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When we think of someone being rich vs wealthy, we might think it’s the same thing but it’s not. For some reason, the words rich and wealthy are often incorrectly used to describe the same thing.

The two words might seem like synonyms, but they are completely different. It’s hard to spot the difference but being rich and being wealthy is not the same thing.

What does it mean to be rich?

Being rich is simply having a lot of money or income. It comes down to how much cash you have in your bank account. But just because you’re rich, doesn’t mean you are wealthy.

In fact, being rich can often mean that you are spending a lot of money. It can also mean that you have a lot of debt. It doesn’t matter how much money you have if your expenses are higher than your income. Being in debt is not something to aspire to!

People who are rich might drive a fancy car or live in an amazing house, but it comes at a cost. If you make £200,000 a year, but spend £230,000 a year in expenses, you might seem rich, but you’re on your way to going broke.

So why do you owe it to yourself to become wealthy?

  1. When you increase your Net worth, you increase your self-worth.
  2. The more you make, the more you can give away.
  3. If you are broke, you consume resources that wealthy people produce.
  4. The wealthier you are, the more legacy you can leave.
  5. Making more money is a good measure of tracking your progress.
  6. You can fund your passions in life.
  7. You can start a foundation and stand for a cause that you believe in.
  8. Statistically, the greatest reason for divorce is money-related issues.
  9. It can exaggerate the best traits in you. IT will make you more of what you already are.
  10. The things you learn becoming rich are more valuable than becoming rich.
  11. The greatest thing you can give your children is what you teach them.

Being wealthy is not only having enough money to meet your needs but being able to afford not to work if you don’t have to. It’s about amassing assets and making your money work for you. In other words, it’s having a significant net worth.

Wealthy people don’t necessarily own the latest gadgets or cars or throw lavish parties. What they do have, is a lot of assets, such as real estate, investments, and cash.

For example, if your monthly expenses are £5,000 per month, and you have £30,000 in savings, then you have about six months’ worth of wealth.  If you invest that £30,000 and you end up with £5,000 a month in investment revenue, you are wealthy.

The difference between being rich and wealthy

There is a bit more to being rich vs wealthy than how much money you have in your bank account. In fact, it’s possible for someone who makes less than a rich person to be wealthier than the rich person with the nice car and latest gadgets.

That’s because rich people spend a lot of money, but wealthy people save and invest most of their money. Wealthy people might have a lot of money, but they don’t spend it all in one go. And they certainly don’t use debt unless it’s for a very clear purpose, such as an investment on an asset.

Instead, a wealthy person saves as much money as possible and invests it in assets. That might mean buying property or investing in the stock market. Regardless of how they invest, wealthy people know that to grow their wealth, they need to turn their cash into assets.

How do you become wealthy?

If you want to become wealthy, there are a few things you can do to get started. Don’t just focus on how big your salary is. Instead, follow these steps to eliminate debt and have the right mindset when it comes to amassing wealth.

  • Save
  • Pay off debt
  • Invest
  • Don’t spend on unnecessary things

Think about your long-term goals

If you want to be wealthy, you need to always think about your long-term goals. Do you want to retire early? Own a few houses? Travel? Fund your passions in life? When thinking about wealth, don’t just focus on your income, but focus on building up your investments and assets to last you a lifetime.