Are you more concerned about buying the latest and greatest toy or having the most recent technology? Are you worried about keeping up with the Joneses or impressing your friends? If so, you do not have the proper mindset about creating wealth.

You never know when you may need something extra to get through life’s trials. An extended illness, disabling accident, loss of a job, or even identity theft can occur without a moment’s notice and leave you destitute. This is where a nice nest egg would come in handy.

Wealth, then, is not the ability to buy a bunch of expensive items. Real wealth is an accumulation of money to protect you in case of emergency and provide financial security.

Wealth = Assets

The true definition of wealth is not how much cash you have accumulated, but the value of your assets. Income is one thing – it keeps the bills paid. Wealth, on the other hand, is more like a savings account. It can encompass all things that contribute to your success, such as investments, debt reduction, savings, and liquefiable assets such as money market accounts.

Do you know your net worth? Take the value of all your assets, including bank and retirement accounts, and subtract the amount of your liabilities (all debt, including interest). This will give you a good idea of what kind of wealth you need to generate to make sure your assets are worth more than your liabilities. Most times, by simply paying off a mortgage, you can tip the scales back towards having more assets.

Tax Deductions = Greater Wealth

One factor in increasing your wealth is taking advantage of perks. The IRS offers quite a few breaks to small business owners and those who work from home. Don’t forget to take deductions for the cost of your work space and deferred taxes from contributions to retirement accounts.

Now that you’ve learned a new way to think about wealth in terms of assets, how wealthy are you? And how much will it take to achieve your goals? It may be less than you once thought.