Most times we refer a rich person as wealthy. We think is the same thing but its not. These two words may be used to mean the same but they are completely different. It may be difficult to find the difference between them, but being wealthy is not the same as being rich. It is in this article we are going to explore further the difference between the two.
What Is to be Rich?
If you are rich, you have much money. Being rich is determined by what amount of cash you have in your account. Having much money does not mean you are wealthy. It means that you have much money that can be spent any time. The money may be from a debt meaning, you can be rich but with a lot of debts. In most time the rich are found to spend more money than what they earn.
Rich people may live an expensive life with expensive cars, houses, gadgets, that come with cost. For example, if you make $200,000 per year and spend $250,000 a year as your expenses, you may look to be rich but you are perishing in debts and ending to be broke.
What is to be Wealthy?
Being wealthy means you have quality net worth that you can use even when you are not working. It is about accumulated assets and making your money work for you. It is not about how much money you have but the ability to afford to do what you want anytime.
Wealthy individuals do not have exaggerated lives.They have a lot of assets such as real estate. They allow their money to work for them.
For example, if you have $3000 as your monthly expenses and you have $24000 in savings, then you have eight-month worth of wealth. If you are then able to invest the $24000 and earn $3000 as income on investment, you are wealthy.
Difference Between Rich and Wealthy People
When we compare the rich and the wealthy, Wealthy people have enough money to meet their needs and also save and invest. They allow their money to work for them. Unlike the rich who spend all their income and sometimes spend more than what they earn, wealthy people know how to build their wealth by turning their cash into assets. We can then say, wealthy people are rich but rich people are not wealth.
How to become wealthy
It is clear that, being wealthy is better than being rich. Striving to become wealthy should be your first goal. It doesn’t matter the size of your pay check, but you can start with the following steps.
Save 10-20% of your income every month
Saving a portion of your income every month is the first step to becoming wealthy. No matter how little you earn, make it a habit to save 10% to 20% every month. It may be little, but with time the amount will accumulate to a huge one.
You can automate such that the portion of your pay is directly deposited to your account. This is a simple way to save without even thinking about it.
Pay off your debts
Wealthy people live a debt free life. If you need to be wealthy, start by paying your debts. Pay them starting with the high interest debts in order to avoid the high interests amount that may have accumulated if the loan was not paid. Becoming debt free should be your priority.
Start to invest
Investing is the quickest way to grow your wealth. Find some areas to invest your money that can yield you more money. you can even put your savings in a high-yield saving account until you are ready to invest. Allow your money to work for you.
Avoid unnecessary expenses
Living within your means allows you to accumulate wealth. In fact, your expenses should be below your income so that you can invest and save the remaining income. That means you should be able to avoid impulse buying.
Always ensure you buy those things that you only need.
Have a long-term financial goal
Growing wealth is a long-term commitment. It does not happen overnight. You need keep your financial focus alive. It may take some years, but when you get there, life becomes easy for you. Even when things become tough remember your financial goals are a priority.
Becoming wealthy is a mindset. Having the right mindset pushes you to achieving your financial goals. Don’t forget to always save a portion of your income. Pay off your debts and then start to save and invest. Always focus on building your investments and assets.