The Wealth Compass

Wealth usually means having a lot of valuable things or resources. For most people, this includes money, property, investments and other assets that can be turned into cash. But wealth is not only about money. It can also include knowledge and skills (human capital), relationships and networks (social capital), and cultural background (cultural capital). All of these can improve your quality of life.

When it comes to financial wealth, it is often measured by something called net worth. This is calculated by subtracting what you owe (your debts) from what you own (your assets). Net worth is not fixed. It can change over time as the value of your assets or debts goes up or down. Financial wealth is fairly easy to measure, but other types of wealth, like skills or relationships, are harder to put into numbers.

Over time, the wealth someone builds is often passed down to their children or grandchildren. This is known as generational wealth. It includes things like savings, property, investments or a family business that is handed down from one generation to the next.

There are three main differences between personal wealth and generational wealth:

Timeframe: Wealth is usually seen at a single point in time. Generational wealth looks at the bigger picture, focusing on the long-term impact for your family.

Focus: Personal wealth is mostly about individual gain. Generational wealth is about building something that benefits the whole family.

Strategy: Building personal wealth might involve short-term goals. Generational wealth needs a long-term plan for investing and handing things down wisely.

Understanding these differences can help you make better decisions about your money and the legacy you leave behind.