Have you ever thought about the difference between being rich and wealthy. Is there a difference? If so, what is it? And how do we become wealthy?
There some interesting findings in the Charles Schwab survey about what being rich meant for people.
Spending time with family (62 percent)
Having time to myself (55 percent)
Owning a home (49 percent)
Eating out or having meals delivered (41 percent)
Subscription services like movie/TV and music streaming (33 percent)
owning the latest tech gadgets (27 percent),
having a gym membership or personal trainer (17 percent), and
using a home cleaning service (12 percent).
And almost half of those surveyed felt that saving money and investing was the way to achieve their definition of rich.
What is the difference between Rich & Wealthy?
Saying that being rich and wealthy are the same is like saying a credit card and debit card are the same. Or that there is no difference between an index fund and mutual fund.
They’re similar to each other, but they have distinct differences that are important to understand.
THE RICH HAVE LOTS OF MONEY BUT THE WEALTHY DON’T WORRY ABOUT MONEY. – Rich Dad
It’s usually easy to identify someone who is rich. As a kid, and even now, when you think of rich people you probably think of movie stars, athletes, and celebrities.
You’re not wrong – rich people are the millionaires and billionaires of the world.
Though, the world’s richest people also include doctors, lawyers, wall street investors, and other high-earning professionals.
They’re easy to pick out because they make a lot of money and show it. Whether it’s through fancy clothes, nice cars, or expensive boats, they display their money for the world to see.
While being rich might mean you have lots of money, you also might have lots of expenses that keep you up at night. These could be expenses like your mortgage, your car payment, credit cards, private school tuitions, and more.
A financial detox is the process of giving your wallet some room to breathe. It’s pressing reset on your spending habits. And it’s being more intentional about how you view and relate to money
Identifying someone who is wealthy is not as easy as finding someone who is rich. Being wealthy is measured by how much money you accumulate and save. In general, it’s defined by your net worth.
Unlike expensive clothes and fancy cars, your net worth is not put on display for everyone to see. It’s usually hidden.
“Wealthy” means having sustainable wealth that’s not necessarily dependent on a paycheck.
Those who are wealthy make, keep, and grow their money over time through the ownership of assets. Assets are investments – in real estate, the stock market, or a business (or many businesses), etc.
How to become wealthy
If you want to become wealthy, there are a few things you can do to get started. Don’t just focus on how big your paycheck is. Instead, have the right mindset when it comes to amassing wealth.
Save 10-15% of your paycheck every month. The first step to becoming wealthy is to save a portion of your paycheck every month. No matter how much or how little you make. Always set aside at least 10% to 15% every month.
You can set up your bank account so that a portion of your paycheck is deposited directly into your savings. This is an easy way to save without even needing to think about it. If you struggle with saving, try a savings challenge. Or look at your budget and find out where you can cut expenses.
Pay off debt
If you want to be wealthy, you need to be debt-free. Focus on paying off your debt. Make becoming debt-free your number one priority!
Learn to Invest
One of the quickest ways to grow your wealth is to invest it. Of course, investing comes with its own risks, but there are plenty of options available. You can get investment advice from a broker. Or invest in things other than the stock market, like tangible assets.
No matter what you do, do something! You can even put your money in a high-yield savings account to accrue interest until you’re ready to invest it. Make your money work for you.
Develop A Wealth Mindset
Don’t get bogged down by your current situation.
If you talk to a multi-millionaire, they will rarely tell you that they just woke up to an incredible life. They sacrificed a lot, and they still remember the early years when they weren’t sure if they would ever make it.
If you aren’t where you want to be, or your earnings are what you hoped they would be, don’t lose hope. Even if you feel like you are too old or not smart enough to do it, the fact that you are reading this article tells me that deep down you know you deserve better. Poor people have nothing to be ashamed of. What matters is where you end up, not where you started.
If you want to be wealthy, you need to always think about your long-term goals. Do you want to retire early? Own a few houses? Travel? When thinking about wealth, don’t just focus on your income. But focus on building up your investments and assets to last you a few lifetimes.
Rich or Wealthy?
As the Charles Schwab survey mentioned, most people think that achieving wealth means saving and investing. And while that is a way to get richer, it is only one part of the equation to becoming wealthy.
Ultimately, it’s not how much money you make that matters but how much money you keep. And how long that money works for you.
If you have the choice to become rich or wealthy, becoming wealthy is the better option.
Being rich is fun for now.
Being wealthy is fun forever.
To build your own wealth, you can follow these 3 simple steps:
- Save (make money and cut costs)
- Build Net Worth
It’s simple, and it all starts with having a financial plan!