What’s the Point of Wealth? (My Journey)
What’s the Point of Wealth? (My Journey)
I reached out to a mentor, who’s financially done very well...he said this.
The wire hit. You sold your company! Congrats!
What does the money really mean though?
Maybe you’re staying on and have an earnout. Maybe you’re leaving the next day.
I felt financially sound before selling. Not because I was rich. I just saved more than I spent and lived in my own bubble.
I bootstrapped my business on the side before going full-time and ran it profitably. The exit felt like icing on the cake. An awesome reward. And honestly, a hard-to-turn-down offer.
After selling, I found it challenging to understand what the money meant.
What are you supposed to do now? What does it mean? Do you invest? In what?
There are so many ideas you’ll get pitched on. Is it stupid to let it sit in a bank account? What should people in this position be doing?
I reached out to a mentor, who’s financially done very well.
We chatted a few times and the synopsis is: The money’s for you to make your life fucking awesome.
Ramit Sethi released his Netflix show, “How to Get Rich”. It’s interesting, but how does it apply to HNW folks? From a high level, Ramit focuses on, creating your “rich life”. Same thing as “make your life fucking awesome”.
This is different for everyone.
It could be:
Mentoring other business owners
Having a chef drop off delicious pre-made food every week
Hiring a housekeeper to handle chores around the home
Living in the location of your dreams
Hiring a coach to improve your hobby skills
The mentor helped me figure this out in two steps:
Design your life (hard task)
Design your day (easier task)
Design Your Life
What’s the life you want post-windfall? Think about it in a few pieces:
Financial/Work
Family
Personal/Hobby
Write down what you want in each bucket.
BUT, for what you write down, you have to ask, “why”. Ask “why” a few times. Asking that question helps make sure you truly need/want it, instead of collecting vanity metrics.
Here’s a snippet of mine:
Financial/Work
Spend
Goals
Don’t want to think about spending on <$300 items. Menu prices, small clothing items, etc.
Monthly spend under $25k
Why?
Reduce the mental load of random purchases
These small items don’t affect the big picture
Why $25k? It’s under the income generated/dividends plus some cushion
Spend up to that, to enjoy the money more
Work/income generation
Goals
$300k/yr from actively managing a business
The business options:
Sell another business, but at $100m — go even harder
Or work on a cash-flowing business to get to the $300k and be happy
Why?
Why $300k? Allows for a comfortable annual spend plus some. Don’t have to touch investment assets and dividends are reinvested.
Does this affect personal/family goals? Ideally no, will be tricky to keep it that way
From where? Actively running a business
Why $100m exit? The number feels meaningful
Are you ready to sacrifice another 10yrs, manage a team of 100, and have no work/life balance again? No. Okay, pass then. I guess the number is just a trophy
Maintenance
Goals
Spend 1-day a quarter on portfolio allocation/optimization
Tax loss harvest every 35 days in a bear market
I’ll manage the majority of our portfolio, and use a wealth manager for a minority
Why?
Why wealth manager? Managing the whole portfolio caused a level of stress and time dedication that violates my stress/time goals. I find it nice to have a professional advisor you can discuss financial matters with
Family
Goal:
Have a happier marriage with a happier wife
Spend more time together
Dates, events, dinners, non-work/focus time, non-phone time (1-2x a week)
1x a year - 10-day vacation and 4x a year - weekend vacation
Why?
So she doesn’t leave me 😂 The business took a lot of time from our marriage
Because life experiences are more fun together vs just me
Makes her happy to spend quality time together
Why vacations? Keep it spontaneous and “work” on it, like a business
Design Your Day
Now take the time to say in the ideal day, what are you doing?
Action
Time to do it. This is the hardest part and I’m still working on it.
I’m making progress though. I’ve found having peers helps, good luck!