Rich Vs Wealthy: Key Differences You Should Know
I once had a friend say that she “wished she had a million dollars.” The thing is, what she wanted was to spend a million dollars. (She loves very nice, expensive things.)
But once you spend it, you no longer have the money. You have cool stuff instead.
And that, my friends, is the difference between being rich vs being wealthy.
Is either better? We’ll let you decide.
What does being rich mean?
Rich means that you have a lot of money available. This may come from a high income, inheritance, credit card limit, or windfall. When we think of rich people, we imagine high-end yachts and private schools.
However, this does not mean that someone has money in the bank.
It can be just the opposite. If you make $800,000 a year but also spend $800,000, you are going nowhere with your money. And if you spend more than $800,000, then your yacht is sinking and you will be broke in a short time.
What Rich Gives You That Wealth Does Not
Large amounts of liquid funds can provide you with quality: enchanting experiences, a beautiful home, and a fast car. These things are fun to enjoy.
Plus, if your wealth is all tied up in land or a business venture, you may have to live as a miser. Being a cheapskate or sacrificing your health and happiness for wealth is not ideal either.
What does being wealthy mean?
Wealth is the long-term building of money. What was found in the book, The Millionaire Next Store, is that millionaires can be found in the most unlikely places. These people don’t look rich – they live in humble homes and drive old cars.
But they have built fortunes over time. And anyone, at any income level, can do it.
What Wealth Gives You That Rich Does Not
Above all, wealth provides you with freedom and options.
When you have substantial money in the bank…
- you no longer have to work at a job you do not like.
- You can retire early or take time from work.
- You do not have to stress about whether you can pay your bills. Or pay for something that adds incredible value to your life.
- And you can build a legacy that works for you even when you are no longer roaming on this earth.
Most importantly, you live life on your terms, not the terms of your creditors or boss.
Is it better to be rich or wealthy?
We all want what money offers.
It is not wrong to enjoy the finer things in life. And the truth is that it is possible to be both rich and wealthy (a very small percentage of people).
But for most of us, you can either look rich or be wealthy. It is hard to do both.
So, to stabilize our future, the focus is on wealth. After all, being rich is mostly about income flow. Being wealthy is the longer-term goal of being in control of your own life.
How to Build Wealth (Rich Vs Wealthy Net Worth)
Here are tips to start building your wealth today!
Adopt a Rich Vs. Wealthy Mindset
Marketing has made the idea of quick money more alluring than ever. The popularity of betting and day trading are great examples of this. But these are also two excellent ways to lose your money.
To build stealth wealth, you have to tune out our society’s get-rich-quick mentality. Shift your mindset. And change the game you are playing.
Save and invest at least 10%. Do more if you can. And as the chart above shows, the earlier you start, the better. Thanks to the magic of time and compound interest.
Pay Off Debts That Are Not Helping You
The fastest way to build wealth is to unshackle yourself from the chains of bad debt.
Unless it is a strategic investment, pay cash for what you want. You will find that you not only pay MUCH less than the average American, but it makes wealth building 10x easier.
Live Below Your Means
Want an example of rich that didn’t last? There are plenty.
Look up the many lottery winners. Nearly one-third of lottery winners eventually declare bankruptcy (CFPBS). And celebrities who skyrocket to success have their troubles too. Johnny Depp, 50 Cent, and Kim Basinger have all declared bankruptcy, as well as many others.
In the end, it does not matter how much you make if you spend more than you bring in.
Use the “Quality of Life Metric” For Spending
Now, to live below your means, you need to be aware of your spending.
When I look at my own expenses, I prefer to use this metric. It helps me keep in perspective which purchases truly upgrade my life, and which ones are just for “status” or are feeding bad habits.
This metric will be different for everyone. For me, it generally comes down to these two questions:
- Does this expense free up time for family or fulfilling work?
- Is this an investment in my (or my family’s) health, happiness, or growth?
Some things are worth spending a little extra for. But it needs to be for the right reasons.
Income Does Matter
Yes, you can build wealth on a low income. But here’s the truth: it is a lot easier if you bring in a good paycheck. Or have passive income streams on the side.
Saving money and being frugal are important to building wealth. But you can only be so frugal before you run out of options or the things you do are not worth your time.
Would your time be better spent making an extra $500 or clipping coupons?
Have a Financial Plan
Finally, when it comes to building wealth, you need a plan. Set meaningful goals that help you stay motivated. And review them regularly so that you remember why you are resisting the fancy “got to have this right now” sunglasses.
Rich Vs Wealthy Quotes
Next, here are a few wealthy vs rich quotes to motivate you on the difference!
1. “Wealth is not about having a lot of money. It is about having a lot of options.” – Chris Rock
2. “If you would be wealthy, think of saving as well as getting.” – Ben Franklin
3. “Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” – Johann Wolfgang von Goethe
4.“It doesn’t matter about money; having it, not having it. Or having clothes, or not having them. You’re still left alone with yourself in the end.” – Billy Idol
5. “Money does not buy you happiness, but lack of money certainly buys you misery.” – Daniel Kahneman
6. “Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris – I wanted the independence. I desperately wanted it.” – Charlie Munger
7.”If not to make the world better, what is money for?” – Elizabeth Taylor
8.”Many roads lead to wealth, and most of them are dirty.” – Peter Rosegger
9. “A man (or woman) is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.” – Bob Dylan
10. “The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.” – T.T. Munger
Wealth Isn’t Just About Money
Being wealthy financially isn’t the end all be all. Many of us know people with a lot of money who are not happy. And what kind of a victory is that? (A hollow one, that’s what).
So, be sure that while you are building financial wealth, you are also nurturing your relationships, partaking in enriching experiences, and building a joyful life too.
These things can all synergize together into an absolutely beautiful life.
*Need help saving more money? Check out these lesser-known but brilliant ways to save money in 2023*