Rich vs. Wealthy
I explain my core belief about money to my friends this way: there is a great disparity between being rich and being wealthy. A rich person receives his or her paycheck and says, “I’m rich!” The money is completely gone before the next check rolls around, or in many cases it was gone before that check ever came in.
This same person gets a pay raise and exclaims gladly “Now I am even more rich!” The increase in cash flow, in the ‘rich’ person’s mind, is equivalent to an increase in their day-to-day means – what they can spend. The extra income is used to buy more expensive versions of the same things this person used to buy with less money, and/or to purchase unnecessary trinkets and luxury items. As they collect paycheck after paycheck, the money goes out the door just as quickly as it comes in. This is the never-ending cycle of the “rich” person.
Now, let’s talk a little about wealthy people.
The wealthy person receives his or her pay, and thinks “This is good. I need money to live. Now, what is it, exactly, that I need?” After making the necessary arrangements to have their needs met, the remaining money is invested, saved, or used to purchase things that will benefit the wealthy person and/or move him closer to his future goals and pursuits.
When the wealthy person receives a raise in pay, the extra money is just more to sock away or use otherwise to increase the value of that person’s life.
So in the simplest terms, the rich person lives at or above his means, while the wealthy person lives below them.
Whether you have a single source of income, or multiple income streams, the ability to handle your finances is the difference between being a rich person and being a wealthy person. Which type of person are you?
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