“Material world!”, sounds different when you’re an adult earning and learning how exactly taxes are done. Most of a person’s twenties and thirties are spent struggling to earn as much money as possible to sustain their expenses through further years. To be rich has been a lifetime goal for a significant portion of the crowd but is that the best?
Rich and wealthy are two terms that seem synonymous but are two different terms. While both the terms mean the abundance of money in financial terms, they do not mean the same things. Let us take a further look and see which is for the better!
Rich vs. Wealthy
The main difference between being rich and being wealthy lies in the definition of what their wealth is. A person is labeled rich when he possesses a huge amount of money. On the other hand, a person can be labeled wealthy when he possesses a lot of profitable assets. This means that a rich person’s wealth can potentially diminish at any time whereas a wealthy person’s wealth sustains for a longer time and is more reliable.
Difference Between Rich and Wealthy in Tabular Form
|Parameters of Comparison||Rich||Wealthy|
|Sustainability of wealth||Rich people have wealth that does not sustain for long and is short-lived.||Wealthy people possess wealth that sustains for a long time.|
|Assets||Rich people only have monetary or material possessions.||Wealthy people possess assets that aren’t conformed to a monetary basis and provide financial benefits.|
|Earning and expenditure||Rich people may spend more than necessary while having an income that does not sustain the same.||Wealthy people spend less when compared to rich people while having a high influx of money.|
|Investments||Rich people typically do not look for investments.||Wealthy people make mindful investments in fields they know will turn out to be an asset.|
|Strategy||Rich people have little to no planning when it comes to their finances||Wealthy people map out their strategies and budget planning to build their investments properly.|
|Education||Anyone can be rich regardless of any education or awareness of business tactics.||Wealthy people are those that have appropriate education or at least significant experience in the field to maintain their assets.|
|Debt||Without financial planning, there is a higher potential of drowning in debt.||Owing to this experience or financial education, wealthy people know how to veer their way around the industry and avoid debt.|
What is Rich?
Rich is a very nebulous term and can be defined in various ways depending upon the context of the discussion. For instance, Rich can be defined as the abundance of a certain quantity. Eg:- Rich is most popularly used when describing the playfulness of money but can also be used when referring to any kind of quantities or resources such as oil, minerals, nutrients, etc.
When talking in terms of money, a person is considered rich when he earns more than a certain established level. This level is set differently for different categories. Eg:- The minimum level for a person’s family to be considered rich depends on how many people earn in that certain family. It can also depend on the standards set by the certain that particular individual is residing in. This can also be applied in a relative sense and not just in the big picture. The term ‘rich’ is typically used as a relative term. Eg:- When person 1 earns more money than person 2, he can be termed rich with reference to person 2.
However, to be rich, one does not necessarily need to have any other qualities than just a high influx of income. They do not necessarily need to have any knowledge of how to manage their money or use it for investments and turn them into assets to be considered rich. Thus, you are considered rich when all you do with your money is buy material stuff to show off a flashy lifestyle or simply do nothing with it. Either way, he/she does not need to have any budgetary planning to be labeled rich.
The Fleeting Status of The Rich:-
- As previously discussed, any person with a high fortune can be termed rich, even a lottery winner.
- However, like any other example, a lottery winner is bound to run out of his money at any given point in time in absence of investments. Even extreme savings will not help you save money for longer periods since a finite amount will remain finite if you never include any element that allows it to grow.
- With inflation casting its shadows every now and then, increasing expenses with no other source of income can very reasonably and quickly land you in debt.
- Thus, without strategies or money management, even the richest can go dangerously broke.
Wealth cannot be built if one spends more than he earns. Here are some examples of famous personalities and celebrities that went broke over time:
- Curtis Jackson, also famously known as 50 Cent, was in a debt of $32.5 million when he declared bankruptcy in 2015. It is rumored that this occurred due to unpaid child support obligations and several other lawsuits.
- Pamela Anderson, with a net worth of $20 million, spent a fortune on luxurious homes, extravagant festivities, and expensive cosmetic surgeries that eventually made her lose all her money. She ended up living in a trailer park despite her fame.
- Mike Tyson, earned more than $400 million in his early boxing career, which he never shied away to spend. He maintained a lavish lifestyle along with multiple sports cars and luxurious parties. He even had Siberian tigers as pets. At later stages, he was unable to bring an influx of money which eventually led him to declare bankruptcy in 2003 for almost $23 million.
- Chris Tucker, one of the highest-paid actors in Hollywood, found himself in debt when the government filed a tax lien against him. However, he could get out of this situation. The real danger began when he allowed his staff to manage his finances and the infamous story made the news.
What is Wealthy?
A wealthy person is someone who does not have plain money but actual assets. He/she may have loads of money just like a rich person but what he does with this money and his efforts towards making it grow is what distinguishes him from a rich person. His financial wisdom and experience help him navigate through the dangers of business, providing him benefits, something a rich person can never do. Thus, a wealthy person is always rich but a rich person is not wealthy.
The Wonders of Wisdom:-
- Education is the foundation for any person striving to succeed. When a person studies finance or business, he learns how the market works or how a business must be managed. This gives him more awareness and the necessary information as to how his money can be put to use.
- Investments > Savings. No matter how much one can save money, there is always a point where all their savings will run out. When someone invests in a company or a business that has potential, it is definite that there will be a source of income until the last operating second of that particular company. Thus, investing is a much more reliable option than simply saving money.
- Experience paves the way to success. While one might argue that education is more valuable than experience, many companies value years of expertise over degrees while appointing authorities. These years of expertise in managing a business or investing in the same help you learn the rights and wrongs of the business industry. It helps you avoid any potential dangers such as fishy contracts or unpromising companies that you can come across.
- One of the wonderful advantages of being wealthy other than being out of the danger of debt is achieving financial freedom.
- Financial freedom is the independence to live the life a person desires, be it luxurious or grounded, but either way regardless of whether he wants to work or not.
- Sometimes, an individual has to work tirelessly to earn such freedom.
- However, through the right guidance and expertise, one can build their way to be free of financial conflicts.
- By achieving financial freedom, one can immensely reduce all his financial troubles as a wealthy person need not worry that his riches might run out. Once a wealthy person, always a wealthy person, and such is the correct use of the term.
How Can One Become Wealthy?
The healthiest and the most beneficial way to use your money is to become wealthy and make it grow rather than just use it for various expenditures without any other sources of income. It is true that while some of us do not have the expertise to make really detailed, strategic plans to grow your finances, it is only logical that one should never place all his eggs in one basket. Let’s look at a few ways to build finances better:
- Start saving money bit by bit until you can accumulate enough to make serious investments.
- Try and read as much as you can about businesses and investments. Update your knowledge of the current market as frequently as you can.
- Work hard at your job and avoid slogging.
- Try and clear any debts whenever you can at the appropriate timing.
- Form financial goals that you can maintain and update each month.
- Finally, perform extensive research on the eligible companies and businesses and make safe investments.
- However beneficial investments can be, always remember that there are other methods to increase finances too and not spend all of it on investments.
Main Differences Between Rich and Wealthy in Points
- The main distinction between a rich person and a wealthy person is how long their wealth can last. While rich people have just money that does not last very long, wealthy people have wealth that can sustain their finances for almost a lifetime or two. Thus rich people's wealth is always short-lived.
- Rich people do not use their money for anything beneficial in the long term but for material possessions. On the other hand, wealthy people use their money to have assets that are not simply monetary. However, they will fetch money over a few years.
- Rich people usually tend to lack planning and spend way more than what they can earn. This isn't very sustainable whereas wealthy people know that it is intelligent to spend less to save money and plan investments.
- While the sustainability of wealth is what provides the distinction between a rich person and a wealthy person, the reason behind this is generally the employment of strategy. Rich people lack any kind of financial and budgetary planning concerning any of their expenses whereas wealthy people plan each and every financial step they take with strategy.
- This strategic planning leads one to make appropriate investments that help them gain the most beneficial returns. Rich people do not typically invest in anything as they only look forward to keeping up a flashy lifestyle. Wealthy people, however, build and establish their riches through such profitable investments, no matter how small they can be.
- Education and experience are one of the prime factors that differentiate the rich and the wealthy. Anyone possessing a fortune will be labeled rich whereas you need to have relevant education, degree, or significant experience in the field to know how to steer through the industry.
- Another advantage of knowing money and how it works in the system is to stay as far as you can from debts and lawsuits. A rich person is always prone to falling dangerously into debt if he addicts to the idea of over-spending. A wealthy person can do this with ease, owing to their financial education or expertise.
From the above discussion, it is easy to infer that being wealthy is definitely the healthier option than being rich. While being rich only means having a lot of money, being wealthy means knowing your finances through and through that helps you grow your wealth. Thus, it is highly recommended that anyone who starts earning, start saving and investing as much as they can. Work smart, not hard!