By Lewis Schiff

Question of the week

My best friend and I have a friendly disagreement about what it means to be rich. He says that a million bucks would make someone rich, but I think it would take much more than that. How much money do you think someone needs to really be rich? --Don in D.C.

Dear Don,

Yours is one of those enduring questions in finance. I'm afraid that it doesn't have a single good answer that's right for everyone, but it's still great for getting us to think through some of the core issues about why we save and invest.

When we posed your question to members of the Armchair Millionaire community, we received a number of thoughtful answers. Here are just a few:

"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

I believe one of the most important aspects of financial freedom is security. This means having your financial ducks lined up so that you're free from anxiety about your future. Don't get me wrong--you'll never need to forget about money altogether--but you can manage it so that you're free to focus on other things. My checklist provides the key steps you need to take to achieve this kind of financial security.

The Armchair Millionaire's Checklist for Financial Security

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.