I used to aspire to be rich when I was younger. I always wanted the nice cars, the fancy house, and big yacht. I wanted to able to travel the world at will. I know we have all seen the people that drive up in the brand new luxury sports cars wearing the latest fashion trends. They have all the latest gadgets and go out as if they are some sort of socialite. However, I have come to learn that most of the time it’s a facade because, most people we identify as rich will be broke within two pay checks. I know now that I was really aspiring to attain wealth.
Rich is the general word for one who has more money, possessions, or income-producing property than is necessary to satisfy normal needs. Wealthy adds to this connotation of grand living, influence in the community, a tradition of richness, etc.
When someone is deemed “rich,” they’ve only amassed their money and/or financial success from mostly one source in a short amount of time. For example: lottery winners, new found celebrities and even high-paid professionals like doctors and lawyers belong in the category of being rich. You can become rich overnight. I think that is why people say they want to be rich as opposed to being wealthy. Becoming rich can happen instantly, but it can also disappear just as quickly. Master P and M.C. Hammer are prime examples of that. In an interview Hammer was asked how he went broke. He said, “When you have $30 million and you spend $33 million, that’s what happens.”
Most actors, athletes, and popular musicians are rich; but not wealthy. Some of them have created wealth but most of the time it’s still just flash cash. They make a lot of money, but the moment they stop working, they stop making money. Although their pay might average $1000 an hour, they still get paid per hour of work. Therefore, if they stop working, they stop getting paid. A rich person will drive an amazing car, live in a gigantic house and go on lavish vacations. They will also have thousands of dollars in loans, always living from paycheck to paycheck and get themselves into trouble if they somehow lose their income (get fired). Like I mentioned before, if a rich person doesn’t work, they don’t get paid. Yes, their house may be nicer than yours, but they are still tied down by the need to work.
I know many people who make a lot of money but, every time they make more money they find a way to spend it. They often buy a bigger house or a new car, which results in more debt and more hard work. Nothing is left to go into the assets that will make them more money. That kind of behavior is what separates the rich from the wealthy. Only financially intelligent people can become wealthy.
So what is wealth? The funny thing is, to be wealthy is to be rich through ownership of other assets. Wealthy people don’t rely on a job, a talent or just one source of income/asset. They often times have multiple streams of income. You can take away their job, if they have one, and they won’t be poor. If done correctly, a person can amass a large sum of wealth over time by adequately saving and investing.
The difference between wealthy and rich is knowledge. Wealthy and rich people both may experience downfalls and failures in their ventures. However, because wealthy people are knowledgeable and disciplined when it comes to money matters, they can start all over again and build wealth over time, i.e. Donald Trump. In contrast, rich people may find it hard to attain what they previously had. In the end, wealthy people are financially free while rich people are not. How long does the money last? Will it be gone once the person’s earning power is gone? Will it be passed on to future generations?
A wealthy person has sustainable income. In other words, the wealthy will always be wealthy. Think about people in history who are considered wealthy and you will see what I mean. The Rockefeller’s, Carnegie’s, and Campbell’s are all wealthy families whose wealth has lasted for generations. Why is this? What makes them so different from the lottery winner or professional athlete who has money for a short time and then it’s gone?
While the rich often flaunt their money, the wealthy tend to live quieter lives. Well known wealthy people include the English Royalty, Donald Trump, and Warren Buffet. These people make money regardless of whether they work or not. They have discovered the secret of having their money work for them, rather than working for money. I have seen articles that were about Warren Buffet’s top 10 Stock Picks and the President’s investment portfolio (talk about influence).
Having money makes you rich and that’s fine but, wealth goes much further. What’s worse is that people who were rich and lost it, no one cares what became of them. They simply just fall by the way side. Being wealthy on the other hand, not only benefits you in the short term but the long term as well. Your children’s children can benefit from wealth, that creates a legacy or “Old Money”. So ask yourself, which would you rather be: Rich or Wealthy?