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Rich vs. Wealthy: What's the Difference?

Rich Vs Wealthy

  • Being rich is having the ability to spend lots of money now
  • Being wealthy is accumulating assets that allow to you preserve your money for use in the future.

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IDEA EXTRACTED FROM:

Rich vs. Wealthy: What's the Difference?

Rich vs. Wealthy: What's the Difference?

https://www.personalfinanceforbeginners.com/rich-vs-wealthy/

personalfinanceforbeginners.com

7

Key Ideas

Characteristics Of The Wealthy

  • They live in homes just large enough for their needs and drive used cars.
  • They have affordable interests.
  • They don’t worry about having the highest credit score possible as they have enough saved to skip loans and make large purchases with cash.
  • When they get a raise, they focus on investments instead of raising their spending. 

Rich And Wealthy

By making wealth your priority now, you could be both later. Establish a strong financial foundation that will give you financial security and peace of mind moving forward. 

Living paycheck to paycheck is a guaranteed way not to build wealth.

If you’re just starting on your personal finance journey, it might not be time for you to start acquiring these assets yet.

How To Become Wealthy

  • Investing in stocks is simple if you avoid lucky stock picking. Keeping long-term perspective, invest early, especially in low-cost index funds.
  • Rental properties.
  • Small business ownership.
  • Delaying gratifications.

Things To Do Before Focusing On Building Wealth

  • Create a budget and stick to it
  • Pay off your debt – especially high-interest credit card debt
  • Learn how to save money to cover unplanned expenses
  • After establishing an emergency fund and becoming debt-free, go all-in on building wealth!

The Definition Of A Rich Person

Someone rich is someone who has the prestige and social status that comes with living a lavish lifestyle. This definition ignores the fact that some rich people have their finances in disarray and live paycheck to paycheck or in debt.

On Being Wealthy

Your wealth is the value of the assets you own

A wealthy person aims to build or acquire assets that hold their value or generate ongoing income, thus providing security and peace of mind.

Rich Vs Wealthy

  • Being rich is having the ability to spend lots of money now
  • Being wealthy is accumulating assets that allow to you preserve your money for use in the future.

SIMILAR ARTICLES & IDEAS:

The Definition of Rich

The Definition of Rich

A high income and a regular acquisition of expensive stuff do not necessarily make people rich. People may have a high income, but many won’t survive three months if they are suddenly without their...

Wealthy People and Pseudo Affluence

Wealthy people have sustainable access to money, often for a very long period of time. Their habits are now aligned with the wealth that they have incurred.

Pseudo affluence, on the other hand, is what people experience when they are currently earning lots of money and start to believe that they are rich. They pay for their expensive lifestyle with a high amount of borrowed money and are just a job-loss away from being poor again.

Object Poor

... is a ‘state of excess’ when the stuff we own makes us poor, as the debt we incur has trapped us to keep working our jobs to fund the expensive lifestyle and habits.

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The wealthy

The wealthy

Most rich people do not flaunt their wealth: They don't live in high-class neighborhoods or drive expensive cars. They look like you and me.

The rich have a net worth of above $1 millio...

The pseudo-affluent

They buy things that convey success. They want you to know just how much stuff they have by showing off their success.

The pseudo-affluent feel insecure about how they compare with the Joneses and the Smiths. They hold on to the belief that all economically successful people display their success through prestige products.

Characteristics of the pseudo-affluent

The pseudo-affluent generally:

  • They earn a high-income, but spend the majority of what they make.
  • Wear expensive suits or carry expensive purses.
  • Drive high-end luxury or sports cars.
  • Really believe that rich people act rich.

It does not mean that every person that drives a BMW pretends to be rich, but those who do spend the majority of high incomes spend it in a way to display their wealth.

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Many life transitions happen in your 30's

From moving up in your career to buying a home. Making smart moves with your money during your 30's can help you achieve future financial success.

Focus on percentage of income saved, not the dollar amount

Over the long term, it's not as much about the dollar amount you save, but the percentage of your income that you dedicate to saving and investing. By focusing on percentages, you can ensure you're always saving more as you earn more. 

Spend time tracking your money

Most people react to their finances. The problem with that is that you rely on chance to have enough money in the bank when you actually need it. Be intentional about your money and spend time reviewing and evaluating it. If you don't, you'll never know if you're moving in the right direction or not.

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