When you struggle with money it’s easy to assume that there is no difference between rich and wealthy.
This is categorically untrue. There is a tremendous difference between the two. You see if I had the choice to choose one it would definitely be wealthy over being rich.
Let’s take a look at what it means to be rich first and then we will look at being wealthy.
After that hopefully, you will see why you should aspire to be wealthy over being rich.
What does it mean to be rich?
To be rich means that you have an abundance of money. You can more or less buy what you want when you want.
There a few good ways a person can become rich and this is what most people will aspire to be.
You can become rich through winning the lottery, or you might have a really good job that pays you well. You may have designed an app that was super successful or you might have a business that is doing well.
All of these things can make you rich.
There is nothing wrong with that and if you are earning 6 figures most people would equate that success to you being rich.
The reason that being rich is nice but is not the best is that riches can run out. Money is fleeting.
What happens when your app has been replaced by a better app? Or you lose your high paying job? Or God forbid your business collapses?
You see the thing is, once you become rich if you don’t do the right things with the money it will be short-lived.
Life changes and you can’t guarantee anything.
How is it that you get high paying football players that end up being broke once their career ends? Or the £10 million lottery winner that runs out of money?
You can be rich and still have a lot of financial problems to go with it.
What does it mean to be wealthy?
Being wealthy is another spectrum to being rich.
When you are wealthy there isn’t a particular action that you need to take in order to keep the money coming in.
The money that you get will be mostly passive income.
Wealth is about the ability to live freely without having to worry about money.
I guess you could say that wealth is measured in time rather than money.
When you are wealthy you are not restricted by money and are free to live your life as you wish.
What are the main differences between being rich and being wealthy
The main difference between rich and wealthy is time.
Being rich relies on you keeping your income higher than your expenses. To keep your level of income going you need to make sure you are taking some kind of continuous action. That could mean going to work every day or working on a new invention idea.
Wealth doesn’t need this.
Whilst being rich can be measured in money, wealth cannot be.
How much money does it take for you to be classed as wealthy? It depends on the lifestyle that you want to live so it’s a personal decision.
If you earn 5 figures some people would not equate that to being rich even though it might be to you. To be rich you need a good income. According to this article you need at least $2 million to be considered rich.
Being rich there is always the potential that your money could run out and it does eventually for a lot of people.
When you are wealthy you have enough to maintain your lifestyle and probably your children and their children too.
Those that are wealthy and rich look at money in very different ways.
You can usually tell a rich person from the way that they are dressed.
A rich person usually likes to display their money. You will notice it in their clothes, the cars they drive and the house that they live in.
Wealthy people are very different. You could have a wealthy person living next to you and you would never know it.
I don’t want to be too stereotypical here but wealthy people tend to put more value in the free time they have because they don’t have to be constrained to always finding new ways to make more money.
Why money doesn’t make you wealthy
Having money alone can never make you wealthy because it’s more about a mindset shift.
A wealthy person may only have £50,000 cash in the bank and that is okay because it is liquid cash and not necessarily the money they have to live off forever.
They value that the money they have allows them to be able to able to do other things except for chase money.
Wealthy people allow money to work for them rather than constantly have to work for money.
They understand that difference and therefore are not worried when their bank statement only shows £50,000 because they realise that they have put measures into place to produce more wealth.
Having money and having to be under the pressure of making more every month is contradictory to wealth.
How to become wealthy
There are some things that you can do if you decide that you would rather be wealthy over rich.
1. Start investing early
2. Find ways to build up passive income
3. Gain knowledge in creating wealth
5. Keep going until you no longer have to chase the money
Can you go broke if you are rich or wealthy?
You most certainly can go broke when you are rich but it is a lot less likely to happen if you are wealthy.
If you are wealthy you have probably learned to diversified your income. This way if one thing fails you have multiple other streams of income that will keep you going.
If you only put all your hard-earned money into things that make you look rich then that is all you will have.
Can you really afford to maintain that £5 million property in 10 years from now or even 5?
You constantly need to be thinking about the future and whether or not you will still be able to maintain your lifestyle in 10+ years from now.
Who remembers MC Hammer? (I loved MC Hammer!) Well, he made some pretty crucial mistakes with his money.
Back in the day, he was the most famous hip hop artist in the whole world. One of the mistakes he made was in his entourage.
He reportedly had 200 members in his entourage and he was paying out $500,000 EVERY MONTH just to keep them on the payroll according to Thrillist.
He eventually filed for bankruptcy in 1996 after a serious of financial mistakes that were his eventual ruin.
Why wealth always wins
Wealth always wins because it’s not about a sum of money that you own it’s about understanding money and knowing how you can best use it in order for it to give you the lifestyle that you want to live.
Wealth understands that you need to work for it for a period of time until you no longer have to and have learned and know how to use it properly.
Wealth is about financial freedom to do the things that make you happy it’s not just about being able to spend money.
Final thoughts on the difference between rich and wealthy
Hopefully, you can now see the difference between rich and wealthy. Neither are necessarily bad but they are different.
You should always aspire to live a lifestyle that will allow you to do do the things you have always wanted to do without being restricted by money.
Money is merely a tool so use it wisely.