Why Being Rich Is Not Enough: Lessons in Building Long-Term Wealth

Do you know the difference between being rich and being wealthy?

Most people think they’re the same thing, but they’re actually completely different.

Let’s break it down.

What the Difference ISN’T

I’m not going to sit here and tell you that rich people buy luxury and wealthy people don’t. Plenty of wealthy people wear designer. Take Mark Zuckerberg and his $2000 T-shirt, for example. Most people are not wealthy just because they are frugal.

The difference is that wealthy people prioritize financial stability above all. Once they achieve that, they allow themselves to indulge in luxury items. Whether we like it or not, the ability to spend lavish amounts of money on these things make them somewhat of a status symbol: but the rich see them as necessary, and the wealthy see them as optional.

The Rich Bitch

Obviously, being rich means having a lot of money. Or a high income. Or both. It comes down to how much money is coming in. But just because you have a high income doesn’t mean you’re wealthy.

In fact, it could mean the opposite. You might be spending a lot. You might have a lot of debt (the bad kind).

Think about it — you could be making a million dollars a year, but if your expenses are a million and a half, you’re on your way to being broke. You just don’t look “broke”, because you literally spent a million dollars on not looking “broke”.

It’s important to keep in mind that being rich comes at a high cost. People who are rich might drive a fancy car, live in a luxurious house in the best part of town, or have a high-paying job, but these things often require a lot of money to maintain.

In fact, plenty of celebrities have gone broke, some because of their rich lifestyles, including Michael Jackson, Nicolas Cage, and Willie Nelson. It just goes to show that being rich doesn’t necessarily equal financial stability or security.

So, while being rich might seem glamorous and appealing, it’s important to prioritize financial responsibility and smart spending habits. Being in (bad) debt is definitely not something to aspire to!

The Wealthy Woman

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

Wealth is a financial safety net — it means having enough money saved and invested that you can afford not to work if you don’t want to. It’s all about having financial freedom and flexibility, which is something that being rich alone might not necessarily provide.

Basically, being wealthy means prioritizing building your net worth and accumulating assets, rather than just focusing on your income. By doing so, you can achieve long-term financial stability and the ability to live life on your own terms.

How to Become Wealthy

Regardless of the specific assets that they invest in, wealthy individuals understand that investing is essential to growing their wealth. So, if you want to build wealth like the pros, start thinking about how you can turn your money into assets and invest wisely for the future.

Here are 5 concrete steps to follow to start building your wealth:

Eliminate bad debt

Debt can be used as leverage if used correctly. But chances are if you’re young, the debt that you would be accumulating isn’t that. Credit card debt especially is the #1 wealth killer due to its absurdly high interest. Find out if it makes sense to refinance your loans for a better interest rate.

Don’t Save Your Money

You heard me right. The rule of thumb is to save 15% of your income every month, no matter how much or how little you make. But don’t let that money sit in your savings. It loses value as inflation goes up. Invest to make that money work for you!

Invest Your Money

When you’re young, you’re what’s called a “long-term investor,” which means you can take higher risks and reap bigger rewards in the long run. The rise of robo-advisors like Wealthfront makes managing your investments so much easier. Don’t underestimate the time-value of money!

Lower Your Fixed Expenses

If you lower your fixed expenses like rent and utilities, it’s a lot easier to increase your savings for maximum compound benefits. While spending $5 here and there on a Starbucks coffee won’t make you any money, it also won’t make or break your wealth.

Set and Stick to Financial Goals

Growing wealth is a long-term commitment. It’s not something that happens overnight. Want a million dollars by 30? You have to reorient your perspective every single one of your financial decisions. Every. Single. Day.

TL;DR

The rich value income, spending, and instant gratification.

The wealthy value net worth, investing, and financial stability.

It’s not just about the money — you also need to think about your long-term goals. Do you want to retire early, travel the world, or own multiple properties?

Spend time growing your income streams and investment portfolio, and building up passive income, in order to set yourself up for success in the future.

So, when it comes to building wealth, it’s not just about how much money you make — it’s about how you manage it. By focusing on your financial habits, investing wisely, and planning for the future, you can set yourself up for long-term financial success.

So what are you waiting for? Get started now and take control of your financial future!