The Difference Between Being Rich and Being Wealthy
At first glance, being rich and being wealthy might seem like the same thing. But is there a difference between being rich and being wealthy?
There is, in fact, a difference. In this article, we’re sharing the difference between the two terms. And the difference might just surprise you.
What Does it Mean to Be Rich?
Being rich and being wealthy might sound like the same great thing. However, in reality being wealthy is quite different, and, you might decide, much more desirable.
Have a High Income
Rich people usually have high incomes. They’re in the six-digit income range, or maybe they get income from a trust or other source.
If you’re a rich person, you probably work a job that helps make you rich. You might be a pilot, a pharmacist or work in some other medical career.
Or you might work as a software engineer or have some other tech-related job. Similarly, it could be that you and your spouse have mid-income range jobs individually, but together your incomes hit the $150k or above mark.
In a nutshell, a rich person has a high enough income that they don’t worry too much about money.
Often Have Luxurious Belongings
Another indication that a person is rich is that they have luxurious belongings. A rich person likely drives newer, high end vehicles.
They have upscale homes with upscale furnishings in the home. A rich person may own second homes, have expensive vehicles or take lavish vacations.
You might know a rich person by the fact that they wear high-end clothing, jewelry and shoes. Or they might spend a lot of money on the food they eat, activities for their kids or items for their pets.
They also might pay others for services such as extensive house cleaning, or have a live-in housekeeper.
Rich people also tend to think quite short term. They are more interested in what they can have and do on this day, this week or this year.
They’re focused on the next vacation, car purchase or on the newest game or gadget. Rich people don’t give much thought to the future.
Instead, they tend to have a YOLO (you only live once) mindset and will plan and spend accordingly.
Lastly, rich people are self-focused. They are primarily concerned about what they need and want.
Their life decisions focus around the answers to those questions. If they want a new vehicle, they get it. If they want to go on vacation, they go.
They take care of their own wants before thinking about how their money could be used to affect a wider audience.
Being wealthy, however, is a totally different ball game.
What Does It Mean to Be Wealthy
Wealthy people live a much different lifestyle than rich people do. In fact, a wealthy person’s lifestyle is often quite the opposite of a rich person’s lifestyle.
One of my favorite books is The Millionaire Next Door by Thomas Stanley.
In it he said this:
“Most of us want to be wealthy, but most of us do not spend the time, energy, and money required to enhance our chances of realizing this goal.”
To help you on your path to build wealth, here are some of the habits of wealthy people.
Manage Their Income Well
Wealthy people may or may not have a high income. However, they do manage the money that they earn very well.
Wealthy people often use a budget to help them manage their money. For instance, the zero-sum budget helps you make sure every dollar you earn has a job.
Wealthy people often work hard to save money too. They might use coupons to save money while shopping.
They likely have a set grocery budget and are sure to stick to their budget in order to help save money on groceries.
Their goal is to limit wasteful spending. And one way to do that is to practice value-based spending.
Practice Value-Based Spending
Value-based spending is simply spending your money on what matters most to you. For instance, let’s say you have a goal to save $20,000 in two years.
When you’re making decisions about what you spend, a value-based spending mindset will help ensure you make purchase decisions accordingly.
As an example, you’ve had a long day at work and really just want to eat out. The value-based spending mind knows it has two choices:
You can spend $60 eating out at your local bar and grill.
You can go home, eat leftovers and put that $60 toward your savings goal.
Is reaching your savings goal more important to you than that spur-of-the-moment dinner out? Only you can make that decision by deciding where that $60 expenditure would most benefit you.
On the contrary, the rich person wouldn’t stop to think about the expenditure or its potential hindrance to the savings goal.
The reason that the rich person wouldn’t stop to think about that expenditure is that, as discussed earlier, rich people think short term.
Conversely, wealthy people think long term. They ponder how each expenditure will impact their long term goals, whatever those goals are.
Don’t worry; it’s not that wealthy people are devoid of fun or morally opposed to a dinner out once in a while.
It’s just that they have a good handle on what their short and long term goals are. As such, they work to make spending decisions accordingly.
Last but not least, where rich people tend to be self-focused, wealthy people tend to be others-focused.
They make a habit out of finding ways to give back. A wealthy person donates generously to charities that are close to their heart.
They often spend time volunteering for organizations dear to them as well. Wealthy people give generously of their time, money and resources.
They’re typically not terribly concerned about ensuring they are granted their every whim. Instead, they see their wealth as a blessing to be used to help make the world a better place.
What is the Main Difference Between Rich Vs. Wealthy?
So, what is the main difference between rich vs. wealthy? I guess you could sum it up by saying that rich people are consumers, while wealthy people are producers.
Rich people use their money to increase their personal consumption. Wealthy people use their money to produce positive results in themselves and the people around them.
As an example, a wealthy person might save their money so they can start a business that will employ people in their community.
Or they might fund a program meant to help single parents support their families or newly released incarcerated persons find a fresh start.
Wealthy people know that the allure of new and shiny things wears off quickly, and that investments in the community can have generations of benefits.
How to Become Wealthy
So how can you become wealthy? Believe it or not, you can start becoming wealthy today, no matter what your current financial situation is.
Just start by taking the four steps listed here.
Determine Your Life and Financial Goals
The first step to becoming wealthy is to determine your life goals and your financial goals. What is it that you want out of life?
What is your dream job? Your dream volunteer opportunity? Your dream retirement age? Do you desire to travel? If so, where and with whom? Where would you love to live?
How big would your emergency fund be in your dream world? And do you need an emergency fund?
What other financial goals do you have? Why is money important? And why is having money important to you?
Take a few hours one day and really think about what your life and financial goals are. If you have a partner, include them in the process.
Once you’ve determined your goals, figure out a step-by-step for achieving them. Write the process down on a piece of paper or type it on a spreadsheet.
Then go about taking the necessary steps to achieve each of your goals. And note too that it is important to revisit your goals list often.
Do quarterly check-ins with your goals sheet. Make notes. Are you sticking with your plan? If not, how come?
And what can you do differently so that you can start sticking with your plan? Determining and achieving goals is a long process.
But the years are going to pass whether you achieve your goals or not. So you may as well get to working on them.
Save a Designated Percentage of Each Paycheck
Wealthy people always treat their savings like a bill. They put a percentage of their budget towards savings each month and make a payment just like they would a utility bill payment.
Savings deposits are non-negotiable budget items just like paying your electric bill would be.
You need to adopt the same mindset if you want to be wealthy. Once you’ve determined your financial goals, you’ll want to put a line item in your budget for each of those goals.
When payday comes around, make those deposits to your savings goals accounts each month, just like you would with any other bill.
It may help you to have separate savings accounts for each of your financial goals. You might have one savings or investment account for early retirement and one you’ll use to fund your next vacation.
You may have separate accounts for college expenses for your kids, for an upcoming wedding or for the purchase of your next vehicle.
Whatever your savings goals are, be sure and make designated deposits to each fund, every month.
Make it a non-negotiable rule and watch yourself get closer and closer to achieving your goals.
And above all, don’t use the money in your goal accounts for anything other than the goal itself, no matter how tempting it might be.
Pay Off Debt/Stay Out of Debt
Another way to become wealthy is to pay off all of your debt. Yes, the “good” debt too. Pay off your credit cards, car loans, student loans and your mortgage as well.
Then, commit to staying out of debt. Only buy cars you can afford to buy with cash. Live within your means and stick to your budget.
I know that paying off debt isn’t always easy. And for some people, the task may sound quite overwhelming.
Luckily, there are many great ways to pay off debt. In fact, Well Kept Wallet’s founder, Deacon Hayes, worked hard with his wife to pay off $52,000 in debt in just 18 months.
Although the debt payoff process is different for everyone, you can choose from many ways to pay off debt.
You can use the debt snowball, the debt avalanche, or pick up a side hustle. You can use one of many apps to pay off debt.
The key to getting debt free is to make a plan and stick to the plan until you’ve reached your goal. Stay on track no matter how tough it gets to do so.
And if you get off track, brush yourself off and get back on track again, putting the mishap in the past where it belongs. You got this!
Lastly, if you want to be wealthy, be charitable. According to a study done by Motley Fool, high-generosity people were 23% more satisfied with their lives overall.
Look for opportunities to give money to help others and you may be surprised at the positive impact it will actually have on you.
Are you in the beginning stages of becoming wealthy, and with very little money to give? Then start by giving of your time.
Find volunteer opportunities in your community. Help out a local family that needs assistance. Mow lawns for the elderly.
There are volunteer opportunities everywhere. Find them and use them to begin your life of helping others.
Give of your money if you can as well. Start with a small amount and increase gradually if giving your money is uncomfortable. I promise you’ll have all that you need!
Can Anyone Become Wealthy?
I’m a firm believer that just about anyone can become wealthy. Don’t believe me? Then check out this story about Ronald Read, a janitor who died at 92 with over $8 million to his name.
How did Mr. Read become so wealthy? By following the tips listed above. Slow and steady wins the race, my friends.
And you can take the fast track too if you’re willing to put in the extra effort. However you do it, don’t be afraid to aim high and reach your goals.