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Back then, I thought the words “rich” and “wealthy” had the same meanings because if you were rich, you were wealthy too. You can never go broke when you have lots of money and living your best dream life. However, being rich and wealthy may seem like synonyms to many of you; the two actually have different meanings.
When you think of someone being rich vs. wealthy, most of you probably think they were the same as me: buying whatever you want because you have money. But think about it for a minute: rich vs. wealthy. Do the words mean the same?
I know it's hard to spot the difference, but I want to explain it in this post. After reading this, I hope you'll have a better understanding of the two.
The Meaning of Being Rich
When you think about the word “rich,” you probably think of celebrities, football players, popular Youtubers, and so forth?
You might think that being rich means you have lots of money, and you can buy almost anything on this planet. You don't need to worry about being broke, correct?
Of course, that's how we perceive things when we look at people. When you see a rich person, you think they have multiple bank accounts with lots of money in them. However, it comes down to how much money they have in there. Just because people are rich, it does not mean that they will always be rich or have a high net worth.
In fact, “rich” people tend to spend a lot of money and have a lot of debt. They don't know how to shop and save like a pro.
They prefer to buy luxury things to look “rich” to impress others than save or invest. They tend to spend more than what they earn. Therefore, most of them are in debt. They care a lot about what they look like or what people see them as that they forget where their finance stand.
You might see people out there wearing designer brands, having expensive cars, or living in a huge mansion, right? They love to buy expensive things just to show off to others.
Let me give you a scenario. If Miki makes $300,000 a year and spends $400,000 a year, she is on her way to being broke. She spends most of her money on designer brands along with the massive mansion that she lives in. That shouldn't be something she should be proud of, but she is.
You can be super-rich and famous, but you can still be in massive debt if you don't learn to take control of your money. That's why you see many people with money problems because they are not financially literate.
Look at famous celebrities, they make lots of money, but most are probably broke due to their flashy, glamorous lifestyles. That rich lifestyle is what many people dream of, so they spend all their money on expensive things to live that dream life even if they were to become broke.
Isn't it sad that people don't know how to manage their money? They think that if they have a lot of money, they can spend it all in one go.
The Meaning of Being Wealthy
Now, wealthy people all have a goal in common: to be financially free. Being wealthy means you have a lot of time to do the things you want, like traveling, spending time with family, and learning new things.
When you have enough money, you are your own boss, and you get to decide when to play and work. If you meet your needs already, you can choose to work or not.
Many of you have probably seen a lot of wealthy people on the news or on the internet somewhere. You probably heard of Robert Kiyosaki or Warren Buffet. These wealthy people would use their money to buy assets to build their wealth. They want money to work for them and not the other way around. They don't waste their money on lavish and expensive things like a mansion, cars, the latest gadgets, etc. What they do to grow their wealth is by buying assets such as real estate, investment, stock, crypto, and so forth.
Most wealthy people are business owners like Elon Musk, Jeff Bezos, and Warren Buffet. They focus on themselves and slowly build a long-term business for themselves.
Whether you have a small or big wallet, you should think like an investor, not a rich person. With an investor's mindset, you'll never be broke, but with a rich person mindset, you'll become broke.
If you have a lot of money, you shouldn't spend everything in one go or use debt for meaningless things like a designer bag. It would be best if you used debt for a purpose like an investment on a house.
To be wealthy, it's all about the right mindset. The mindset is the key to success. If you don't have a strong mindset or the will to achieve your goals, it'll become challenging to get anywhere.
A lot of people can be poor in the beginning and become wealthy years later because they have the mindset to achieve their dreams. You have to start somewhere to get the things you want.
Growing wealth is not something that can happen overnight; it is a long-term commitment.
The Key Differences
When you think of rich vs. wealthy, there are 3 main components that distinguish the two: time, freedom, and sustainability.
Wealthy people build long-term wealth that allows them to do what they want in life.
While the rich people, their money doesn't last that long and end up in debt.
Someone who makes $90,000 a year can be wealthier than someone who makes $300,000 a year.
It all comes down to:
- How much do you spend, save, and invest
- How much debt do you have
If you want to optimize your wealth, you should start as soon as possible because time is crucial. Whether it's a new side hustle or you want to learn to invest your money, you should start learning, experimenting, and investing in yourself. Only by doing do you get to learn a lot.
And even if you fail, it is not the end of the world. A lot of business owners face many challenges every day, but over time they become strong individuals.
There is more to being rich vs. wealthy than how much money you have.
If people call you rich, call them out and correct them because you want to be known as being wealthy and not rich.
Thanks for reading and I'll see you in the next post!
She started her blog, The Money Dreamer, when she realized the 9-5 job was not the lifestyle she wanted anymore. After designing for a while, she wanted a more meaningful life, which was freedom, so she decided to venture out. She took action so that she can live her dream life and decided to help people to live theirs by helping them how to save, budget, and invest.