What comes to mind when you think about being rich?
And, wealthy?
Are they the same thoughts?
What are the differences between the two sets of thoughts?
We like to think of rich and wealthy as two different things.
Sure, there are similarities but there are also key differences.
The Merriam-Webster definition of RICH is having abundant possessions and especially material wealth.
Welp, wealth was included in the definition.
That doesn’t really help our argument.
Still, we think you should think differently about the two types of words.
The definition of WEALTH is abundance of valuable material possessions or resources.
On a definitional level, wealth and rich are the same thing.
But, it real use we think there are some differences.
Rich is the appearance of having wealth while wealth is actually having
Why Should You Think About Wealthy and Rich Differently
As we’ve said before, your mindset is a huge part of achieving your financial goals.
There are the limitations of how much you can earn and how much you have to spend on essential needs.
But, what about if you have a decent paying job and don’t pay too much for your essential needs, but still have a credit card balance after you pay the bill each month?
If your goal is to become wealthy, we would say that your goals are not aligned with your actions in the above scenario.
You have to think about money in a specific way if your goal is to become wealthy.
Every dollar you have can be used to produce another dollar.
When you have this mindset, you’ll start align your actions with your financial goals.
To become rich?
You really only need a well-paying job.
When you’re rich, you make a lot of money, therefore giving you the power to spend a lot of money.
But, instead of investing your money, you buy an expensive car or a house that you don’t need.
You Can Live a Rich Lifestyle When You’re Wealthy But You Can’t Do the Opposite
A rich person buys a new sports car with the money they just earned or, even worse, with debt.
A wealthy person buys a new sports car with the money they’ve generated from
It’s easy to become rich but it’s difficult to become wealthy.
To become wealthy, you not only have to earn enough money but you also need the mindset to invest those earnings in assets.
Someone who wins the lottery tends to live a rich-lifestyle, spending until they have no more money left.
You hate to see it.
Sometimes it’s hard to even understand.
You’ve heard statistics and stories about people winning or even earning a lot of money and then somehow going bankrupt in just a few years.
The families that win the lottery but somehow end up back in their same lives.
The professional athletes who earn more money in a few years than some do in a lifetime, only for them to declare bankruptcy a few years after retiring from professional sports.
These people were rich but not wealthy.
Wealth is All About Choice
When you’re wealthy, you have substantial assets that allow you to live the life that you want to live.
You understand that each time you use money, you are making a choice.
Choose to spend it. Or, choose to invest it.
You can even choose to give it away.
But, when you’re wealthy, you’re consciously making those decisions and understanding what the potential outcomes are of those decisions.
A rich person buys a new car, thinking solely about the new car.
A wealthy person buys a new car, thinking about the opportunity-cost of buying the new car.
Will buying that car mean you have to work five additional years before you can retire?
With money, comes choice.
Rich people tend to make only one choice, spend it.
People who become wealthy have made the choice to give up immediate satisfaction for long-term happiness.
A rich person tends to focus on spending money first while a wealthy person tends to focus on saving money first.
It doesn’t really matter how much you earn.
A high-wage earner and low-wage earner can both have a rich or wealthy mindset.
The amount of money you earn is really more about the time that it will take you to become wealthy.
Can You Lose Wealth?
Sure, it happens to plenty of people.
You may make a bad investment or lose your money another way.
Still, you’re unlikely to lose the wealthy mindset.
And, that will help you to rebuild wealth.
Another common way that wealth deteriorates is money that transfers from one generation to the next.
As wealth is passed from one generation to the next, there is a higher likelihood that the wealth will not make it to the next generation.
Once again you might not understand how these people who had all this money since they were born and managed to blow it.
You hate to see it.
But, that’s because they have the rich mindset and not the wealthy mindset.
If their parents or parents’ parents didn’t pass down the wealthy mindset, they will likely have a rich mindset by default.
It’s important to teach your children to have a wealthy mindset too.
If they’ve grown up with money for their entire lives, they likely understand what spending it can do for their happiness.
But, they probably don’t understand how money can be used so that they can maintain unseen happiness.
Like the ability to choose where they work or what they do with their life.
Final Thoughts
On a definitional level, wealthy and rich are the same thing.
But, it’s important to think about the two differently.
People who are rich have money from their jobs.
Wealthy people have money from the assets they own.
When you realize that living the life you want is all about the money you earn, you start to think about how you can build and maintain wealth.
There are limitations of how much money you earn when trying to achieve your financial goals.
But, there are also self-limiting beliefs and habits that can also keep you from achieving your financial goals.
Once you understand this and self-correct the beliefs and habits, you’ll be much closer to building wealth.
Leave a Reply
Your email is safe with us.
You must be logged in to post a comment.