Often we confuse the wealthy with the rich, but they aren’t the same thing at all. For some reason, the words rich and wealthy are often incorrectly used to describe to be one and the same.
Despite appearing similar, the terms are completely different. There is a big difference between being wealthy and being rich, although it is hard to tell the two apart.
What does it mean to be rich?
Having a large income or a large amount of money defines you as rich. Your bank balance determines how much money you have. It doesn’t mean you’re wealthy just because you’re rich.
As a matter of fact, being rich can often entail spending a lot of money. Additionally, it could also indicate that you have a large amount of debt. Having more money will not help you if your expenses exceed your income. You should NEVER dream of being in debt!
Having a fancy car and a luxurious home might be a privilege of the wealthy, but it comes at a cost. Having an income of $200,000 but expenses of $225,000 a year might make you look rich, but actually you are in trouble!
In fact, rich lifestyles have caused a number of people, including celebrities to go bankrupt. In his heyday the most feared boxer to ever step into the ring, Mike Tyson earned more than $400 million during his boxing career. “Iron Mike” was also known for his extravagant lifestyle, shelling out big bucks on jewellery, mansions, sports cars, and parties— even Siberian tigers he kept as pets. When he declared bankruptcy in 2003, Tyson listed debts in excess of $27 million, of which nearly $18 million came from unpaid taxes. Other debts included $600,000 in legal fees and $50K in unpaid child support.
What does it mean to be wealthy?
The definition of wealth is not just having enough money to meet your needs, but also being able to stop working when needed. Investing in assets and using your money to your advantage is what it’s all about. Having significant net worth is having a high net worth.
Luxury comes in many forms, including cars, gadgets, and lavish lifestyles. Despite the lack of assets, they have plenty of investments, real estate and cash. You can think of it as six month’s worth of wealth if you have $5000 per month in expenses and $30,000 in savings. If you invest that $30,000, and you end up earning $5,000 a month in investment revenue, you are wealthy.
Warren Buffet is worth $80.8 billion. Among one of the world’s richest people, Buffett has a reputation of being frugal. He still owns and sometimes lives in the original home that he bought in 1958 for $31,500 despite his massive wealth. He bought a vacation house in California in 1971 for $150,000 it was eventually sold by him for $7.5 million.
The difference between being rich and wealthy
It’s not just about how much money you have in your bank account that determines your status as rich v wealthy. You can actually make more money than a “rich person” with a fancy car and fashionable clothing, even if you make less than he or she makes.
In other words, wealthy people spend more money, but they save and invest most of it. Despite having a lot of money, wealthy people do not spend everything all at once. If debt is used, it’s usually for a very clear purpose, like making an investment in real estate.
In order to accumulate wealth, wealthy people invest. Real Estate may be a fantastic option. Regardless of how they invest, wealthy individuals understand that they must turn their cash into assets to grow their wealth.
How to become wealthy
A few things can get you started on the path to becoming wealthy. Your pay-check should not be the only thing that is on your mind. Aside from that, you should stay away from schemes that promise you quick riches. If you want to accumulate wealth, then follow these steps to eliminate debt.
Save 10-15% of Your Pay-check Every Month
Regardless of how much money you make, you should save part of it every month in order to become wealthy. Always set aside at least 10-15% every month.
A portion of your pay-check can be directly deposited into your savings account after you set up your bank account. The idea of saving this way is simple and does not even require thinking about it. Take part in a savings challenge to help you save money, or look at your budget to figure out where you can eliminate expenses.
Pay off debt, starting with high-interests debt
Being debt free is the key to being wealthy. Attempt to pay off your credit card debt before paying off high-interest loans.
Check out whether it is worthwhile to refinance your mortgage for a lower interest rate. Make becoming debt-free your number one priority!
Invest as soon and as much as you can
Investing your money is one of the fastest ways to grow your wealth. There are many options when it comes to investing. Don’t stop doing something! If you don’t know exactly when or how you’re going to invest your money, you can put it in a high-interest savings account until you are ready. Money works for you when you make it work for you!
Don’t splurge on unnecessary expenses
Be frugal and live within your means if you want to grow your wealth. Your extra income and savings should be invested,
For example, resist the urge to purchase those designer jeans or to upgrade your IPhone to the latest model when an older model will do just as well. Don’t just buy things you want, buy things that are of value, that will last a long time and that you NEED!
Think about your long-term financial goals and assets
It takes time to build wealth. It doesn’t happen overnight. Wealth can be build up over time, and that is okay. Whenever you feel the financial pinch, remember your long-term goals and your reasons for trying to become wealthy.
Wealth is mindset
You don’t become wealthy by accumulating massive amounts of money. Mindset is the key to wealth. Invest early and often, save a portion of your income, and become debt-free.
Wealth can only be achieved by keeping your long-term goals in mind. What are your plans for retirement? Have a few houses in your name? Would you like to travel? Consider investing and building assets rather than just your income when you think about wealth and retirement.
At Chase Edwards, we have invested over $300 Million of customer funds over the last 10 years. With in-house financial strategists, financial planners, mortgage brokers and investment property experts, we have everything you need under one roof. Whether you’re ready to purchase, have some questions or are just considering investing in property, we’re here to help.