Rich Vs Wealthy: What’s the Difference?

Rich vs wealthy, is there a difference? Have you ever asked yourself this question? When you think of wealthy people nowadays, what comes to your mind? Perhaps, you think of Jeff Bezos, Bill Gates, Elon Musk, Warren Buffett, Mark Zuckerberg.

Many people equate being rich as the same thing as being wealthy. Both the rich and wealthy have lots of money. But the truth is, there is a difference between the two. The difference is that the rich has a lot of money. But the wealthy, not only does he have lots of money too, he does not worry about it that much.

If you’re actively working toward becoming rich and building wealth, it’s a good idea to consider working with a financial advisor.

Rich vs Wealthy: An Overview

The rich and wealthy both have lots of money. Rich and wealthy have so much money that they drive fancy cars, have multiple mansions, and eat at fancy restaurants, etc. While they share some similarities, they also differ in some key ways.

A good example would be a lottery winner. Someone who just won the lottery can suddenly become rich. But that does not necessarily means he or she is wealthy. Unless he or she invests the money in a business, real estate or stocks, he can lose it in a matter of months if not days.

So being wealthy is really how long your money can last. As Robert Kiyosaki, the author of the famous “Rich Dad and Poor Dad” book, once said being wealthy is the number of days you can survive without physically working, and yet still being able to maintain your standard of living. According to him, wealth is measured in time. Understanding all the distinctions between the wealthy and the rich is important in

If the rich vs wealthy comparison is weighing on you, here’s the quick answer:

• If you are rich, you make or have a lot of money. You have fewer or zero investments. Most of your money goes to credit card debt, mortgage, fancy dinners, fancy holiday trips, children education, etc… You have to work every day to keep earning money. The moment that you stop working, the money stop coming. Here’s how to get rich.
• If you are wealthy, you also have lots of money. But you have income producing assets like real estate, stock investments, businesses. Your money works for you; you don’t work for your money.

Keep reading for more tips on the difference between the wealthy and the rich:

Rich Vs Wealthy: Understanding the Key Differences

Hats off to you if you’re already rich and on your way to become wealthy. If not, this rich vs wealthy distinction will help you prioritize your goals and investment strategies to amass wealth.

Key Differences: Income

The rich earns a lot of money. He or she can be a CEO of a major corporation making $2 millions a year. Or, he can make a lot of money in his business. While the rich might have a high paying job, he still has to get up every morning to go to work.

The wealthy, on the other hand, does not have to work. They have built significant income producing assets which provide them with cash flow to cover their monthly expenses. In other words, they don’t work for money. Money works for them.

Key Differences: Wealth

A key distinction between the rich vs wealthy people is that the rich is not building income producing assets, such as real estate, stocks, or business. Rich people may earn a significant wage, but a higher income does not equate wealth.

These people are usually called “High Earners, Not Rich Yet (HENRYs)“. High earners, not rich yet or HENRYs is a term to describe people making between $250,000 to $500,000 a year, but have not invested enough to make them wealthy.

The HENRYs are usually CEOs, doctors, lawyers, or those earning significant salaries. They may earn a lot of money, but much of it goes to tax, schooling, housing, cars, and other debts. And if they stop working, they won’t be as “rich.”

Whereas, wealthy people have sustainable, generational wealth — wealth that can be passed on from one generation of family to the next. More of their money goes to wealth building investments rather than costs. Wealthy people will always be wealthy. A good example would be the Rockefellers, the Duponts, the Carnegies, etc.. Their wealth has lasted multiple generations.

Key Differences: Patience

Another key difference between being rich and wealthy lies with how much patience you have. While many people can become rich, not too many can become wealthy. Only the patient, the disciplined can become wealthy. As Warren Buffet once said, “wealth is the transfer of income from the impatient to the patient.”

To become wealthy, you have to have discipline, focus, and have to be able to delay gratification. It requires years of hard work to build an asset base big enough to have cash flow to become wealthy.

Rich vs Wealthy: How to transition from being rich to getting wealthy?

Now that you know the difference between the rich vs wealthy, how do you become wealthy? Rich people earn or have a substantial amount of money. However, they have fewer or no investments, making them less likely to become wealthy. But there are several ways they can transition from being HENRYs to being wealthy.

See our guide if you want to learn how to get rich quick.

Below are several steps on how to get wealthy.

Seek help from a professional advisor. If you’re rich and want to become wealthy, you should consider hiring a financial advisor. A financial advisor advise their clients on how to save, invest, grow and manage their money. They help them set financial goals and create a plan to achieve them. Click here to find a financial advisor in your area.

Developing better spending habits. One of the habits of the wealthy is spending less than you earn. In other words, they live below their means. So start developing better spending habits by setting up a budget to track all your spending. By doing so, you will know where your money goes.

Increasing savings. Increasing your savings is just as important. You likely need a large sum of money to invest money , start a business, or for a down payment on a real estate property. Put more money in a high savings account, a certificate of deposit or a money market account.

Take a look at the CIT Bank CD Rates. Saving is just the starting point. You cannot save your way to wealth, which brings up the next point.

Looking for more saving options? Then look at the Vanguard CD Rates.

Invest in stocks and/or real estate. Wealthy people don’t just save. First they save, then they invest and over the years they grow their asset base. Investing in the stock market is one way the the rich become wealthy. First, you must know how the market works. And begin with low risk investment such as mutual funds, index funds or ETFs. The best Vanguard funds is a good option. You should also consult a financial advisor who can guide you.

Another way the rich can get wealthy is through real estate investing. More than half of the people in the Forbes made their money in real estate.

Contribute to a retirement account. Because rich people earn a significant amount of money, they also pay a lot in taxes. One of the ways rich people become wealthy is finding a way to reduce tax whenever they can. Retirement savings accounts, such as a 401K, are a popular investment vehicles for tax benefits. A 401k allows you to benefit from employer matching, pre-taxed invested dollars, which reduces your reportable taxable income.

Rich vs Wealthy: the Bottom Line

Being rich and being wealthy are related but often confused with each other. Both have lots of money. However, there are several differences. The rich’s money is consumed by consumer debts, mortgages, educational costs, etc. There’s not much money left for retirement savings, investments, etc. Whereas, the wealthy has income producing assets such as real estate investments, businesses, and stocks.

Strategies to Help Maximize Income

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning to retire at 50, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.