What's the Difference between RICH and WEALTHY?

ORIGINALLY POSTED AT MY BLOG

If you look at any dictionary or thesaurus, rich and wealthy are both synonymous to each other. However, in the field of personal finance, they have difference. 

In fact, you may have heard of 'get-rich-quick' schemes but NOT 'get-wealthy-quick' scheme. So what's the difference then?

The main difference between being rich and being wealthy is knowledge. In most cases, wealthy people know how to make money while rich people only have money. Rich people are motivated by money but wealthy people are motivated by their dreams, purpose and passion. Most rich people make a lot of money with their paychecks but the moment they stop working, they also stop making money. Wealthy people can build sustainable wealth that can last for years through asset investments producing multiple streams of income.

Rich people, on the other hand, may get money in an instant such as inheritance or winning a lottery. However, because of lack of proper mindset and poor money management skills, all of it can be lost in a short period of time. It makes sense that if you did not work hard to earn and build it, then it can just easily pass on your hands and splurge it on things which are not important. Some of these people are more commonly known as ‘one day millionaires’. Now they have it, the next time they don’t.

Being wealthy is defined as that status of an individual’s existing financial resources that supports his or her way of living for a longer duration, even if he or she does not physically work to generate a recurring income.

For example, if a person’s monthly expenses amount to $400 and he only have $2,000 in his savings, his wealth is approximately five months or 150 days. Wealth, therefore, is measured in time, and not in amount of money that you have. It suffices to say that wealth is dependent not only to the amount of income but also to amount of expenses one makes.

Wealthy and rich people both may experience downfalls and failures in their ventures. However, because wealthy people are knowledgeable when it comes to money matters, they can start all over again and build wealth over time. In contrast, rich people may find it hard to attain what he or she previously has. In essence, wealthy people are financially free while rich people are not.