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Richness and wealth, though sounds similar, are different. You can be rich but not wealthy. But if you are wealthy, you can definitely become rich. 

Confused? 

Well, don’t be. Consider the case of the megastar Amitabh Bachchan. Do you consider him rich and wealthy? Well, the stars were not aligned for the star a couple of decades ago. His company ABCL went broke and filed for bankruptcy. The star was burdened with a debt of Rs.90 crores * forcing him to pledge his bungalow as a mortgage. In his own words – ‘In the year 2000, when the entire world was celebrating the new century, I was celebrating my disastrous fortune.’ 

Then came KBC and the star’s fortunes changed. But can we all bet on our good fortunes too?

Rich v/s Wealthy – the concepts

Being rich means having a high source of income. The uber-rich spend more and maintain a lavish lifestyle. Luxury cars, spacious villas, weekend homes, international trips, you name it and the rich would flaunt it. Thanks to the craze of social media and the need to get social approval, the need for a lavish lifestyle is predominant. 

On the other hand, the wealthy are those who have their finances in control. They have sufficient incomes to take care of their expenses. They boast of a considerable portfolio which not only helps them meet their financial goals but also spares them funds to indulge in. The wealthy try and minimise their liabilities all the while building their asset portfolio. 

Rich v/s Wealthy – the difference

What is the conceptional difference?

While the conventional dictionary will list both with the same set of synonyms, from an investment perspective there is a difference. 
Being rich essentially means being able to afford a certain lifestyle. Being wealthy on the other hand, is subtle, they may not have a fancy lifestyle, but their net worth speaks volumes about the meticulous way in which they have handled their money.

Remember, being wealthy is a mindset. So, even if you cannot afford a certain lifestyle, you can not be rich, but if you are planning for a better future, you can still be wealthy!

The difference in ideologies

Being rich is an idea that many pursue by splurging on luxuries. Being wealthy, on the other hand, is a reality that can be attained only through proper financial management.

For example: Do you fall back on your credit card to fund your lifestyle? Or take a loan to buy <read splurge> which may be otherwise postponed? This is a “rich” mentality and not really a wealthy one… 

A wealthy person would have enough funds to meet his financial requirements today and be well-planned for the future. 

Wealthy people are more worried about “credit score” than spending money so that they can avail debt anytime and at a competent rate. 

The difference in mindset

Rich people are often myopic, they want to stay in trend and live a life that appeals to them as of today. They may spend humongous amounts on short-lived pleasures such as designer clothes, fashion jewellery, fancy cars, etc. 

Boris Becker, the six-time Grand Slam title along with Career Grand Slam winner, filed for bankruptcy because of his rich lifestyle. On the other hand, Warren Buffet made 99.72% * of his wealth after the age of 52 … solely because of his prudent investing habits. 

Life is all about building net worth over the long haul. Making your money work for you and ensuring that your financial corpus is built effectively is far more liberating than driving a fancy car and being able to dine at very high-end restaurants. You should also aspire to reduce your debt as your approach retirement, this is the only way to financial freedom. 

Difference in attitude

Wealthy people manage their finances effectively. Wealth is not just about the quantum of funds you have built but is about effectively investing them to ensure that your financial goals in the future are taken care of without any hassle. Being wealthy in a sense is about being financially stress-free and being about to achieve your financial goals such as buying a house, children education, etc. efficiently with minimal debt or no debt. 

On the other hand, the rich live for the moment without planning for the future. 

Understand the fact that time is a critical factor in building a corpus. And plan for the future keeping inflation in mind. This is a classic wealthy outlook!

Rich v/s Wealthy – what should you aspire for?

Nobody asks you how much you earn. Your lifestyle says that for you. While the pull of instant gratification or social media likes might make you reckless with your money, caution is advised. Take control of your finances. 

Robert Kiyosaki, in his book Rich Dad, Poor Dad said ‘Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep’. This is, in effect, the essence of the difference between rich and wealthy. How much money you earn might make you rich but how much you keep would make you wealthy.

So, aim for being wealthy. Save and invest your income in fruitful avenues so that your money works for you. When you pursue the reality of being wealthy, richness would consequently follow.