Many strive for riches, but is that the ideal path to take? IOL Wealth writer Kaymery Swart digs deep.
Is being wealthy different than being rich?
The simple answer, according to the experts, is a resounding yes.
Often, people use the words “rich” and “wealthy” as though they have the same meaning, when, in fact, they are distinctly different.
There is a difference between the two: The rich have lots of money but the wealthy don’t worry about money.
- Robert Kiyosaki, author of Rich Dad, Poor Dad
In terms of economic status, wealth has the upper hand, says Kiyosaki.
Being rich boils down to how much money you have in your bank account.
Simply, earning a high income and possessing money in high quantities - basically being loaded - makes you rich. Your money is easily accessible and, if you want, you can make a quick withdrawal at an ATM.
With riches, however, comes debt - these two are thick as thieves and as riches enter your life, debt will successfully creep its way into the mix. Unfortunately, this is the case for many.
Take celebrities - the “rich and famous” - as an example. Celebrities are rich, although this doesn’t mean they are necessarily wealthy as we have seen with many filing for bankruptcy because of debt they have been piling up.
The reason? Being rich is a lifestyle. This lifestyle includes the best cars, fancy homes, and lavish spending - a place where expenses and income meet, or where expenses way exceed income.
Wealth is the core trait of being rich, with a thick sprinkling of a sense of security that distinguishes it from riches.
People who are wealthy do not have to work. There is no need for it. All their current and future needs and wants are met, explains Kiyosaki.
This does not mean they have a stack of money hidden away somewhere that will never run out. Instead, wealth is measured by assets and passive income.
A wealthy person will probably have investments and assets such as property with the purpose of income generation via passive income. A wealthy person will not always have a lot of money and there are many examples where rich person have more money than wealthy people.
Another question that people may have is “old money (generational wealth) vs new money (became rich not so long ago)”.
Being rich is new money - so not inherited.
The mistake some rich people make is not thinking about accumulation of wealth and they resort to getting into debt.
To truly secure your future and that of your future family, think about amassing wealth. Invest money in assets, not doughnuts, so to speak.
Wealth offers security in contrast to riches that offer temporary financial stability. I know which one I want.