All Wealth is Relative

Amar Pandit , CFA , CFP

I read an interesting quote by American comedian and actor Chris Rock. Not only did I read it once, I read it a few times because it’s not just funny, but it’s also real and deep. I bet you will agree with me. He says – “Oprah is rich; Bill Gates is Wealthy. If Bill Gates woke up with Oprah’s money tomorrow, he’d jump out of the window and slit his throat on the way down saying, I can’t even put gas in my plane!

Just to make it clear, Oprah herself is a billionaire. But relative to the money Bill Gates has, even Oprah’s billions could seem like change (to Bill). So, what’s at play here?

Let me give you a hint (other than what I have already given in the headline) through the lens of a quote by French philosopher, Charles de Montesquieu“If only we wanted to be happy, it would be easy; but we want to be happier than other people, which is difficult, since we think of them as happier than they are.”

We overestimate how happier other people are…We overestimate how happy we will be when we hit that benchmark…

We also overestimate how happy we will be if we are happier than other people…

The same is true with money…

We don’t know how much is enough for us. Our sense of enough(ness) comes from what others have.

We believe we will be happy or happier when we have more…not just more but more than others…And even when we have that more, we can still feel poorer than people who have more than us (because there will always be people who will have more than us). It’s always easy to point at someone else who is doing better than us. But the real trick is to not forget all the people who might be pointing at us/you.

What’s more shocking is that we can also feel poorer than people who have less than us. Even a billionaire can feel poorer than someone who has far lesser money. This phenomenon happens because there is no real objective measure of what wealth is.

An example from Nick Maggiulli’s book ‘Just Keep Buying’ that highlights the point above. “Consider a February 2020 interview with ex-Goldman Sachs CEO and current billionaire Lloyd Blankfein. In the interview he claims that, despite his immense wealth, he isn’t rich: Blankfein insists that he is well-to-do, not rich. I don’t feel that way he says. If I bought a Ferrari, I would be worried about it getting scratched, he jokes.

As shocking as this sounds, I get where Blankfein is coming from.

When you regularly hang out with people like Jeff Bezos and look at Ray Dalio and Ken Griffin as your peers, having only $1 billion doesn’t seem like much.”

It’s not just Blankfein who has this problem. Most rich or high net worth people think they are less well off than they actually are. Thus, it’s absolutely likely that Bill Gates would feel poorer if he woke up tomorrow with Oprah’s money.

Haven’t you come across people who have more than enough but yet believe they have less (as compared to other) or they don’t have enough? Even at the peak of their lifetime financial earnings, they are plagued by what I call as money worries. By the way, money problems and money worries are two different things (I think this concept itself warrants a different post as I realized I was digressing trying to explain the difference).

What about you?

Do you have enough? Or Do you feel you need more?

Do you call yourself rich? Or Do you simply call yourself “well off” as Lloyd Blankfein did in the above example?

You, me and everyone we come across (except for Elon Musk or the richest person in the world) can say this, ‘I am not rich, this other person is rich, or these people are rich.’ This is because we probably know someone who is richer than us…And you know what, your someone knows someone who is richer than your someone…And this circus continues…But more importantly when this happens, we tend to feel poorer than we actually are…However the truth is that we are far richer than we think we are.

Nick further wrote, “For example, if your net worth is greater than $4,210 (Rs.3.45 Lakh), then you are wealthier than half of the world, according to the 2018 Credit Suisse Global Wealth Report. And if your net worth exceeds $93,170 (Rs.76.4 Lakh), which is similar to the median net worth in the U.S., that puts you in the top 10% globally. I don’t know about you, but I would put someone in the top 10% to be rich.

Let me guess you disagree?”

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No matter how much you have, two things will always be simultaneously true:

1. You don’t have enough.
2. You have more than enough.

It doesn’t matter what we’re talking about. Time, money, love, energy, resources, etc.

Not only are both things true, but there’s also nothing you can do to change the situation.

What you can change, on the other hand, is your worldview. In particular, what kind of mindset do you have? One of scarcity or one of abundance?

You can choose, you know. You can simply decide to focus on the fact that you have enough. Or, if you really want to, you can fixate on the fact that nothing will ever be enough.

But I don’t think that will make you any happier.

The truth is being rich and/or wealthy is relative. It has always been that, and it will always be that. This is the reality we need to live with…You, me, and everyone else…