Rich vs wealthy: which is better? Asking the experts

Is there a difference between being rich vs wealthy? What does it really mean to live a wealthy life?

If you ask different people from different backgrounds, you’ll get different answers. Is it as simple as having a certain amount of money, like one million dollars? 

In the Sitting Poolside interview series, I’ve been asking people about what wealth means in their own life, and I want to take a look at those answers specifically today. I also took to Twitter to see what the consensus is on the “rich vs. wealthy” debate. What does the personal finance blogging community have to say?

Twitter responds: rich vs wealthy

I polled Twitter and asked what comes to mind when you think of wealth. 

Does wealth mean having luxurious goods and experiences? Does wealth mean just having a certain large amount of money? Or is wealth actually the options and flexibility that having savings and investments unlocks?

rich vs wealth poll

74% of respondents said that when thinking of wealth, options and flexibility come to mind. 26% of respondents total answered either luxury (7%) the actual money (19%).

Daniella from iliketodabble says wealth is being able to do whatever she wants. “Rich in money is nothing compared to rich in options. But I guess there needs to be money there in order to have the options!”

Jessica from The Budget Savvy Bride says “Options and flexibility. I have a good amount of both in my life [though] currently, yet I don’t feel ‘wealthy’ (and by pretty much any standard, I am not even close to being wealthy.)”

Michael from Your Money Geek says “Actual Money = Options = Lego Voltron!”

michael ymg rich vs wealthy

Do your actions match the poll responses?

Michael makes a great point! Wealth unlocks options that include the ability to purchase some of the luxury goods and experiences that we tend to associate with being rich. 

But, of course, not everyone who drives a luxury car or has an expensive home is actually wealthy. They may be riddled with debt and financial stress. So, in my view, it’s critical to build the wealth first before spending on luxury.

Easier said than done, of course. 

In fact, a recent survey from Statista found that nearly half of US consumers (46%) estimated their debt to be more than $25,000. 14% owed more than $100,000.

We can argue if the US economic system is fair, and I think that’s a valid argument to make. Whether the system itself is fair or not, though, people are in debt because they’re buying things they can’t afford. Why? 

Is it as simple as not being able to afford something you need, like a car? I think that can be a factor, but even when buying a car, people often go into debt to buy a nicer car — because people care about others’ perception of them, and having a nice car is a signal that “I’m doing well and I have a good life.”

Outward appearances

When you think of being rich or wealthy, do you think of an outward  appearance of having money?

I talked with Jesse from the Best Interest blog about the rich vs wealthy debate. Jesse says, “‘Rich,’ to me, focuses on money, material, short timespans, and outward appearances.

‘Wealth,’ however, focuses on multiple resources—money being only one of them. Wealth is focused on free time and relationship building. A wealthy mindset looks long term, and looks within for satisfaction. 

The Venn diagrams of ‘wealthy’ and ‘rich,’ certainly overlap. But, to me, wealthy is a better place to be.”

I love Jesse’s response here. If you’re spending on luxury items just to maintain an outward appearance, that’s a dangerous place to be financially. 

Dave Ramsey has a relevant quote that I always enjoy — he says Americans are in debt because “We buy things we don’t need with money we don’t have to impress people we don’t like.” And I do it too sometimes! But that’s not a mindset that will lead you to be wealthy, even if it is effective at convincing your neighbors that you are rich.

Rich vs wealthy: financial bloggers describe what “wealth” means to them

Is “wealth” just reaching a certain income level?

In my Sitting Poolside interview with Mike Monfredi from Miked Up Blog, Mike shared that as a kid he used to view wealth as achieving a specific income level. For whatever reason, my concept of ‘wealthy’ at a young age was earning $100,000/year.”

Even into his early working years, income was a focus. 

“I knew that I needed to save money but I didn’t quite know where, or how. I knew of the few employment options available in my hometown but honestly felt helpless at the prospect of only those few options, none of which seemed to boast much potential. 

So I focused entirely on annual salary, ignorantly ignoring the multitude of ways I could put some savings to work for me (i.e. real estate, investing in the market, etc.). I felt that if I could earn 6-figures that all would be swell in the money department. But I ended up finding out later in life that more money doesn’t solve your financial woes — it just gives you new ones.”

Now, Mike views money differently. 

I’d say that ‘wealth’ to me means a healthy and growing net worth, while financial success is the ability to do the things you want to do in combination with growing your net worth, not in spite of it.

Is wealth a matter of living in a certain location or having a certain lifestyle?

Like Mike, in my interview with JJ from A Journey to FI, JJ shared that he used to define wealth as having a certain career situation — but it was more than just a specific income level target.

“This might sound silly to you but, as a little boy, the concept of wealth meant having a lot of US dollars and traveling to the United States for vacation. On a more serious note, it was defined as a deliverable of a plan that required the following:

  • Go to college, and more specifically engineering (high income),
  • Get a job in the Oil & Gas industry (high-paying jobs),
  • Get married,
  • Buy a house,
  • Have kids and,
  • Work until you can’t anymore.

Today, we see Financial Independence as the true definition of success. As a result, we live a more intentional life driven by specific goals.

Save, invest, and create sources of passive income to cover our monthly expenses. Simple and straightforward, but requires teamwork and alignment.

Our view around money was influenced by many sources of information: books, podcasts, and blogs; however, it was curiosity and a desire to take control of our finances what led to a major inflection point in our lives.”

Wealth as a level of freedom

In my interview with Jessica from The Budget Savvy Bride, Jessica described that while growing up she learned the value of limited money her family had.

“Growing up… the main thing I remember is knowing that we only had a limited amount of money and we had to spend it wisely. I guess that’s why I grew to be so savvy! I definitely knew my family wasn’t wealthy, and was pretty aware that many of my friends had much more than I did.

For me, it’s not so much about having a certain amount of money to feel ‘successful.’

I think I like to measure success more by my level of freedom, how much I am able to pursue my purpose, and the impact I am able to make. I don’t need a ton of money for all of those things to be true or to feel personally fulfilled.

That said, money certainly does give a person more options in all of those areas!”

Different childhoods, similar view of wealth

In my conversation with Sebastian and Tawnya from Money Saved Is Money Earned, they shared about their respective childhoods and how that has affected their view of rich vs wealthy in the present.

Tawnya shared, “Growing up I had most of what I wanted. On the other hand, I’ve always been one that didn’t want much. I’ve always been frugal and reluctant to spend, and when I do spend, I make sure I get what I want and keep it.

My family was very much focused on things and material possessions. While we did take vacations and do fun things, the focus was on working hard and saving for a better car, house, whatever.

As a kid it was easy to look at what people had as a measure of wealth but as an adult I now realize that looking purely at what others have is a false measure.

What changed that for me was learning about topics such as net worth, savings, etc., and realizing that many who have things have very little money to their name. I also experience the tendency to judge a book by its cover in my own life.

I drive an old beater Camry and people make all sorts of assumptions about me because of it. They have no idea I have a house, no consumer debt, and the savings/investments I do.”

Sebastian says, “I believe that we all need money to live, but if we just live for money life can lead you into many unhappy and unhealthy consequences. I had the luxury of growing up with virtually no money or conveniences of life. It gives a different perspective to me about wealth.

However, safeguarding my hard earned income is the number one priority. I would say everyone should try managing their wealth meaningfully.”

Wealth as a life of luxury

Todd, Invested Wallet

When I talked with Todd from Invested Wallet, he shared that he used to view life as having access to luxurious experiences and goods. 

“Growing up, I viewed wealth as having the nice fancy cars, traveling on a private jet, and basically doing whatever you wanted at any time. Being in a middle class family, that’s really what being wealthy and rich meant to me at that time.”

I want to jump in here to note that, growing up, Todd felt that rich vs wealthy were interchangeable. 

“Now, I view being wealthy somewhat different. Sure, being able to buy anything and travel often still holds true. But to be wealthy means you have the freedom to live the way you want, you aren’t stressed about money, money works for you, and you can choose to work or not. The fancy cars, big mansions, etc. is not always a clear sign of wealth.

I think the book The Millionaire Next Door was key to opening my eyes a bit further. I also think just getting older and learning more about money started to shape my mindset a bit differently as well.”

Jakob, Wealthy Whisper

In my conversation with Jakob from Wealthy Whisper, he shared a similar evolution in perspective in the rich vs wealthy debate.

“Growing up, I thought to be wealthy and rich were the same thing. Reading a lot of financial books has helped me to realize that they are entirely different.

Wealth is built through assets and is not something that you ‘spend.’ Some incredibly wealthy people drive average cars and live in ordinary houses. However, they will never have financial stress or have to work for the rest of their lives. To me, this is the ultimate goal.

Some people seem ‘rich’ but are buried in debt. This is why I think wealth completes your life while being rich, fulfills other people’s thoughts of your life.

mansion rich vs wealthy
Do you view being rich as living a life of luxury?

Wealth is having options on how to spend your time

Time and flexibility were major themes in the Sitting Poolside interview responses. Here are a few different perspectives on wealth in relation to those concepts.

Tom from This Online World

During my interview with Tom from This Online World, freedom of how to spend time was a major theme. 

Tom explained, “I was fortunate to grow up with a parent who works as a financial planner, so I was taught basic personal finance concepts and how to invest from a relatively young age. 

Funnily enough, I also played a lot of strategy-based video games set in the Medieval era as a child, and there’s something about taxing your peasant population into the ground and fighting over silk trade roads that probably influences the developing brain a tad.

Like most kids, however, I don’t think I truly understood the value of money and time to the extent that I do now.

My perspective of wealth has changed since I started working because I now realize that wealth encompasses more than the numbers in your bank account…wealth is knowledge, health, time, and freedom.

Other factors have contributed as well. I think I am scared of aging if I’m honest, or having other people around me grow old. While I am immensely grateful for my health and the health of my immediate circle, the thought still unnerves me. Part of the reason I want to work remotely and acquire more time/freedom is to try to live a more fulfilling life and to also spend more time with people I care about.”

Myles Wakeham from beUnconstrained

In my interview with Myles Wakeham from beUnconstrained, he shared that growing up, wealth meant “To have the choice on how to spend my time. That I wasn’t a subject to a government, corporation, or a boss. I am not a great team player in that regard. I am an only child and that pretty much told me that I need to make my own wealth in whatever form I can.

I am lucky enough to be sensitive to detecting opportunities and I was never really interested in putting a dollar value on wealth — I just knew that if I could be presented with access to the world, I could make it what I wanted it to be.”

Now, Myles says “I now have my freedom to choose what to do, but I refused to use the word ‘retire’ because I never expected to stop doing what I was doing when I was 15 years old — enjoying the challenge of life, business, and trying to seek out the truth.

Wealth is letting your money work for you

M from Radical FIRE

In my Sitting Poolside dialogue with M from Radical FIRE, we talked about how time is more valuable than money because it is scarce

M explained, There are people who are earning a great deal of money, but they’re not wealthy or rich because they spend all their money on stuff. The big change in my view came from Rich Dad Poor Dad, where I learned that it is not how much money you make but how much money you keep

After that, I learned that you should give your money a job to do. Up until then, I would just save money and let it sit in my bank account. Now I’m letting my money work for me through investing in the stock market, peer-to-peer lending, and investing in cryptocurrencies.

First wealth was just time, but now I’ve realized that time is more important than money. People who are rich are working 80 hours per week and earning a lot of money. People who are wealthy are working 10-20 hours per week and earning the same amount of money.”

Cashflow Cop

When I talked with Cashflow Cop, he talked about the effect that his childhood — and now his own children — have had on his view of wealth.

“Growing up, we used to live in public housing so my concept of wealth as a child was simply anyone who had their own home. I remember being driven around our town when younger to get to school and we would drive through some of these ‘nicer’ neighbourhoods where houses had actual driveways.

I thought to myself, these people are rich.

Little did I know that these houses were just standard really, but compared to what I was used to, they could have been mansions. As a result, I connected owning a home as being wealthy. I don’t think ‘wealth’ was in my vocabulary back then, but I would have considered ‘rich’ and ‘wealth’ to be the same thing.”

Compare that to his view of wealth now.

“The concept of wealth is being in the financial position to live the life I want and to be able to share this with those closest to me.

My views of wealth and financial success has changed over time, but the biggest influence has been the birth of our first child. I remember returning home from work and just feeling exhausted. I didn’t have the energy or focus to be present with my wife, let alone our son.

It was then that I realised FI was not about our net-worth. It was what our net-worth represented. It was the currency of time. Once I’ve earned enough, I could trade in out net-worth to have more time with my family and be happy together. That, to me, is success.”

rich vs wealthy children
Do children or other people close to you change how you view being rich vs wealthy?

Rich vs wealthy: key takeaways

From the answers above, there were several themes through multiple answers:

  • Freedom of action — being able to do what you want, while also growing your net worth
    • Get your money working for you, so you’re not just trading your time directly for money
  • Freedom of how to spend your time — time is more valuable than money
  • Don’t get caught up in debt or compare yourself to others so you can look or feel rich

What steps should you take to actually become wealthy?

A few of my past interviews have led to discussing the actual wealth-building process. Here are some of the best quotes on actually becoming wealthy.

Invest and don’t be afraid to take measured risks

When I talked with Bob from The Frugal Fellow, he said, “If you’ve ever heard ‘invest early and often,’ there’s a reason for it. Investing can get complicated, but the short version is total-market index funds. Invest as much in them as early as you can. The unfortunate thing is most of us make less early on. Regardless, invest as much as possible. This will allow your investments to grow and compound.

Also, don’t be afraid to be different. In other words, don’t ‘keep up with the Joneses.’

And, lastly, you might have to take a leap somewhere along the line. This is especially true if you are retiring without being FI. Yes, it might be a bit risky and it might be scary. That’s why I would never do it without at least some savings. That way, you have a buffer. Plus, you can always go back to the 9-5 if absolutely necessary. However, if you want it badly enough, I honestly believe you’ll find a way to make it work.

Learn more than you think you need to know about investing

In my interview with Micah from Deep Value ETF Accumulator, Micah shared, “My advice to those who are on the path to semi-retirement or early retirement is to get out of all consumer debt and then invest a significant amount of your income.

Additionally, I recommend learning more than you think you need to know about investing. This is true even if you plan to hire a financial advisor or fund manager.

For example, if you were going to be a real estate investor, you would want to know all you can about real estate, even if you were going to hire a realtor and property manager do most of the work for you. As an equity or bond investor, it is in your best interest to know a great deal about equities and bonds even if you have a financial advisor on your team.”

Practice “stealth wealth”

When I asked Jerry from Peerless Money Mentor about the best advice he’s ever received, he said:

Practice stealth wealth.  My father used to always encourage me to spend my money wisely growing up. He practiced what he preached by not purchasing brand new cars or name brand clothing.

As a teenager, this advice went into one ear and out the other. I wanted to impress my peers and fit in, so I purchased a lot of brand name items and a brand new car.

Those purchases landed me in the not so secret group Broke Phi Broke. 

While there is nothing wrong with purchasing quality clothing or new cars if you can afford them, one shouldn’t go broke trying to keep up with their peers.

Be mindful about the people you surround yourself with

When I talked with Josh from Money Life Wax, he shared some great advice, too.

Hands down the biggest influence has been surrounding myself with people going somewhere in life! When you get around people who are wealth focused, you will learn a ton!”

Who you choose to spend time with will affect what you value and think about. This can have a huge influence on your life.

Avoid an excess mindset — at some point, more is not always better

Chris from Money Stir

Chris from Money Stir shared some of my favorite wealth advice I’ve ever seen.

“For me, getting to a spot where our money is earning more money will help us further de-emphasize the focus on money in our lives.

To me, the more you can get to a spot where you don’t have to worry about money, the more freedom you have to focus on what matters most. I love my job, but this is not something I would do for 40+ hours per week if I could do anything with my time.

Most of it comes back to me realizing that time is one of the most valuable things I have. And the main power with money comes from its ability to free up our time.

Looking at how most people spend money, even when they make a lot, the primary emphasis becomes on excess. Having a massive house with space you don’t use, brand new vehicles, and other toys that make you look good. Sure, some of these things might be worth having if you can afford them, but the idea that more is always better is not true.

The only things I want to have an excess of are joy and peace. These things are invaluable and worth more than anything massive amounts of money can buy. This is has become my mantra in why I’m pursuing financial independence.”

Kevin from Just Start Investing

When I talked with Kevin from Just Start Investing, he said he had a similar realization about rich vs wealthy.

Throughout college, my concept of wealth shifted from ‘I want as much money as possible’ to ‘I want enough money to do the things that make me happy.’ I still majored in business which was a great choice for me, but my mindset just shifted slightly.”

That mindset shift is huge.

Do you know what “enough” looks like in your life?

Are there non-financial areas of your life where you already have “enough” but you’re not fully appreciating it?

Wealth gives you options

I asked Jeff from Kickass Entrepreneur how wealth has affected his life.

Jeff shares, “I’ve been very fortunate in my life where I have reached a financial position that I could only have ever imagined even just a few years ago. I sold my business and managed to semi-retire at 49, and now spend my time writing, and managing my real estate and investment portfolio.

Having wealth has given me freedom. Freedom to make choices in all regards to my life, whether it’s economic, or, most importantly, time.”

What’s your view on rich vs wealthy?

What’s your final opinion on rich vs wealthy? Is one more virtuous or empowering than the other? Share your biggest takeaways in the comments below!