A friend of mine earns about 60L a year, lives in a 4-bedroom house situated in a posh locality, drives a 25L+ sedan, and yet calls himself middle-class. Strange?

In a recent interview, I heard Abhishek Bachchan (film star) refer to himself as ‘middle-class’. We all know that Mr. Bachchan earns several crores a year, drives a Bentley (Rs.2 crore+) and wears an Omega watch.

(Wonder what Mr. Mukesh Ambani likes to call himself? 🙂

If this is what some of our richest Indians think of them, what should you and I call ourselves?

Middle class of course!

No, jokes apart, are calling oneself a middle-class fashionable or an expression of modesty? Or, is it another way of saying that ‘there are so many people out there who are far richer than I am’?

Here’s my take:

1. More than the money in our bank, it’s the value of what we possess versus what we believe is the value of what others possess that makes us feel rich or poor (or middle class). The final outcome, of course, depends on whom we compare ourselves with?  For instance, when I think about the Rs.17L we invested in a flat five years ago, I feel rich as the flat is now worth Rs.40L. But the next moment, when I think of the current value of the house we sold six years ago, I feel terribly poor –  it’s current value is Rs.3 crore and sold it for Rs.32L. 🙁
2. More often than not, the real culprit is property. Property prices keep increasing. If you have one, you obviously keep getting richer, notionally speaking. If you missed investing in one, you can just feel others are getting richer. If the property prices didn’t actually grow at the rate as they do, we’ll perhaps be able to take a more balanced view of where we stand.
3. ‘Symbols’ too are indicators of our position. By symbols, I mean ‘brands’. The brand of watch, to the brand of clothing, to the brand of car one drives, each one announces to the others what we can afford. The more expensive the brands we wear or are seen with, the richer our neighbors and friends think we are. Does this mean we should discard brands? I don’t think I can answer this honestly as I’m myself hooked on to several brands.  Maybe, we need to revisit our reasons for our brand preference?
4. The amount of gold we possess can make us feel seriously rich, what with the gold prices always heading in one direction – up! More gold equals more wealth is how we see the equation. Gold also has a great show-off value.  No wonder all of us keep acquiring gold. Although it’s another story that our quest for possessing gold is only making the jewelers richer.

Actually, the above parameters of measuring are purely relative. They can never give us a clear sense of who’s rich, who’s not. And if someone is rich, how rich he or she is?

The correct way to measure is to evaluate ourselves against what I call ‘the truly rich’.

The truly rich are few. And they can be identified quite easily. Here are three things that separate them  from the other rich (like ourselves):

1. The truly rich don’t work for money. They do what they like doing  – party, travel, play golf, social work. Sometimes they also work. But that’s pure indulgence. Their lifestyle is not dependent on what they earn from the work they do, or from their job or professions. Their lifestyle is funded by the use they put their earnings to. They get their money to work for them, while they busy themselves with what they love and enjoy doing.  (Recall 3 idiots?)
2. A dear friend recently explained to me the difference between the truly rich and ‘other rich’. Said he: “There are two kinds of rich people: a ‘Nawab’ and a ‘Seth’. A Nawab spends what he has, enjoying a lifestyle others can only envy. A Seth on the other hand, spends only the interest he earns from his assets and earnings. In simple words, a Nawab lives-off the asal or principle, while a Seth lives-off the sood or interest.
3. The truly rich understand the difference between an asset and a possession. To us, everything we possess is an asset. Car, house, consumer durables, jewellery. On the other hand, to a truly rich, an asset is something that earns income. Income like rent, interest, dividends and capital gains. This simple knowledge is reflected in every spending decision they take.

Now perhaps we can guess what Abhishek Bachchan and my friend meant when they said they are middle-class. They are basically telling us that they are truly rich, the Seths, not the Nawabs’.

I’m sure you’d know several truly rich people.

I’m fortunate enough to know a few. Two of my previous bosses. My current business partner. One of my colleague and her family. And, my own wife.

And I must thank them for making understand the subtle differences between themselves and other rich.

I’m trying to become truly rich myself. And I know, how much the Lakshmi  puja can help.