What is economic wealth?
Economic wealth is the total value of the resources you have to meet your physical or material needs. Money is the currency of economic wealth. So all of these resources can be interconverted through money. These resources include the value of your assets (home, car, bank accounts, other material possessions, etc.) and income from your job or other sources. If you have borrowed monetary resources (loans) then you have to subtract those. Total net economic wealth is calculated by totaling the value of your resources and subtracting from that the total of your debts.
Economic wealth is used for two main things.
- Ongoing fulfillment of physical necessities such as food, shelter, clothing, health, etc. These physical necessities arise from biological systems within your brain and body that are responsible for the physical well being and survival of the body. These systems make you seek food when you are hungry, water when you are thirsty, shelter when you are cold or hot and so on. When you feel that these necessities are being met to a comfortable level, then the first main purpose of economic wealth is met.
- Providing a sense of security and confidence in your future ability to fulfill the physical necessities. This is the main reason for accumulating wealth. The accumulated wealth allows you to have less anxiety and more confidence, and so improves how you live your life.
A reasonable amount of economic wealth is what is able to comfortably provide the above two things.
Please use the Economic Wealth Calculator for a quantitative assessment of economic wealth.
Also, how does this view of economic wealth compare with your own? Please leave comments below.