Rich vs Wealthy: The Incredible Difference Between Them

Being rich and being wealthy are two very different things that are often mistakenly confused for being one and the same. The words are used interchangeably in conversation when referring to someone having lots of money. But the two words have one very important difference. 

When you understand the difference between riches and wealth, you will unlock the fast-track to achieving financial freedom and living a fulfilled life. 

Read on to learn the (not so) secret, subtle difference between being rich and being wealthy. 

The definition of being rich and being wealthy

The definition of being rich is having lots of money. Obviously. Rich people have lots of material “rich people things” too; designer clothes, fancy cars, a couple of mansions. 

Actors are rich. Movie stars are rich. Professional athletes who buy $10,000 glass animal sculptures are rich. You get the picture. 

Wealthy people often have a lot of money too. However, here’s where the subtle difference plays in. 

Wealthy people may or may not have all the material possessions that rich people have. They might not even appear to be wealthy on the outside. What wealthy people do have, however, is time. 

Being rich and having time don’t often go hand in hand. And THAT is where the difference lies. 

The difference between being rich and being wealthy 

The difference is subtle. Many people gloss over it. But being wealthy is a step up from being rich when you really look at it.

When you are rich, you have money. When you are wealthy, you have money and time and more often than not, financial security. 

All wealthy people are rich (to an extent,) but not all rich people are wealthy. 

Level 1: Getting rich in the first place 

Before you can be considered wealthy, you must get “rich.” Most of the time, people are not born rich. They’re not born with 6 figures in their bank account or their own private island. Getting rich and making money requires time and effort and hard work, going through school and higher education, getting a good job and working your way up to the top. 

Of course, there are other paths you can take to richness. Maybe you’re born with a special gift of being able to run faster than anyone you know. Maybe you win the lottery or are indeed born into riches. 

However, unless you’ve fallen into richness, the only way for you to get more money is to trade your time for it. Time = money, right? You work long hours and spend most of your waking time and energy focused on making money. 

With the money you make, you spend it on material things that require even more time and money. A new car, house, or helicopter might seem like they’re buying you freedom, but actually they’re draining your time and money. They are liabilities. Soon enough, you become addicted to buying things to satisfy your cravings. 

You are rich, but you are dependent on your income level to keep living your luxury lifestyle. 

Before you know it, you’re stuck in a hamster-wheel of spending time to make money to buy things that requires you to spend more time to make more money to buy more things. 

It’s a never-ending loop. 

Level 2: Using your riches to build wealth 

As Robert Kiyosaki, author of the bestselling book ‘Rich Dad Poor Dad’ says: 

Wealth is measured in time, not in dollars

Taking time to build your wealth and plan for your future ultimately gives you more free time – unlike building your empire of riches which drains you of your time. 

Here’s the catch: few people get rich overnight, but nobody ever gets wealthy by accident. 

Building wealth requires careful planning, self-discipline, and turning your back on the norms of society. You have to break through the rat race in pursuit of riches and plan for a life of wealth instead. 

This simple change puts many rich people off completely.  

How to build wealth successfully

So how do you break free and build wealth? 

It’s actually pretty simple. You take your income (which most rich people would spend on fleeting material possessions) and invest it. 

By investing your income, your money will start working for you to make more money, without you having to do anything more than investing the surplus and refraining from buying unnecessary junk.

This way, you are essentially buying yourself more time and building a security fortress of wealth around you. 

As any busy person will know, you can always get back money, but you can never get back your time. 

Wealthy people give themselves more time and options. Rich people give themselves less time and take away their options.

You get punished for being rich - but you get rewarded for being wealthy

In the US, you are taxed by the government based on your income. That means the richer you are the more money you pay in taxes. A large chunk of your hard-earned money is taxed, and the richest can pay up to 37% of their income in taxes! 

On the other hand, if you’re wealthy, your wealth is taxed 0%. 

Any interest you receive on your wealth is not taxed more than 20%, regardless of how much wealth you have accumulated. If your wealth lies in your real estate investments, the property tax rate is even less. 

That means that no matter how wealthy you are, you don’t get punished for accumulating more money – unlike someone who is rich and accumulating riches. 

When it comes to taxes, being rich loses you money, whereas being wealthy gains you money. 

Conclusion

By now, I hope you understand the difference between riches and wealth, and the advantages of being wealthy over being rich. 

On the road to financial freedom, wealth is the way to go. It requires careful planning, breaking free from society’s norms, and being disciplined in your spending habits. 

At the end of the day, wealth pays off. Riches don't.