ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Understanding Finance

What's the Difference Between Being Rich and Being Wealthy? You Want to be Wealthy

Updated on August 20, 2012
Source
Source

Living the Dream Life

What does the dream life look like to you?

Imagine sitting back on your yacht, a tropical drink at your side, Bob Marley and the Beach Boys playing in the background, and the rays of the setting sun glistening off of the Mediterranean as you enjoy your view of the Greek Isles.

Listen to the soft growl of your jet as you fly to South America for a week of exploring jungles and extreme hang gliding.

Picture yourself cruising around the country on your Harley, scouting out the distant edges of our nation.

Everyone has dreams of what the perfect life would consist of. We all have ambitions to live out great adventures, provide the best to our family and friends, and leave a positive mark in the world by saving the environment, feeding the hungry, or educating the poor.

There is just one problem...

You need money to live the lifestyle you desire. You need to be rich. Or do you?

Actually, to be content in life, to live the life of your dreams, you may not need to be as rich as you might have originally thought. In fact, your perfect life might be closer than you anticipated.

There are just two concepts that you need to understand to obtain your dream lifestyle: focus on becoming wealthy instead of rich, and join the realms of the New Rich. This article will talk about wealth.

Could you get to a point where you never had to work again?

See results

The Difference Between Riches and Wealth

There is a very clear distinction between being rich and being wealthy. Knowing the difference is not only important, but necessary, if you want to be able to achieve the financial freedom necessary for your dream life. After all, one of them allows you to be a slave to more money, the other gives you freedom from money all together! Which option sounds better to you?

Let's briefly define the two concepts:

Being Rich

Think of the majority of actors, athletes, and popular musicians. Chances are, they are rich, but not wealthy (although some of them have done a good job of developing wealth as well). They make a lot of money, but the moment they stop working, they stop making money. Although their pay might average $1000 an hour, they still get paid per hour of work. Therefore, if they stop working, they stop getting paid.

A rich person will drive an amazing car, living in a gigantic house, and go on lavish vacations. However, this person will also have thousands or millions of dollars of loans, always be living on the edge of their paycheck, and get themselves into trouble if they somehow lose their income (get fired). If a rich person fails to work, she fails to get paid. Yes, her house may be nicer than yours, but she is still strapped down by the need to work in order to pay her bills.

Being Wealthy

Most wealthy people do not stand out as much as the rich. While the rich flaunt their money, the wealthy tend to live quieter, but still adventurous, lives. Well known wealthy people would include the English Royalty, Donald Trump, and Warren Buffet. These people make money regardless of whether they work or not. They have discovered the secret of having their money work for them, rather than working for their money.

If you look at the lists of the people with the highest incomes, and then look at the list of the people with the most money, you will discover that they are completely different. Rich people work for a paycheck, just like everyone else (although they can buy a lot more with their paycheck). Wealthy people have their money and other people working for them - meaning that they make money whether they work or not.

The more money you place into investments, the larger your income gets without having to do any more work. Meanwhile, money that you spend is gone forever.
The more money you place into investments, the larger your income gets without having to do any more work. Meanwhile, money that you spend is gone forever.

Why You Want to Be Wealthy

Being rich takes a lot more work! It doesn't matter how much you make, you are never free from worrying about your job, because you need it to survive. You get a pay raise and you buy a bigger house, you get a bonus and you use it as a down payment for a new car - you are still continually in debt. You are still slaves to someone else.

If you take the step out to becoming wealthy, rather than trying to become rich, you reach a point where you DON'T HAVE TO WORK! Even without working, you are making enough money to live the lifestyle that you desire.

Imagine never having to work again. The possibilities are endless. You could spend more time with your family and friends, you could volunteer your time to make the world a better place, you could focus on living rather than on surviving.

How to Become Wealthy

The key to becoming wealthy is: "Don't work for money, make your money work for you" (Rich Dad Poor Dad). You want to invest your time and money instead of sell your time and money. The more of your resources that you invest, the more of a return you will make.

The two methods for becoming wealthy are using methods of passive income and getting people to work for you.

Make Money From Passive Income

If I have $10,000, I can spend it on a car, a nice TV and computer, or an awesome vacation. However, once that money is gone, it's gone for good. On the flip side, if I invest that $10,000 into a company or real estate, and I make a 5% interest rate from that money, I am making $500 a year WITHOUT DOING ANYTHING. The more of my money that I put aside for investing, the more money I will make off of the interest.

The same takes place when I invest my time instead of sell it. For example, if I do yard work for $20 an hour, after an hour, I have $20. However, if I spend that time and write an article on HubPages, I will not gain $20 right away, but I have the potential of making money for the rest of my life! The same concept takes place when you start your own business. You may not make any money for the first 1000 hours of work that you place into it, but, in the end, you are making money without having to work.

The key is to invest your time instead of sell your time.

Make Money When Other People Work

Another element of becoming wealthy is to make money when someone else works. Think about it, if you got paid $1 for every hour I worked, you could make $40 a week doing nothing! If you got paid $1 per hour for 10 people, you would make $400 a week without doing anything. This is how so many founders of companies become wealthy - they have an idea, pay other people to make it happen, and get paid for the work that their employees do.

The website makes this even easier. Think about website like YouTube, Facebook, and Hubpages - they create a platform for people to create content, but do not create any content at all. These website then make money any time someone else views the content created. When you and I upload videos to YouTube, we are helping YouTube (owned by Google) make money. You can even make money using your cellphone.

Of course, it is not easy creating any kind of business. It takes a lot of thinking and a lot of work. But, if you make it happen, you have a great opportunity to become wealthy.

Source

Summary

Rich: Living a luxurious lifestyle, but having to continually work. If you stop working, you lose everything.

Wealthy: Being able to live the lifestyle you desire without having to work at all. You might not own as much, but you do not have to work to survive.

Being wealthy is beneficial because your time is fully your own - you are a slave to no one.

How do you become wealthy? make money without working:

  • Invest in stocks
  • Invest in real estate
  • Publish work that provides you with royalties
  • Start a business and make money when other people work

Being wealthy does not always equal being rich. If you only need $25,000 a year to live the life that you want to live, then that is all that you need to make without working to be wealthy. In other words, if you have $500,000 making you 5% interest, then you are wealthy. Or, if you have written enough articles on HubPages to make $2,500 a month, then you are wealthy.

Being wealthy gives you the freedom to do whatever you desire without having to work. It's a great point to reach in life, and I wish you the best as you strive to live your dream. Of course, you can always find other creative ways to survive.

I appreciate your comments and thoughts on this topic. Maybe you can come up with other ways to make money.

Comments

    0 of 8192 characters used
    Post Comment

    • Doodlehead profile image

      Doodlehead 4 years ago from Northern California

      Excellent advice.

      And learn the tax code while you're at it.

      Timely sales of long-term versus short-term capital gains, real estate exchanging and so forth. Sometimes you can avoid taxation entirely in completely legal ways.

      Sharing

    • profile image

      john 4 years ago

      Great JOB.... Don't work for money, let money work for you !

    • Robert Erich profile image
      Author

      Robert Erich 4 years ago from California

      @WealthTitan: Thank you for your comments. I think you have summed this up quite nicely.

      @livingsta: I am glad that the article got you thinking! I wish you the best in your pursuit for success in life!

    • livingsta profile image

      livingsta 4 years ago from United Kingdom

      This is an awesome hub. Being rich and being wealthy, clearly explained. Makes me think. Thank you so much for this write. Voted up, useful and awesome. Sharing it too!

    • WealthTitan profile image

      Patrick 4 years ago from South Africa

      I agree with Robert, the wealthy contributed quite a lot to society. Some wealthy peoply really care about society and set up really large charitable organisations for example Gates,Branson,Kyoreski (spelling sorry) there are a few that do it mainly for tax reasons, but if they didn't setup the organisations there would be a lot less of them around to help.

    • Robert Erich profile image
      Author

      Robert Erich 4 years ago from California

      @psbhatt: I understand the point that you are making, but I have to respectfully disagree. A rich man focuses on consuming as much as possible (which means that he is requiring others to work at slave-wages). Meanwhile, a wealthy person has developed a way to live within his means (in other words, he invests in others to make himself wealthy, and he lives on little). Additionally, the wealthy person is able to spend his time doing things that truly benefit society - meanwhile, the rich person is just as much a slave to money as a poor man would be.

    • psbhatt profile image

      PISUPATI SRINIVAS BHATT 4 years ago from HYDERABAD

      Hi, nice article from comforts point of view! A rich man has a compulsion to contribute to the Society but wealthy man has none. Rich ones are more useful for Society's welfare.

    • rajan jolly profile image

      Rajan Singh Jolly 4 years ago from From Mumbai, presently in Jalandhar,INDIA.

      Great read. Never thought about it so deeply, Robert. Being on Hubpages gives all of us an opportunity to get wealthy.

      Voted up and interesting.

    • Armchair Builder profile image

      Michael Luckado 4 years ago from Hawaii

      Great hub. You are so right about the wealthy part. And I would even add that we don't need nearly as much as we think we do to have a great quality of life!

    • Robert Erich profile image
      Author

      Robert Erich 4 years ago from California

      You are absolutely right! If you can cut down on your expenses, then you won't need to save nearly as much to live on your residual income. Thanks for sharing.

    • SD Dickens profile image

      SD Dickens 4 years ago

      Great advice...I've been making this my goal for the last few years. In my opinion, lowering expenses is also part of the equation. With lower expenses, you need far less invested/income to become financially independent.

    • profile image

      Phalima 4 years ago

      Thank you very much for this encourage information, I will invest my money so that it can work for and leave a good legacy for my children.

    • Robert Erich profile image
      Author

      Robert Erich 4 years ago from California

      Good idea! Use the riches to become wealthy. Glad you enjoyed the read.

    • iguidenetwork profile image

      iguidenetwork 4 years ago from Austin, TX

      First, get rich, then be wealthy. :)

      Thanks for the superb hub, I really like reading it. :)

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Thank you for commenting. It's true, there is a significant difference in lifestyle between the rich and wealthy. Knowing that difference can certainly help someone become successful.

    • tipstoretireearly profile image

      tipstoretireearly 5 years ago from New York

      Great hub! Many people don't understand the difference between being rich and wealthy, and as a result squander their chance to be wealthy.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Thanks again Geja! I am certainly glad you enjoyed. It is true, sometimes the most basic concepts can have the most powerful impact. Often we just need to be reminded of what we already know.

    • Geja8856 profile image

      Geja8856 5 years ago

      I don't know how or why HubPages sent me your articles to view but I'm glad they did. All of this is basic but you make sense out of it. You're making me want to try things instead of trying to figure out how to get there. Great work as usual!

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Yes Cyndi! You understood my point completely. How much money you have really doesn't matter, the goal is to no longer need to worry about money. Thanks for commenting!

    • Cyndi10 profile image

      Cynthia B Turner 5 years ago from Georgia

      Hello, I so love your article because I definitely believe in becoming wealthy and in having passive residual income. It's not so much about the money, but about the lifestyle and freedom passive income can provide. Well written. voted up and Sharing.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Levertis, I can relate completely! Drive and perseverance seem to be the only two things that I lack - and they also seem to be the only two things you truly need... Bummer how that works. Thanks for commenting.

    • Levertis Steele profile image

      Levertis Steele 5 years ago from Southern Clime

      This is a very informative hub!

      I have read RICH DAD, POOR DAD, along with other related books, and found valuable gems on practically every page. I have also attended classes like Dave Ramsey's and loved them. Now, I need to hone just two more traits to get going: drive and perseverance. Perhaps someone has written a hub on that one. I will explore.

      Thanks for sharing.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Thanks Rochelle! Yes, it will be a trick to get motivated and follow through with this, but I am striving for it. Wish you the best in your future endeavors as well.

      And thanks for stopping by jainismus. I'm glad you enjoyed the article!

    • jainismus profile image

      Mahaveer Sanglikar 5 years ago from Pune, India

      Great Hub. It is well written and explains the difference between being rich and being wealthy. Thank you for sharing the information and the tips.

    • Rochelle Frank profile image

      Rochelle Frank 5 years ago from California Gold Country

      Some people take way too long to figure this out. You are wise to have learned it early in your life. Knowing it and doing it are still two different things.

      It can be a bit of a trick for young people to start investing when their earnings are low and expenses are high.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Thanks for the comment Peggy! You are an intelligent woman and a great part of the Hubpages community. I look forward to reading more of your work!

    • Peggy W profile image

      Peggy Woods 5 years ago from Houston, Texas

      Those Rich Dad, Poor Dad books are great and help people develop true wealth if followed. Your hub nicely points out the difference of continually working for wages...or developing sources of income that continue to grow for work done once as the books also illustrate. Nicely done! The earlier people figure this out, the better their lives can be worry free (at least in monetary terms) later on in life. Voted useful and sharing!

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      It sounds like you've got it figured out WealthTitan! I will have to read some of your articles - sounds like you have many words of advice.

    • WealthTitan profile image

      Patrick 5 years ago from South Africa

      Excellent hub, You absolutely right. A lot of people have the idea that appearing to look rich makes them wealthy. Wealthy buy cash generating Assets, while the rest purchase with credit and probably never accumulate any real wealth.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      That's a great line HarperDavis, "money is just the by-product of a great idea". I agree completely. If we find things that make us passionate and pursue those, money will come.

    • HarperDavis profile image

      HarperDavis 5 years ago from Midwest

      I'll take wealth please. I was even telling a friend of mind to seek out ideas rather than money. Money is just the by-product of a great idea.

      Great hub!

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      You summed it up nicely cprice75! Thanks for stopping by.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Thanks bmcoll3278. I'm glad you enjoyed the article. Wish you the best in your writing!

    • cprice75 profile image

      cprice75 5 years ago from USA

      Interesting hub. You made a good distinction between riches and wealth. One you have to work for, the other works for you. Voted up.

    • bmcoll3278 profile image

      bmcoll3278 5 years ago from Longmont, Colorado

      One of the best hubs I have read great job voted up.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      I'm glad you enjoyed the article Emmyboy. Becoming wealthy may actually be more difficult than becoming rich, because it requires dedication and commitment, where becoming rich requires talent or luck. However, anyone CAN become wealthy with a bit of self discipline.

    • Emmyboy profile image

      Emmyboy 5 years ago from Nigeria

      I love this hub! Thank you so much for sharing. It is amazing the way You really made becoming wealthy seem so much easier than becoming rich.