By Ryan Velez
Being a millionaire one day. It sounds like a nice financial goal, but it also exposes what people don’t understand about money and wealth. Being a millionaire isn’t as simple as having the highest paying job (which isn’t that simple at all). Alfred Edmond Jr. explains how this takes place in an article he penned for Black Enterprise.
“A lot of people trying to give you the impression that they are millionaires, or outright telling you that they are, are not. This includes everyone from most professional athletes and entertainers to many megachurch pastors, to most entrepreneurs (including those in the network marketing industry) and motivational speakers.
They may not be deliberately trying to deceive you. In fact, they may actually believe they are millionaires, simply because most people are mistaken about exactly what makes a person a millionaire. (Even many journalists get this wrong.) Also, it is not only possible, but fairly common, to floss a millionaire lifestyle and image (or what media and popular culture teach about what that looks like), without being a millionaire,” Edmond explains. He also makes some very important points.
• Having an annual salary of $1 million (or more) does not make you a millionaire.
• Owning a business with $1 million (or more) in gross revenues does not make you a millionaire.
• Selling $1 million (or even millions of dollars) worth of a product (such as a record, a book, make-up, cookies, etc.) does not make you a millionaire.
• And certainly, living a millionaire lifestyle does not make you a millionaire—in fact, quite the opposite is more likely to be true.
So, to be a millionaire, what is the key? “A millionaire is a person whose net worth (the total value of their assets, or what they own, minus the total value of their liabilities, or what they owe) is $1 million or more Period,” defines Edmond. Real wealth isn’t about income as much as it is about assets, being investments or savings. Yes, higher incomes help with that, but living beyond your means is a sure way to put your financial health on flimsy ground.
Sometimes, even assets aren’t enough. For example, you may only have liquid assets, meaning assets that can be readily converted to cash. That definition would exclude assets such as the home a person lives in, versus stocks, which you could convert to cash right away if you wished.