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Rich vs Wealthy (Ultimate 2023 Guide)

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  By Forrest McCall | Last Updated:  February 4, 2022

Rich and wealthy are often used interchangeably today as if they were the same thing. But the truth is that a rich person and a wealthy person aren’t really the same, and when it comes to being rich vs wealthy there are a lot of really important differences.

If you want to be financially free, dream of being rich, or being wealthy, it’s important to know the difference. After all, one of these things will give you real financial freedom. The other will give you the appearance of financial freedom, but it probably won’t last.

In this post, I’ll explore what it means to be rich vs wealthy and much more. Let’s get started!

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Rich vs Wealthy

What’s The Difference Between Being Rich Vs. Wealthy?

There are a couple of big differences between being rich vs wealthy. The biggest differences are in how people use their money, think about their money, and spend their money.

Rich people live an enviable lifestyle. They often own luxury cars, live in huge homes, and spend money freely and frequently. Many rich people will spend more than wealthy people who have the same amount of money.

It’s about the lifestyle, the trappings of being rich, and most rich people have to keep earning money to stay rich. They aren’t making passive income and usually aren’t making their money work for them.

Their lavish lifestyle might look like a lot of fun, but rich people don’t have the financial health of a wealthy person.

That’s one of the biggest differences between rich vs wealthy. Wealthy people are less about spending money than saving money, less about the luxurious lifestyle, and more about financial independence and net worth.

The wealthy focus on maintaining their wealth rather than buying the trappings of richness.

But, from the outside rich people and wealthy people can often look like the same thing. They both have high net worth, more money than average, and may both have similar high incomes and valuable material objects.

The difference is in how the rich and wealthy think about their money, spend it, and whether they put their money to use.

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Rich Person

What Does It Mean To Be A Rich Person?

Rich people are relatively common these days. A rich person usually has a lot more money than ordinary people, but surprisingly they might not have a higher net worth.

That’s because rich people often spend as much as they make, and sometimes even spend more than they make.

When rich people spend that way, they aren’t adding to their net worth the way a wealthy person would. They might have a big bank account, but they also probably have big expenses and might not be working to create wealth or save.

Being rich means having money, but not necessarily being responsible with that money.

Often the problem here is financial education. Rich people might have money, but they don’t know how to use that money to make more money or aren’t interested in building wealth if it means that they can’t spend their money right now.

Rich people often struggle with unexpected expenses and often don’t have an emergency fund. Many carry high-interest debt and don’t know how to build financial relationships that let them maintain their wealth.

That’s one of the reasons so many lottery winners are often temporarily rich, but not wealthy. They don’t know how to turn the riches into long-term wealth, which means they never make the transition from being rich to being wealthy.

Related: How to Get Rich from Nothing

Wealthy Person

What Does It Mean To Be A Wealthy Person?

Being a wealthy person is a little different. A wealthy individual has both a high net worth and a wealthy mindset, they use financial planning and good personal finance to build financial security.

That means that wealthy people often have more money in their bank account, but lower spending compared with rich people. Why? Because achieving wealth usually means that they are more willing to save money than to spend it, and often strive to be debt-free. Or, at least they don’t carry any high-interest debt that costs more money than it’s worth.

The focus on personal finance is one of the biggest differences between wealthy people and rich people. Rich people want to enjoy their money, wealthy people would rather focus on their net worth and financial security than on creating a lavish lifestyle or having the signifiers of wealth. 

That means that wealthy people usually avoid lifestyle creep, where your lifestyle gets more expensive as you start making more money.

But even just being good about not overspending isn’t the difference between being rich vs wealthy.

To become wealthy people need to have a wealth mindset and long-term thinking. Being wealthy means using your money to make more money, investing, and making sound financial decisions in addition to having a high net worth and plenty of savings.

Related: How to Make Your Money Work For You

Does Being Rich Mean Financial Freedom?

Contrary to popular belief, being rich doesn’t mean you have financial freedom. 

Think about professional athletes, for example. Many professional athletes are rich, and almost immediately rich. Their incomes mean they have a lot of money to spend, and a lot of athletes immediately dive into having a luxurious lifestyle, regardless of what kind of lifestyle they’re used to.

But, athletes often only have one income stream, their work. It’s also a job where they’re particularly likely to get injured and no longer be able to play.

That means that athletes often lose their financial status within a few years of stopping playing. Most professional athletes might be rich, but very few are rich and wealthy.

Related: How to Get Rich with a Normal Job

Do You Want To Be Rich, Or Be Wealthy?

Most people, to actually achieve their financial goals, want to be wealthy, not rich. That’s important because being wealthy takes a lot more effort and active work. Or, at least, being wealthy takes listening to a financial planner and good financial education, and not spending money as soon as you have it.

But becoming wealthy can be hard, especially if you’re already rich. That might seem like a contradiction, but this is another reason lottery winners don’t tend to build long-term wealth. When you suddenly have access to the rich life it can be hard to resist.

The problem is that the rich, while they get to drive fancy cars and live in multi-million dollar mansions, usually don’t have the financial security to maintain their lifestyle when something goes wrong.

The wealthy might not always feel wealthy or act like rich people, but their wealth is longer-lasting, more secure, and less dependent on a single high-income job or opportunity.

Here’s Why It’s Better To Be Wealthy Than Rich

Being wealthy is better than being rich because rich people are incredibly vulnerable.

Think about the rich people you know of that ended up going back to regular lives after a couple of years, often after selling a lot of their luxuries and even going into debt. It’s a common story for professional athletes, one-hit wonders, actors, and even some business owners whose businesses failed or who couldn’t maintain their lavish lifestyle.

Wealthy people have money set aside for rainy days. They usually have large savings accounts, investments in the stock market, secondary sources of income, passive income streams, and better control over their money. 

They might not live the same kind of lifestyle as a rich person with access to the same amount of money, but they hold on to their money longer, which is a big part of how you can become wealthy in the first place.

These people can withstand losing a job, medical diagnoses, and bills, and even stopping working entirely much better than rich people.

Plus, over time, wealthy people are able to use their money to make more money, which means that wealth can become self-sustaining as long as they keep their spending under control.

Sounds a lot more secure and sustainable, doesn’t it?

Can You Really Go Broke When You’re Rich?

A lot of people don’t really believe that you can go from being rich to being broke, but it’s easier than you’d think.

That’s because the lifestyle rich people like to live comes with massive bills, and it’s often paid for at least partially in debt.

Since rich people usually don’t have as many resources set aside as they use to maintain their lifestyles, it doesn’t take very long for those resources to run out when something goes wrong.

Note that we’re saying when something goes wrong, not if? That’s intentional. Even the rich and famous have to deal with roadblocks and hurdles in life. When those happen, and especially if they interrupt their normal income stream, rich people can go broke very quickly.

Now, that doesn’t mean that they become homeless or immediately lose their rich lifestyle. In fact, a lot of ‘rich’ people are actually broke when you look at their bank statements and net worth.

Going broke as a rich person usually just means that your lifestyle becomes unsustainable and you start losing money instead of making it. Once you’ve started losing money you can either turn the situation around, or slowly lose your rich status.

Sometimes it takes a few months to go from being rich to being traditionally broke, sometimes it takes years, or even most of your life. But, you’ll always be able to tell the difference between the rich and the wealthy when you look at their balance books.

Does Being Rich Make You Happy?

Not usually. Having money can make life easier and more enjoyable, but being rich is usually very precarious and high stress.

The pressure to maintain your lifestyle and constantly keep working to maintain the money you have (so you can spend it) can make it hard to be happy. After all, a lot of rich people live the same daily grind as ordinary people, they just have a few more luxuries mixed in.

Sadly, luxuries like a fancy car and a big home don’t translate to happiness. Plus, the fear of losing those things and your current social status can add to your stress levels, making it even harder to stay happy.

Does Being Wealthy Make You Happy?

Being wealthy has a better chance of making you happy than being rich, but we’re not going to tell you that wealthy people live on cloud nine.

The truth is that happiness is dependent on your ability to cultivate it, just like wealth.

But, wealthy people have a lot more tools to achieve happiness compared to the rich or average people.

There are a few parts to this. For one thing, they can usually afford more luxuries than ordinary people, which helps a little. But they also have financial security and don’t need to worry about the usual ups and downs in the market. They also don’t have the high-performance pressure of traditionally rich people like famous singers or actors

What Is The Meaning Of Wealth?

The basic definition of wealth just means to have an abundance of resources, it doesn’t really talk about the differences between rich vs wealthy, or a lot of the other distinctions we talk about in the financial world.

But, being wealthy, and having wealth, does have a huge meaning for the people who achieve it. Mostly, that they are secure, safe in their finances. Even though becoming wealthy often takes a lot of discipline and patience, wealthy people are more financially free than the rich.

Once you’re wealthy your wealth is usually self-sustaining, comes from multiple income sources, and is protected from the usual ups and downs of the stock market or your job.

Being wealthy means that you don’t have to spend time worrying about your money, thinking about whether you can afford the basic things you want.

Sure, your money still needs some caretaking, but not as much as the rich or people who have not become wealthy.

The true meaning of wealth is not having to worry about money, and having sustainable income whether you actively work for it or not.

How Can You Become Wealthy?

The truth is that the majority of truly wealthy people are business owners, and many of them have more than one business that helps them make money or generate passive income.

That’s one of the biggest differences between rich vs wealthy. In fact, rich people often only have one source of income or inherit their money. Wealthy people usually have sustainable wealth thanks to passive income, business success, and smart investing.

Wealthy people focus on long-term goals and how they can build wealth that doesn’t need their constant attention. That’s important because if something happens to someone who is wealthy they’ll probably still be wealthy. If something happens to someone who is rich they might not be able to recover.

That said, you don’t have to be a business owner or an entrepreneur to be wealthy, it’s just one of the most common ways you can get there. The goal should be to have a high-income stream that’s at least partially passive, along with positive net worth and low debt.

How you get there is a combination of your financial habits, controlling your monthly expenses, making good financial decisions, and working to meet reasonable financial goals.

Being rich and wealthy might seem really similar from the outside, but building long-term wealth takes a different mindset and a commitment to a sustainable lifestyle, which isn’t what most people living the rich life want.

That said, an average person can absolutely achieve true wealth. Being a successful business owner, working as your own boss, earning passive income, or even just building wealth with assets from a high-paying job are all possible routes to wealth. You just need to build a wealth mindset to help you get there.

Being Wealthy Doesn’t Have To Be About Sacrifice

It’s possible to make the kinds of good decisions needed to become wealthy while still enjoying a lifestyle similar to the rich. It’s just important to make sure you can really afford it.

Wealthy people don’t tend to fund their lifestyle through debt and make more good decisions than bad ones. They make more responsible financial decisions than spur-of-the-moment decisions.

But that doesn’t mean you aren’t allowed to enjoy your money, live in a fancy home, or even drive a fancy car. It just means that you protect your wealth before doing those things and that you don’t live beyond your means.

Final Thoughts on Rich vs Wealthy

If you want to reach financial independence and build wealth, becoming wealthy should be your goal.

The differences between rich vs wealthy can be easy to complicate. In simplest terms, being wealthy provides you long-term financial security that being rich might not supply.

Forrest is a personal finance, entrepreneurship, and investing expert dedicated to helping others obtain life long wealth. He has a Bachelor's degree in business and has been featured in many popular publications including Forbes, Business Insider, Bankrate, CNET Money, and many others. To learn more about Forrest, visit the About Us Page for more info.
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