Wealth building: Better to Be Wealthy Than Rich

Wealth Building:
Better to be Wealthy Than Rich?!
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If you strive to build wealth rather than just get rich you’re basically giving yourself the keys to the vault!
There’s a massive difference between being wealthy and being rich
Not all rich people can be wealthy but all wealthy people can be rich
Confused!?...let me explain

If you are a millionaire , are you by default wealthy ?
A millionaire by definition is someone whose net worth (asset value minus debt) exceeds a million dollars
However, if a person did have 1 million in assets but these assets were not generating income then that person by my definition is rich but not wealthy

Why Making Money Won’t Make You Rich

You can make a lot of money and still be broke
I know many people who have made millions of dollars in the course of their life but are now neither rich nor wealthy
Why is this?

Not all people are blessed with naturally good money management and investment skills
Some people can be more interested in living a certain lifestyle now rather than planning and building an asset base
It’s not how much money you make that matters, but how much money you keep

How Rich is Rich?

How Rich is Rich?
We often say so-and-so is rich because he or she has a high-income corporate job , buys brand new luxurious cars, dresses in fancy clothes and so on
Although these are outward demonstrations of ‘rich’, crucially, that doesn’t mean these people are wealthy (they might very well be of course but it’s not a given)

How Rich is Rich?
It’s actually quite hard to define in a dollar amount what rich is
It can be subjective and mean different things to different people
In addition, it can depend on where you live and the cost of living in that place
If you ask someone who already has $1 in assets they are likely to say being rich would be to have $5 or $10 million in assets
Some people are never happy!

Is “Rich” a Feeling?

Is Rich a Feeling?
In a way being rich is a feeling and you probably never think you’re truly rich or as rich as you could be
Someone who’s making $30,000 per annum will probably say that if they made an income of $100,000 they would see themselves as ‘rich’

Is Rich a Feeling?
How someone defines rich depends on their expectations and how they feel about it
So the less money you have, the less money you think you'll need to become rich
And the wealthier you are I suspect the more money it takes to make you ‘feel’ rich

Wealth is Best Measured
in Time

Wealth is Best Measured in Time
If there was one defining difference between being rich and being wealthy it’s this: rich people can generate money now , wealthy people can generate income always
The best definition I know of for being wealthy is if the passive income from all your assets is greater than all your liabilities then you’re essentially wealthy

The key here is the time it takes to manage your money
If you are working 60-80hr a week just to make enough money to pay all your expenses, even though you could be making more than say €200,000 per year; then you are not wealthy
Wealth is best measured in time , not dollars
The longer your money or assets work for you the wealthier you are

The longer you can live without having to work and still pay all your expenses and maintain your standard of living the wealthier you are
For example, if your expenses are $2,000 a month and you have $10,000 in savings/liquid assets then your wealth is equal to 5 months

The moral of the story is this:
If you are rich, don’t be fooled into thinking you’re wealthy
If you’re not already rich, don’t worry about it, focus on being wealthy and you will be rich anyway
Whilst it may be difficult to know if you are truly “rich”, you’ll definitely know if you’re truly wealthy and for how long!

Strive to build wealth rather than focus on being rich
You can build wealth by starting or running a profitable business, investing in real estate, etc
The key thing is to focus on generating future income from these assets
Now you are creating wealth

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Wealth building: Better to Be Wealthy Than Rich

by Keelan Cunningham

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