total market value of all physical and intangible assets owned, then subtracting all debts. Essentially, wealth is the accumulation of scarce resources. Specific people, organizations, and nations are said to be wealthy when they can accumulate many valuable resources or goods. Wealth can be contrasted to income in that wealth is a stock and income is a flow, and it can be seen in either absolute or relative terms”.
In his article titled “The 4 Types Of Wealth That You Must Know About” Zaid K. Dahhaj quotes Henry David Thoreau’s definition of wealth as “Wealth is the ability to fully experience life”. According to Zaid, the 4 types of wealth are Financial wealth (Money), Social wealth (Status), Time wealth (Freedom), and Physical wealth (Health). He is of the view that one finds a “wealth of fulfillment” when all the 4 types of wealth intersect and are constantly improved upon.
WHAT IS THE MEANING OF RICHES
According to the Cambridge dictionary, riches is defined as a large amount of money or valuable possessions whilst the Collins dictionary similarly defines riches as an abundance of money, valuable possessions, or property.
From the two definitions, one can be said to be rich if the person has large sums of money either in their bank account or in physical cash. Possession of a fleet of cars, luxury homes, gold and diamond, and other such properties as yachts, and aircraft are signs of riches.
But wealthy people too can and some do possess these things. So is it to suggest that just because a person is rich, they are necessarily wealthy? The answer is NO. A person may be very rich, but their lifestyle is that of profligate spending they could easily run aground, especially if their expenditure almost matches or even exceeds their earnings. They could also run into debt and lose their riches if they are unable to sustain their sources of income.
So what then is the difference between riches and wealth?
THE DIFFERENCE BETWEEN RICHES AND WEALTHY
Obviously, there is a thin line between riches and wealth. However, if we understand that wealth is about a steady and continuous flow of income in its various forms we will be able to distinguish between the two. A rich person may not necessarily have a steady and continuous flow of income. It is not just about how much money you have in your bank account but how sustainable and long lasting that bank account is. Under these circumstances, it is very much possible for a person earning less than a rich person to actually be wealthier than that rich person despite his flashy and luxurious possessions.
Generally, wealthy people tend to save, invest and reinvest a substantial amount of their money. They have an almost endless flow of income from their investments. On the contrary, rich people tend to spend more of their earnings and invest little or nothing at all. History abounds with a lot of sportsmen, entertainers, and other celebrities who went broke few years after their careers ended.
With the above in mind, let us return to my grandfather.
MY GRANDFATHER’S CONCEPT OF WEALTH
Now let me attempt to explain my grandfather’s concept of wealth. He viewed wealth from the human resource point. To him, the more children, and people you had around you, the wealthier you were. He saw children as an investment into the future not only to sustain his genes into the millennia but also to provide for his needs in his old age when he could no longer fend for himself. The fact that he had several grandchildren meant that his empire was growing steadily. He could fall on these children and grandchildren to provide what money (in this case, caws, goats, and sheep) could not provide. He also made sure that he invested in the formal education of his children and grandchildren. If I am writing this article today it is because of the wealth of knowledge I have acquired through formal education. We the grandchildren now have a relatively steady source of income and are striving to make it sustainable so that even in our old age we can live a comfortable life. Also, by having a network of friends he ensured that there was always someone handy ready to lend a helping hand.
On the contrary, the man with plenty of cattle and other animals lost everything with time. He was rich by the standards of the village folks at that time. But he failed to have a sustainable income stream. When he was weak and could no longer attend to his animals, he began to lose them gradually and with time the story was told of how a rich farmer in the village lost everything.
Even though my grandfather’s concept of wealth was quite rudimentary, it had the key principle of wealth – to be wealthy, one needs to invest to have a steady flow of income. And I agree with Zaid when he says “we all have the ability to achieve all 4 types of wealth within our lives”. And the time to start is now whether you are a youth, middle aged or retired from “active work”. There are endless opportunities to explore.
I know it can be tough out there trying to invest to get a steady flow of income. I have already failed in one: I had to close my block making business because I did not have enough supervisory time. My foreman did me in, and I had to close shop. But I learned valuable lessons. I am currently doing catfish farming. I try to be more present, but it is still a challenge. So I am thinking of better ways to monitor the activities at the farm. I am also exploring other options to continue to create wealth.
More about wealth creation next time. In the meantime, drop your comments below. I would love to read them.