Rich vs. Wealthy – is it the same thing? Well, according to Robert Kiyosaki, “there is a difference between the two: The rich have lots of money but the wealthy don’t worry about money.”
The two words might sound like synonyms, however, they are completely different. It’s difficult to spot the difference, however, being rich and being wealthy is not the same thing.
Being rich is defined by your income.
Being rich is simply having a lot of money or income without corresponding assets. It comes all the way down to how much cash you have in your bank account. However simply because you’re rich, doesn’t mean you are wealthy. Being rich may often mean that you are spending a lot of money. It may also mean that you have a lot of debt. It doesn’t matter how much money you have if your expenses are more than your income. Being in debt is certainly not something to aspire to!
Being wealthy is defined by your assets and net worth.
Being wealthy is not solely having enough money to meet your needs however being able to afford not to work if you don’t want to. It’s about amassing assets and making your money work for you. In alternative words, it’s having a significant net worth.
The difference between rich and wealthy is very simple. Wealthy people know how to make money. Rich people only have money. Once you know how to make money, you can build sustainable wealth. The money never stops coming. In short, the difference between rich vs wealthy is that one group of people focus on investing, while the other focuses on spending.
How To Become Wealthy
If you want to be wealthy, there are a couple of things you can do to get started. Don’t just focus on how big your income is. Rather, follow these steps to eliminate debt and have the right mindset when it comes to amassing wealth.
- Save 20% of your after-tax income every month
- Pay off debt, starting with high-interest debt
- Invest as soon and as much as you can
- Don’t splurge on unnecessary expenses
- Think about your long-term financial goals and assets
Being wealthy doesn’t begin with a huge wallet full of cash. Wealth starts with the right mindset. Save some of your income, focus on becoming debt-free, and invest early and often.
Being wealthy ultimately has more to do with financial freedom. It means you’ve either saved enough that you simply don’t need to work every day to sustain your lifestyle or you’ve built up enough residual, passive income sources that you’re getting paid in your sleep.
If you want to become wealthy, you need to always think about your long-term goals. Do you want to retire early? Own a few houses? Travel? When thinking about wealth, don’t just focus on your income, but focus on building up your investments and assets to last you a couple of lifetimes.