HOW TO KNOW WHEN YOU ARE RICH: A new report from reveals how the affluent define financial freedom.

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What does it take to really be rich? This report uncovers attitudes about wealth and how people define and consistently achieve it.

What it means to really be rich is one of those enduring questions in finance. While there's no single good answer for everyone, a new report from Lewis Schiff, founder of "The Armchair Millionaire," says that it is a valuable starting point for thinking through some of the core issues about how we save and invest.

In the recently released report, the question was posed to members of the community. Here are a few of the responses:

"To me, wealth means not looking over your shoulder all the time in fear of the bill collector or tax man. It's having enough money to treat yourself--to a trip overseas, to dinner at a nice restaurant, to an occasional shopping spree. That said, I think wealth is a relative term. It takes much less money for some people to feel wealthy than for others." --Casey M.

"I measure my wealth in time--the one resource that for each of is completely unrenewable yet available in an utterly unknown quantity. When I am able to roll out of bed in the morning and decide to do only what I choose to do, versus what I 'have' to do, then I will be wealthy." --Jules

"When I can provide all basic living expenses on 3 percent or less of my investment portfolio, I am rich." --mysticaltyger

The report describes a financial approach that focuses on the most common kind of financial goal, security. This means having your financial house in order so that you're free from anxiety about your future.

The report includes a checklist, summarized below, for the key steps you need to take to achieve this kind of financial security.

The Armchair Millionaire's Checklist for Knowing When You Are Rich.    

Secure your retirement. This is first on my checklist for a reason. If you're not confident that you can take care of yourself when your working years are over, you'll never feel safe. Figure out how much you'll need (and no, Social Security will not be enough), make a saving and investing plan and get going. Your goal should be to ensure an adequate cash flow from your investment portfolio for as long as you live.

Insure your health, your life and your stuff. An accident or illness can be just a bump in the road when you have insurance, but a financial disaster if you don't. A nest egg worth hundreds of thousands or even millions can be wiped out in a heartbeat without the proper insurance. Schedule a review with you insurance agent today to make sure you have the coverage you really need.

Educate your kids. It no secret that quality education doesn't come cheap. Give your kids a boost up--and help them ensure their own financial security--by beginning to save and invest for their educations as early as possible.

Make yourself recession-proof. Ask yourself where you'd be in six months if you lost your job today. If you don't like the answer, you're not recession-proof. Pay down your debt and build up a cash emergency fund so that losing your job would not constitute an emergency.

Provide for your legacy. Some people want to die broke, but most of us want to pass on something to help provide for the financial security of the next generation. If you don't have an up-to-date will that accurately describes where you'd like your money to go, see a lawyer.

THE BOTTOM LINE: Being rich is less about having a certain amount of money and more about having a sense of security that can come only from managing your finances with care and wisdom.

This article originally appeared on


============================================= was founded in 1997. The company's first book, The Armchair Millionaire, was published in 2001. Today, is an established community of common sense savers and investors.

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