There is a difference between being wealthy vs rich. In fact, one is MUCH better than the other. You want lasting wealth and riches, you need to choose the right path to financial freedom.
I have always wondered what it meant to be rich vs wealthy. Also, if you had to choose, which would it be?
Come to find out that a wealthy person is always rich, BUT, a rich person may not always be wealthy. The difference is how they each make their money. The wealthy has assets that make them money without working and the rich has a job that makes a lot of money. The problem with the rich is that if they stop working, the stop being rich.
In this article, we are going to look at being rich vs. wealthy and which is better.
Is there a difference between being rich vs wealthy?
The easiest way to differentiate between a rich and wealthy person is that a wealthy person is always rich, but a rich person may not be considered wealthy.
- A wealthy person is rich because of his income and assets he owns. He can make money without working and still afford his lifestyle.
- A rich person may have a lot of things and a high income, but if he stops working, he will no longer be considered rich.
If an individual earns $200000 per year but spends more than he earns, he will go into debt and thus will not be considered wealthy.
There are still people who consider such a person as rich because of his earning capacity but he would not be considered wealthy.
This article will clear the confusion and show you the difference between a rich and a wealthy individual.
If you want to learn how to be rich, I wrote the ultimate guide to become rich. You can find it here.
What does it mean to be wealthy?
If you are wealthy, there is no doubt that you are rich. Being wealthy means, something more than just being rich.
A wealthy man has sustainable wealth which means he has invested his money in such a way that it keeps adding.
He has several income producing assets and these multiple income streams allow him to remain wealthy for a long time to come. Wealthy people figure out ways to own businesses and assets, so they do not have to work for a living.
These are the types of items wealthy people own:
- Real estate
- Mutual funds
- and other assets
Owning these allows the wealthy to spend their time and money the way they choose.
In short, a wealthy man not only has lots of money, but he also knows how to make money from his own money.
What does it mean to be rich mean?
You must have heard stories about individuals who were once very rich but are now living poor.
Think of the many people that won the lottery, making millions of dollars, and then back to being poor within 3 years. A person is considered rich when he has lots of money.
But when you spend it without thinking about your future and investing a part of it in profitable business and assets, you may become poor one day.
According to a survey, you are considered rich when you have $2.4 million or more money in your account. Of course, this is a national average and there is no limit to how much money a rich individual can have in his account.
This is a survey about how people think, and not reality. Since the word “rich” means different things to different people, the term usually shows one person’s perspective on what is rich.
One person can say that having a $1,000,000 makes you rich, while another says $100,000 makes you rich.
Some people are born rich while others work hard to become rich. Of course, you can also become rich if you inherit the property of a rich uncle who leaves behind everything in your name before his death.
But your riches last only if you know how to invest them to get attractive returns on investment. That is how you go from just being rich, to being wealthy.
Difference between rich and wealthy
At first glance, it seems that being rich vs. wealthy are basically the same thing.
But upon closer look, you will find that the wealth of a wealthy person is sustainable while the rich rely on making money from their job to stay being rich.
A rich person is rich only as long his money lasts, but a wealthy person will remain rich because he has passive income streams that keep generating money for him.
A wealthy individual knows the importance of money and he invests his wealth in stock market, real estate, or businesses from where he keeps getting back income streams.
History is full of examples of men and women who became rich because of their talent or because they hit a jackpot. These people can be seen eating at fancy restaurants, buying fancy cars or homes.
They have tons of money at the peak of their careers, but they do not know how to make their money work for them.
They keep working for money instead of having their money work for them.
The result is that all their riches are gone after a few years because how to create or buy assets that make money for them. The same is the case with a rich man who has inherited the estate of his late uncle or aunt.
He can be rich for a few years, but he will lose all his wealth and become poor if he does not know how to invest the money and earn wealth that is sustainable.
Both rich and wealthy are rich, but the difference really lies in the duration for which they enjoy their riches.
A wealthy person will continue to be rich even if he never works a job again because his businesses and assets make him money.
Wealthy People Leave A Legacy of Wealthy
In most cases, a rich person is unable to pass on the money to his next generations whereas a wealthy individual has riches that are sustainable.
This means a wealthy individual will be wealthy not just during his lifetime but also after his death and his riches will be enjoyed by his next generation.
On the other hand, a rich individual can become poor even during his own lifetime.
You can see how after several generations of Carnegies and Rockefellers.
These families are still wealthy where there are examples of so many professional athletes and lottery winners who have become poor in their own lifetime.
Who has more money a rich person or a wealthy person?
Since it is not the amount of money that proves one to be wealthy, it is hard to say who would have more. Anyone who hits a jackpot in a lottery becomes rich overnight as he has millions of dollars in his account.
A rich man may have more money than a wealthy person in the short run. But as he does not know how to invest his money wisely, he will eventually lose all his money or stop working and not make the money he once did.
On the other hand, a wealthy individual utilizes his money in a smart way so that he remains rich not just during his own lifetime but leaves enough money for his future generations to be labelled as wealthy.
There is no criterion to find out who is wealthier between a rich man and a wealthy man.
But if you keep looking at the assets of two rich people over a period, you will find that the rich man must continue to work to make money whereas a wealthy individual goes on to add to his wealth.
Can You Be Broke Being Rich?
Short answer is yes!
What it comes down to is the rich person’s spending. As in the case above, a person may be considered rich by society if they make $200,000 a year.
But, if they spend $250,000 a year, then they will go into debt.
Also if you look around you, you will find that there have been, and there are many individuals who have become broke after being rich for some time.
These include individuals who have won lotteries; inherited properties from their late uncles, and a breed of sportsmen and celebrities who earn a lot of money during the peak of their careers.
If someone like Mike Tyson can become broke and file for bankruptcy to get rid of his creditors after earning millions of dollars for his boxing bouts, it is easy to imagine how people become broke after being rich for a while.
A rich man can become a broke in quick time if he experiences a reversal in his fortunes. This is because he doesn’t know to build wealth.
This lack of knowledge about how to sustain wealth turns a rich individual into a broke if he continues to spend money without bothering whether his money would last for a long time or not.
How to become wealthy?
There are many ways to become wealthy but all of them require you to work hard and stop believing in any magic wand that can make you rich overnight.
There is no such thing as a get rich quick scheme that works.
No one has ever become wealthy by dreaming and making castles in air. If you want to become rich, you must stop procrastinating and act.
Make Your Money Work for You
Once you realize that you can have your money work for you instead of you working for money you will see how and why wealthy people stay wealthy.
Save Money to Buy Investments and Assets
Saving is a very good habit that can help you in accumulating enough money to invest in profitable schemes. This means that every dollar that is saved by you has capability to earn money for you.
You can think of every $100 that you save as your employee and make these employees to work and earn for you.
Of course, this is the same principle that is used by wealthy people as they put their assets to work for them.
Once you become rich, you can buy many such assets whether they are treasury bonds, stocks in blue chip companies, or properties that will continue to earn income for you.
Start Businesses and Hire Employees to the Work
Wealthy people have this habit of acquiring assets that produce steady streams of income for them.
This may include stocks of companies or properties capable of producing rental income month after month.
You can start your journey towards wealth by paying off your debts and by saving a small amount of money every month.
You create wealth when you invest your savings into safe and profitable schemes.
When you invest in real estate, you are investing in long-term assets that make you money while you sleep.
When you buy one rental property, you allow a tenant to live in the property and they pay you rent each month.
Learning how to invest in real estate is not just flipping homes, wholesaling houses, find tax liens or tax deeds, it is all about owning a property long-term and creating passive income in monthly cash flow.
The longer you hold onto the property and rented out to a tenant, the more money you make.
Eventually you will be able to pass the business on to your children and grandchildren preserving your wealth.
How to build wealth?
There is no magical formula that can help an individual to accumulate wealth.
However, if you look at the millionaires around you, you would find that a vast majority of them have become wealthy by investing their money in real estate.
It is the only method of investing that allows you to utilize other people’s money.
You can buy a property by paying only a small amount of money as down payment while the rest of the amount for the purchase is financed by a lender.
How to become rich fast?
There are many ways to become rich fast.
- Win the lottery
- Become an actor
- Inherit a lot of money from a relative
- Start a tech company that gets bought out in three years
- Invest in real estate rental properties
You can repay the loan to the lender in equal monthly instalments (EMI) over a very long period.
If you buy a rental income property, even this EMI can be repaid by the rent that is paid by your tenants. Your property keeps appreciating in value over a period and you create an asset for your future.
You Want to Be Wealthy and Not Just Rich
Between being rich vs wealthy, you want to be wealthy.
Being wealthy will:
- Make you money without you working
- Do not need to continue working
- Is already rich and can spend their money as they want
- Can pass down the wealth and knowledge do their children
So, you want to learn how to become wealthy. I personally became wealthy learning how to invest in real estate.
Get started today and build wealth for yourself.
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