Wealthy Vs Rich & How to Focus on Being Both With Time
Where does desire come from? So many are fixated on the ideas of success and wealth often from a very young age. Is this an inherent trait of youth or a trope ingrained in American culture? To the point that we have to distinguish what it is to be wealthy vs rich.
Many of us aspire to grow up and amass wealth to alleviate our troubles with money. Of course, all the while knowing money doesn't really make us happy, right? It just helps. But if it takes money to make money how can anyone ever expect to become wealthy or rich?
Wealthy Vs Rich: What's the Difference?
Wealth is a long game, where richness can come in the form of a high-paying job or a one-off windfall of cash. Richness can come from one's outward perspective and view of their circumstances.
When someone is referred to as wealthy it often means they have significant net worth or possibly come from a long line of generational wealth.
If you're starting from nothing with the desire to become wealthy, hearing this can make achieving your financial goals feel momentous. Time and patience may feel like the enemy, often leading to a slew of get-rich-quick attempts that really don't help one make real progress toward their goals.
On the other hand, going the traditional route and working one's way up in a company can also have its dead ends and unfulfilled expectations. Navigating the tricky waters to financial security and beyond is tricky, but there are a few things anyone can do to get started now.
The Most Important Step to Becoming Wealthy vs Rich
Do the math. Forget about the poverty line and minimum wage or anticipated income post-college graduation. What is the living wage where you are right now or wherever you plan to start your adult working life?
The living wage is a significantly undervalued metric that tells you more specifically what your base income needs to be in order for you to meet basic living requirements like food, shelter, and transportation in a given area.
Now that you have loosely defined your minimum expenses it's time to review the job market. Again, the key here is to look specifically at the geographic area you plan to live in and the demand for various positions.
What industries have the most job postings? The missed opportunity here is remembering that when you're a great worker in a high-demand industry, your efforts are more likely to be recognized quickly.
A great work ethic in a high-demand field is more likely to lead to faster advancement. Sometimes the most 'easy' or humbling forms of employment can lead directly to the most fulfilling career opportunities.
Create Your Simple Path to Wealth
Finding happiness in adulthood that also leads to happiness later in life comes directly from your ability to stick to a plan and structure your finances.
The better you are at living contently below your means the more money you can allocate toward investments and savings. Going back to doing the math, the more money you can allocate towards long-term investments earlier on in your life the greater return you can expect to see with the least amount of effort.
Keeping yourself knowledgeable of financial markets will also help you capitalize on timely opportunities to build wealth. Like taking advantage of high-yield savings opportunities or other lower-risk investments.
Once you've selected your career path and structured your finances accordingly, it is time to enjoy friends and family and give time a chance to work on growing your wealth. When it comes to being wealthy vs rich this stage is about finding richness in the day-to-day.
Being Independently Wealthy
Independently wealthy is a very loaded term that’s subjective to the importance placed on several favors like age, quality of living, and how you define ‘work’
Surprisingly, Merriam-Webster doesn’t actually have a definition for the term. However, popular opinion declares it means to have money without having to work.
At first glance, it sounds like this independently wealthy person must have just inherited their wealth. This is a likely case, but since the term doesn’t place any exact constraints on timing or means by which one becomes independently wealthy there are options.
For example, perhaps you set a target net worth and through your professional efforts reach that monetary goal in you're thirty or forties and choose to leave the workforce a few years early. Or perhaps you win the lottery or sell the rights to an idea at eighteen so, with proper money management, you can leave your 9-5 for good.
The important thing about being independently wealthy is the amount of interest earned on your money each year relative to your spending. The key is to live on the interest without touching the principal.
Another avenue to becoming independently wealthy might include setting up one or more successful businesses (with proper management) that don't require your presence on a day-to-day basis.
Technically you're not unemployed but you're not punching a clock or making the daily commute. Your duties and responsibilities might take the form of oversight and guidance on a broader scale. But for the most part, you're free to lead your days as you please.
In this sense, one can simultaneously be rich and wealthy. You built the empire and reap the initial benefit of your hard work. This is a particularly wonderful place to be because, in addition to interest on the savings and investments you've built over the years, you still have revenue coming in from your businesses. This is typically how generational wealth is started.
Fundamentals of Generational Wealth
At its core, generational wealth is an asset that can be passed down or inherited by younger generations. Most commonly, this inheritance takes the form of a trust with various rules and regulations set out by the founder stipulating how the money will be managed.
In other instances, generational wealth can be in the form of a company where heirs are groomed to take over high-ranking leadership roles in the family business. What's interesting about this model is that it is one of the oldest forms of inheritance and it spans small family-run shops to major fortune 500 corporations.
Similar to a trust, one might also inherit an investment portfolio ranging from stocks to mutual funds, IRAs, and more. Less common now but still relevant is the inheritance of large quantities of land that could be kept or divided and sold over time to generate income as needed.
Wrap up
The best piece of advice on finance and wealth is to play by your own standards. Take a hard look at the things that really make you, personally, feel fulfilled. It's great to have big goals and ambition but you might find you are happiest with a lot less and all those nice but extra things you thought you needed don't really matter.
If you keep things simple and always manage to live below your means you may be shocked by how wealthy you will become in time. Starting early with modest investments and savings is the key for anyone regardless or ambition or lot in life.
It may not be flashy or impressive to anyone but stability and quiet confidence go a long way for your mental well-being when you're not caught up in anyone else's game.
"To have money is a glory as long as you haven't lost the joy of things that money can't buy." -Salvador Dali