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E’s (Ease) of Creating Sustainable Personal Wealth

Vinay Dutta
Prof in Finance
FORE School of Management
New Delhi 110 016

In the present day context, creation of personal wealth is of utmost importance owing to
increasing materialistic orientation among households. But what are the factors that commonly
lead to creation of personal wealth and the degree of interconnectedness among identified factors
remains an area of interest to researchers. There are divergent views as to the factors that
contribute and motivate households to create sustainable personal wealth. Yet conventional
wisdom holds that factors like education, experience(s), expertise, earnings and expenditures,
entrepreneurship, events and emergencies, enjoyment, emotions and ethics do inspire and
accelerate the pace of creating sustainable personal wealth. This paper provides only a
preliminary discussion to gain an insight into each of the E’s described above in motivating and
creating sustainable personal wealth and also examines linkages among the E’s.

Key Words: Sustainable Personal Wealth, Education, Experience(s), Expertise, Earnings and
Expenditures, Entrepreneurship, Events and Emergencies, Enjoyment, Emotions, Ethics

Acknowledgement: Infrastructural support provided by the FORE School of Management, New

Delhi in completing this paper is gratefully acknowledged.
E’s (Ease) of Creating Sustainable Personal Wealth


Traditionally the word wealth refers to making money, generating income or creating value.
From personal wealth perspective, wealth represents physical and financial possessions of
households. Sustainable personal wealth is a much broader expression that touches everything in
life; in people’s mindsets, in the way people deal with wealth in every human interaction. It is
about balancing measureable material wealth with acknowledgeable wealth*. It is about taking a
long-term view on wealth leading to fulfilling and enjoyable life experiences. Upholding this
view on sustainable personal wealth Rev. Jesse L. Jackson, Sr. and Jesse L. Jackson, Jr+
observed “Accumulating wealth—as distinct from just making a big income—is the key to your
financial independence. It gives you control over assets, power to help shape the corporate and
political landscape, and the ability to ensure a prosperous future for your children and their
heirs…" Accordingly, for the purpose of this discussion paper, sustainable personal wealth
implies developing a corpus that allows households in maintaining desired life style spanning
over the entire life cycle and even expanding its reach to future generations. But what is it that
goes in the creation of sustainable personal wealth?

This discussion paper addresses the issue of creating sustainable personal wealth through the E’s
encompassing education, experience (s), expertise, earnings and expenditures, entrepreneurship,
events and emergencies, enjoyment, emotions and ethics.


*Acknowledgeable Wealth: Friendship, beauty, freedom, civility, culture, happiness, integrity, reputation--these are all forms of
acknowledgeable wealth. They are neither tradable nor objectively measurable because their impact is only felt subjectively.
+ The Rev. Jesse L. Jackson, Sr. one of America's foremost civil rights activist and his US Representative son, Jesse L. Jackson,
Jr. are authors of the book “It’s About the Money.”
Education and Wealth

Education is key to opportunity and fundamental to almost all human endeavors. Proponents of
education across the globe use slogans like –“the more you learn, the more you earn! Don’t be a
fool, stay in school” to encourage people to get into school and more importantly, remain in
school (Graham and Paul). The issue here is in what way education contributes in creation of
sustainable personal wealth? Speaking on the crucial role of education, the great philosopher
Aristotle insightfully observed “Education is an ornament in prosperity and a refuse in
adversity”. This explains (a) Why professionally qualified people command premium in the job
market? (b) Why they swiftly progress in career over a shorter time-span? (c) Why they are
relatively better prepared to sail through the hard times? Speaking on education, Lyndon B
Johnson, the 36th President of the United States said “We have entered an age in which education
is not just a luxury permitting some men an advantage over others. It has become a necessity
without which a person is defenseless in this complex, industrialized society.”As per Liber8*
“Education is an investment in human capital, because it delivers specialized skills and boosts
worker productivity. As a result, higher levels of education generally lead to increased earnings
power. Economists refer to this higher earning power as the return on education.” This shows
that there exists a positive relationship between career progression and wealth creation. Learning
is thus a critical input in developing earnings potential. Putting it differently, earning is an
integral component of the word learning (L+Earning).” Thinking of attaining greater heights
without quality education is virtually unimaginable in today’s competitive environment. That
explains why more and more people are seeking higher degrees than ever before.

Does higher education and resultant employment matters in better financial planning resulting in
accumulation of sustainable wealth? Though there is a consensus that higher education by and
large leads to enhanced earnings potential it may not make households finance savvy. Making
money is easy, but managing money and creating sustainable wealth is a very complex
proposition. Financial Experts strongly advocate for making financial education as an integral
part of formal education. They believe that imparting financial education is an enlightening
process for creating financial awareness among the masses. Speaking on the topic Mr Durmuş
Yilmaz, Governor of the Central Bank of the Republic of Turkey argues “financial awareness
supports a more rational decision-making process for individuals by improving their literacy
against financial risks (2011).” Financial awareness assist households in properly understanding
financial products, prepare them to read financial statements and equip them to take informed
decisions concerning personal wealth. Financial orientation may even provoke households to
think and choose the best possible wealth creation alternatives matching with their own ethical
values. For example, households may decide to keep away from putting their money into
businesses like tobacco or liquor, which are detrimental to the society as a whole. Does higher
education and higher earnings always guarantee accumulation of sustainable wealth is an issue
outside the scope of this paper?

Experience(s) and Wealth

Work experience and experiences of dealing with money together with education serves as key
*Liber8-The Economic Information Newsletter August 2009 issue of the research library of Federal Reserve Bank of St Louis,
drivers of producing personal wealth. Hence, there are two ways of exploring the relationship
between work experience and / or experiences of dealing with money and creation of wealth.
Work experience refers to active involvement in an activity or exposure to events or people over
a period of time leading to an increase in knowledge or skill. Experience is non-transferable.
Albert Camus, a French existential writer stated “You can’t create experience, you must undergo
it.” Experience coupled with education is a great advantage. There is abundant evidence to show
that earnings grow as people gain experience (Medoff and Abraham, 1980), to be more precise
relevant experience. Explanation to this could be productivity gains accomplished over a period
of time. From sustainable personal wealth perspective, experiences refer to households own
experiences, good or bad, of dealing with money. For example, households who spent money on
experiences related to their social life saw an improvement in their satisfaction with their social
life. Households who spent money on experiences related to fitness saw an improvement in their
satisfaction with their health. Households who spent money on provision of higher education to
children and grand celebrations of life events saw improvement in their enjoyment. Increases in
satisfaction with a particular area of life affect overall sense of well-being and happiness of
households. Capturing this essence of relationship between life experiences and wealth, Henry
David Thoreau, an American philosopher observed “Wealth is the ability to fully experience
life.” Experiences with money are thus associated with emotions, and personal beliefs or
assumptions on which they are based. Differences in experiences with money stems from
differences of what people think and believe money can do for them. In the words of Jean-
Jacques Rousseau, the great Genevan (Swiss) philosopher “the person who has lived the most is
not the one with the most years but the one with the richest experiences.”

Expertise and Wealth

Simply speaking, an expert is a person who has extensive skill or knowledge in a particular area.
Experts are generally in short supply and command premium for the services they offer. Experts
seek to stand above the crowd and are not egocentric jerks with self inflated egos, but those who
have earned the right to be considered in the top of their respective fields. They are reservoirs of
acknowledgeable wealth. Expertise is generally associated with higher earnings potential. Alan
Pease contends “Brain surgeons earn 10 times that of a general practitioner... it pays to be an
expert.” This explains the superior net earnings power of experts compared to people possessing
ordinary skills. But how is it that only very few people accomplish expertise? What makes
someone an expert and who determines the level of expertise? Is it education or experience or an
early break-through in career? But what of those who have acquired both professional degrees as
well as plenty of mediocre experience? Why is it that they cannot make it to the big league of
experts? Experts are specialists, not easily replaceable due to distinct professional identity. They
have the ability to recognize novel patterns from noise and above all possess required
competence to deliver value that others normally do not imagine. An expert is able to recognize
and perceive the meaning of a phenomenon in a given context within a very short period of time.
Coming to what and who determines expertise, it is the quality of education, quality of practice
and quality of experience gained over time that determines expertise. Expertise in turn leads to
excellence- superiority, the quality of being outstanding and distinct. “You are what you
repeatedly do. Excellence is not an event-it is a habit (Aristotle).” Ultimately, it is only those
who engage experts, can establish their true worth in financial terms. Obviously, an expert
cannot proclaim to be an expert if others do not recognize his unique talent and reward him
appropriately. However, expertise does provide an advantage in securing higher earnings and
facilitate creation of sustainable wealth.

Earnings, Expenditures and Wealth

Personal earnings and expenditures are among the most important determinants of creating
personal wealth. While earnings depend on factors like education, experience and expertise;
personal expenditures are influenced by life-stage, life-style and life-circumstances. Studies
show that self-discipline in personal financial decisions relating to spending habits is far more
critical than smart investing for creating personal wealth. Talking on the subject, Thomas J.
Stanley and William D. Danko in their book, The Millionaire Next Door remarked “If you make
a good income each year and spend it all, you are not getting wealthier. You are just living high.”
Controlling urge to spend does wonders, while intelligent investing may not ensure creation of
wealth. Yet most of us strive to enhance earnings to create wealth. Regarding impact of
education on earnings, researchers at Georgetown University's Center on Education and the
Workforce calculated a lifetime-earnings figure for full-time, full-year workers with various
levels of education, from less than high school to doctoral and professional degrees.
Unsurprisingly, they found that median lifetime earnings rise with education level (2011).
Several other studies demonstrate a strong positive correlation between a person’s level of
education and his or her employability and earnings. Studies also confirm that those with higher
levels of education enjoyed higher rates of employment and higher growth in earnings over time.
People with higher earnings are usually emotionally mature because to them it is one of the signs
of accomplishment in their career.

Entrepreneurship and Wealth

There is a general saying that ordinary people work for money (usually have single source of
earnings), for rich people money generates money (have multiple sources of earnings, say salary
or business income, rental income and income from investments) and entrepreneurs create new
wealth through conceiving something different that can be commercially exploited.
Entrepreneurs produce new wealth because they have wish power to dream big and will power to
execute and achieve. They are creative, game changers and have the ability to generate most of
the new wealth. Is large personal wealth produced by entrepreneurs a good thing? Broadly good,
provided wealth is created in an ethical manner and not derived from anything that is detrimental
to the society as a whole. Entrepreneurs act as change agents and role models for spreading the
message of creating sustainable wealth. As a matter of fact one of the recommendations made by
World Entrepreneurship Forum, 2008 was to include within schools a curricula that promotes
development of skills and attitudes that are hallmark of entrepreneurship. Experts believe that
embracing entrepreneurship provide an opportunity in accumulating personal wealth. However,
Barclays Wealth survey findings suggest that while money is vital for an entrepreneur to achieve
his or her vision, it is more an indicator of success rather than the prime motivation (2008).

Enjoyment and Wealth

Choosing between wealth and enjoyment is a highly conflicting proposition. Enjoyment literally
refers to pleasure that result from using or experiencing something. Unfolding the relationship
between wealth and enjoyment, Benjamin Franklin, the classic American overachiever remarked
“wealth is not his that has it, but his that enjoys it.” Does that mean accumulating wealth
necessarily brings enjoyment, makes us contented and gives us the power to do as we please?
Many of us believe that money makes the world go round and so the life is only about the
amount of material possessions one can accumulate. Yet others follow a frantic effort to excel,
earn name in the society and money automatically follows them. Money to them is means to an
end and not an end in itself. Whatever way we look at money, it does open doors for
experiencing many pleasures in life. But is it money alone or the source through which we
acquire money that is critical in determining relationship, positive or negative, between
enjoyment and wealth? There seems to be general consensus that wealth acquired through fair
means and self-generated wealth leads to superior self-fulfillment. Barclay’s research also finds
that source of wealth is important; there is a stronger relationship between wealth and happiness
when it is earned, rather than inherited (2011). Pleasure derived from having your own baby
certainly far exceeds than raising a child of other biological parents.

Emotions and Wealth

Human beings are not machines. They are a rare combination of social, economic and emotional
beings. Human emotions depict range of human feelings, both pleasant and unpleasant, having a
motivational effect on behaviour. Emotions are consciously experienced and cause psychological
stress and alter our thought patterns. Whether we notice or not emotions too permeate
household’s thoughts and actions relating to personal financial decisions. Blending emotional
wealth with material and acknowledgeable wealth is essential to succeeding in making money
and creating sustainable personal wealth. But in what way emotions actually leads to creation of
sustainable personal wealth? Emotions reflected through range of human feelings (fear, security,
status, etc.) inspire households to think and plan accumulation of wealth for anticipated and
unanticipated life events. Changes in our thought patterns also facilitate gaining control over how
we feel and ultimately how we deal with money. It is for this reason that money remains an
emotional issue to most of us. Accordingly, no matter how practical we may be, at least some of
our personal financial decisions are based more on emotions rather on rational beliefs or logic.
While emotions play an active role in making personal financial decisions, “education is the fire-
proofer of emotions” as per Frank Crane. Particularly when it comes to preservation and inter-
generational transfer of wealth, past experiences with wealth makes it easier to control emotional
responses. But is there a way through which we can seek guidance on emotional responses
relating to wealth? Financial psychotherapists provide assistance to individuals in charting their
unique meanings, values, responses and solutions for resolving wealth related conflicts. This
special breed of experts primarily focuses on the emotional, motivational and interpersonal
dimensions of our relationship with wealth.

Events, emergencies and Wealth

From personal wealth perspective, events, to be precise life events, refer to happenings that have
significant financial implications for households. Some of the major life events come both in
expected (starting job, weddings, births, schooling, higher studies, buying assets, retirement) and
unexpected (losing life partner, disability, divorce, sudden inheritance) ways and necessitate
accumulation of wealth with an eye on the future. While these events don’t happen daily, the
memories both good and sad, they offer and wealth they erode can be felt for years. Provision of
adequate wealth prepares us to celebrate enlivening events of life and to embrace unpleasant
happenings gracefully. Just like major life events, personal emergencies are also facts of life.
Emergencies are non-discriminatory; they can strike anyone, anywhere, at anytime, have
monetary as well as emotional consequences and require instant response. Emergency situations
are not a matter of “if” but rather “when”. While it is difficult to predict unanticipated shocks
triggered through sudden job loss or unexpected medical/healthcare expenses etc., provision of
an emergency fund, a self-insurance mechanism, can definitely prepare us to sail through bad
times smoothly. Creation of an e-fund is critical to avoid negative impact on family living
expenses resulting from unexpected decreases or loss of current period income, or unexpected
increases in consumption and getting into unwarranted debt. According to Dave Ramsey an
American financial author “The basic truth is that you must plan for the unexpected, because it
will happen. Although we don’t know what form it will take, it will come. Cars do break; people
do get hurt or die, businesses do lay people off. To think otherwise is naïve. So you have to plan
for it. Creating an emergency fund is an essential element for seeking financial peace. Life cycle
savings theory provides a foundation for analyzing emergency funds and liquidity ratios. The
theory developed by Ando & Modigliani suggests that people desire to smooth consumption and
seek to maximize utility over their lifetime.

Ethics and Wealth

In this materialistic world, we all need enough money not only to satisfy basic needs, but also to
fulfill our desires. While satisfying basic needs of life, that is, provision of food, shelter and
clothing, is necessary for survival, we do need money to fulfill some non-basic desires to lead a
decent life style. According to Sam Lim an entrepreneur and certified financial planner, a person
who is struggling to make ends meet will be in no mood to care about his spiritual health. A
certain amount of material wealth is necessary unless you live in Mars or Venus. The problem
with material wealth lies in human nature to desire for more, better and bigger things. In our
desire for more material wealth, people with not so strong moral values will trade their integrity
for greater material comforts. So there is no denying the fact that we all need money and we have
to create wealth. However, from ethical perspective, it is crucial to do detailed assessment of our
own feelings, thoughts and motives to ascertain what we actually attain through earnings and
wealth? How we live, who we are, and the steps we may initiate to increase and/or decrease our
own overall as well as others well-being? Thus the way we obtain money and use money are
important ethical issues needs to be addressed while creating sustainable wealth. An old
aphorism in personal finance is “wealth gained by dishonesty will be diminished, but he who
gathers by labor will increase”. This aphorism and the strong beliefs underlying it highlight the
complex issue of relationship between ethics and wealth. So, what’s the remedy? How can we
spread awareness on ethical and moral values among people when it comes to amassing wealth?
This can be done through bringing change in the mind sets of people right from school level.
People should be sensitized to obtain money and accumulate wealth in an ethical manner.
Expressing his views on morality and social ethics, Georg Hegel said “Education is the art of
making man ethical.” Thus, ethics coupled with education fosters creation of sustainable
personal wealth.

The objective of this preliminary discussion paper is to gain an insight into the E’s of creating
sustainable personal wealth. Based on literature review and expert views, author is of the
opinion that each of the E’s talked about in this paper acts as an enabler in creation of sustainable
personal wealth. However, readers can think of more factors influencing creation of sustainable
personal wealth than presented in this paper. Readers may also collaborate with author to expand
the scope of this paper to:

(a) Investigate the degree of interconnectedness of various Es.

(b) Design an analytical matrix to determine the impact of various combinations of E’s
through assigning specific weights to each of the E’s.


1. Ando, A., & Modigliani, F. (1963). “The life cycle hypothesis of saving: Aggregate
implications and tests.” American Economic Review 53
2. Barclays Wealth Insights (2008): “The Entrepreneurs in Adversity”, In co-operation with
the Economic Intelligence Unit, Volume 7
3. Barclays Wealth Insights (2011): “The Transfer of Trust Wealth and Succession in a
Changing World”, In co-operation with Ledbury Research, Volume 14
4. BIS Central Bankers’ Speeches, Speech by Mr Durmuş Yilmaz, Governor of the Central
Bank of the Republic of Turkey, at the International Conference on “Financial Education
and Financial Awareness: Challenges, Opportunities and Strategies”, Istanbul, 10 March
2011. (Link:
5. Ben Graham and Charles Paul, Essay “Does higher education really lead to higher
employability and wages in the RMI?” This essay is produced under the auspices of the
Insular Areas Statistical Enhancement Program and is not an official RMI or US Census
Bureau report.(Link: Education%20 and% 20
6. Georgetown University's Center on Education and the Workforce Report (2011),"The
College Payoff: Education, Occupation, Lifetime Earnings."
7. Jesse L Jackson, Sr., Rev Jesse L Sr Jackson with Mary Gotschall, “It's About the
Money!: How You Can Get Out of Debt, Build Wealth, and Achieve Your Financial
Dreams” (1999), Crown Business
8. Liber8® Economic Information Newsletter (2009), “Education and Earnings” (Link-
9. Medoff James L and Abraham Katharine G (1980),, “Experience, Performance and
Earnings”, The Quarterly Journal of Economics ,95(4), pp 703-736
10. “Promoting entrepreneurial spirit’, World Entrepreneurship Forum, 2008 (Link:
11. Sam Lim, “Balancing Your 3 Wealth: Material Wealth, Spiritual Wealth & Emotional
Wealth”, 2004 (Link:
12. Stanley Thomas J and Danko William D,” The Millionaire Next Door”(1998), Gallery