Paycheck vs. Playcheck

If you ask ten people what it means to be wealthy, you’ll get ten different answers.

Wealth means different things to different people.

I’ve been trying to peel the onion of wealth and poverty since I began my Rich Habits study in 2004.

I’ve written often about need income and want income, as these two things relate to wealth. But one of my financial planning associates had a different spin on what it means to be wealthy.

His argument is that you are truly wealthy when the assets you own generate two types of income:

Paycheck Income

This is income that provides for everything you NEED.

It covers all of your basic expenses, and meets your cost of living needs. This category includes:

• Shelter Costs – Mortgage or Rent, Real Estate Taxes, Utilities, etc.
• Automobile Costs – Loan or Lease Payments, Car Insurance, Gas, Repairs & Maintenance, etc.
• Medical/Dental Expenses – Medical/Dental Insurance, Out of Pocket Costs, Emergency Costs, etc.
• Other Basics – Food, Clothing, etc.

Playcheck Income

This is income that provides for everything you WANT.

This category includes:

• Vacations
• Family Support/Gifts
• Charity
• Travel Dreams – Wimbledon, Europe, Cruises, etc.
• Club Costs – Golf Club, Country Club, Yacht Club, etc.
• 2nd Home Costs
• Hobbies/Recreation – Skiing, Boating, Fishing, etc.

Your Paycheck income is driven by your standard of living. Some people have a different standard of living than others.

Your Playcheck income is driven by our wants and your wants are dictated by what your definition of an abundant life is. An abundant life is different for each person.

This is why it is impossible to numerically define wealth – everyone’s life is different.

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