What Is the Difference Between Rich and Wealthy?

the difference between rich and wealthy

I remember writing in my diary once at the age of 12 that I wished my family were rich so we could afford certain indulgences like a swimming pool. The 12-year-old version of me wanted so badly to have a chlorine-treated hole of water in our backyard and thought this would bring my middle-school-pre-adolescent-self happiness. I was wrong. I was also immature with little life experience. At the time, I saw rich and wealthy as the same concept, understandably so. People can see the clear difference between rich and poor but not between the two words that both seem to mean having an excessive amount of money. There are many varying opinions on these two terms, so what is the difference between rich and wealthy?

The Difference Between Rich and Wealthy

Although Merriam-Webster Dictionary lists rich and wealthy as synonymous, both have conceptually different meanings. You might be rich with a large sum of money in the bank, but it does not mean you are wealthy. However, if you are wealthy, you could also be rich. Why is this?

What It Actually Means to Be Wealthy

When you close your eyes and imagine someone who is rich, what comes to mind? Likely, you’re seeing something similar to what I see, which is a large beautiful home, a luxury vehicle (or two), a spa-like backyard, and an overall extravagant lifestyle. While this may be accurate, there is one thing we don’t know about this mystery person: their financial plan to maintain said lifestyle.

Being wealthy is more than just having a lot of money. In fact, the difference between rich and wealthy is fairly simple; it all comes down to mindset, knowledge, and resources.

Dandan Zhu, Headhunter, Career Coach, Investor, and Podcaster Daily DANDAN, explains in this May 23, 2017, Quora post that being wealthy is not about how much you make but rather the strategies you take to make more than what you spend. She states that wealthy people will fare well in the following categories:

  • Saving. It’s hard to build wealth if you spend every dime you make. Zhu uses Warren Buffet as an example, who still lives in the Omaha home he bought in 1958 for $31,500.
  • Income Generation. Never stay in place in your career if you want to be wealthy, even if you’re already making six figures. The wealthy are always looking for ways to advance and to add various sources of income to keep their finances healthy.
  • Learning. Knowledge is power, and Zhu adds that part of this is learning how to deal and handle life’s setbacks. The response to such is also part of what separates the rich from the wealthy.
  • Investing. Zhu suggests that due to inflation and taxes, making your money work for you (instead of the other way around) contributes to wealth. This does not have to be the stock market; it can be assets, real estate, retirement funds, and so on.

New York Times columnist Paul Sullivan wrote in his book, “The Thin Green Line: Money Secrets of the Super Wealthy,” that people are wealthy because they have created financial security for themselves. In other words, according to Sullivan, they are in complete control of their money.

In an interview with Jessica Khorsandi of DujourNews.com, he says, “Rich to me is a number. It’s a bank statement, a broker’s account, perhaps it’s a number associated with the value of your house or the price of your car, but it doesn’t give you any security. It doesn’t tell anymore about your level of comfort in life. As we saw in 2008-2009, those numbers weren’t always enough.”

If that’s not an eye-opener, I don’t know what is.


When you only focus on what you have rather than how to build stability, you’ll find you’ll lose yourself fast. Many celebrities and professional athletes, such as Allen Iverson, have made this mistake, getting caught up in the lifestyle and materialism rather than creating financial freedom for themselves. Now, instead of living the dream, these individuals are finding ways to pay for their once lavish lifestyles and debts.

Instead of trying to earn your first million, put your attention toward improving your net worth, creating multiple streams of revenue, and building strong savings for cases of emergency, other investments, and the like.

What are your thoughts? How do you define the difference between rich and wealthy? 

Retirement Planning: A cFIREsim Review


It’s never too early to start planning for retirement. In fact, the sooner you start planning the better. But, when retirement age feels light years away, it can be hard to be motivated to do so. Not to mention, how do you know how much you should contribute to a retirement fund? What will be best for you when you don’t have a current retirement budget? The internet is full of helpful retirement tools to assist, such as cFIREsim, which just might have the answers you need.

What is cFIREsim?

cFIREsim is a free web-based tool that stands for Crowdsourced Financial Independence and Early Retirement (FIRE) Simulator. It uses data from the last 146 years to simulate how your portfolio would stand the test of time. According to the cFIREsim website, it “uses historical stock/bond/gold/inflation data from 1871 to present, and calculates how your portfolio would have fared throughout history.”

To use the simulator, you will fill in few responses regarding your current retirement plan. From there, it mimics your financial future based on how well your portfolio did throughout some of the toughest times in history. Using this tool, you’ll be able to see whether or not you’re account will survive based on how much you want to take out during retirement. Once you’ve put in your information, you’ll be directed to a color-coded interactive graph, which will show your portfolio compared over time.

cfireism graph

cFIREsim Pros

There are no frills with cFIREsim; upon entering the site, you can immediately start entering your information. There is no copy to navigate through to get to the simulator. The entire site is essentially the simulation.

If unsure where to start, you’ll be able to reference the cFIREsim FAQ and tutorial, but you can start with the most basic information. This includes the year you plan to retire, the year you plan to live until,  your current retirement information, and how much you’d like to live off of per year. Thus, to get an idea of what your retirement will look like, you only need basic information to start. Although the more details you enter, the better idea you’ll have.

One of the biggest pros of cFIREsim is the fact that you do not have to create any kind of account to participate nor do you have to pay anything. The tool is completely free to for users.

cFIREsim Cons

Even though the site allows you to immediately get started with your retirement simulation, the fact that there is no introduction to the page makes it a little confusing. The layout can feel overwhelming if you did not read the tutorial first or know what type of information you should enter. The graph can also seem overwhelming, but it is simply showing you how well your retirement would have done back through 1871.

Accuracy can also be an issue due to the fact that taxes are not incorporated into the simulation as well as inflation rates calculated yearly. In addition, the forms do not appear to be updated, and their tutorial could also provide more details explaining the varying capabilities of cFIREsim, as there are quite a few beyond the basic retirement planner, the site claims.

Overall, when used as just a tool to provide an idea of how to plan for your future retirement, it can be useful.

What are your thoughts of cFIREsim? 

Business Practices that Translate Well to Personal Finances

seniors pay debtsFinances are finances. Whether you are a global corporation with assets in the billions of dollars or an itinerant busker living from gig to gig, the way you use the money you have is a comparable process. To make money, in business or personal life, using the assets you already have is the key.

Large corporations all started out with one person who was willing to invest his time to make money. There are no exceptions to this. No company started out fully built and funded, ready to take on even bigger challenges. Your personal life is similar.

Note: If you did start out with plenty of money and time, through inheritance or pure luck, this article could introduce you to some concepts that might have been skipped, like working for a living.

Investing time or money is still investing

Investments can be either time or money. When we work, we are investing our time in expectation of getting compensated for it. You clock in, do your job and get paid.  Businesses invest their money in expectation of being rewarded by making even more.

Successful businesses invest their assets wisely. They are constantly looking for the most efficient, least expensive way to make or sell a product to make them money. Look at Apple, for example. They don’t manufacture their iPhones in China to increase the standard of living in that country. They manufacture them there because it is much cheaper. The bottom line for Apple (and many other companies) is that keeping the cost of their products down means they have more profit in the company coffers.

Delayed gratification can reap benefits

By keeping costs down, you have more money to invest in your future. Working hard while young means that your quality of life should improve through your career. As we go from minimum wage jobs to careers that give us a living wage, maintaining a lower quality of living allows us to invest more money into our future.

Adapting that philosophy to your personal life means that you should look for the most cost-effective way to do everything. Balancing cost vs standard of living gives us reason to strive to succeed. It is cheaper to eat Ramen noodles than a Porterhouse steak, but our standard of living should eventually rise high enough where we can choose the steak.

Keeping your reputation pristine

A business that pays its bills slowly or sporadically gets a reputation. They have difficulty finding sources for stock and have trouble keeping employees. They have allowed the needs of the moment to override long-term advantages.

We see the same problem with people who get into trouble living above their means. A corporation may have a line of credit for account receivable that gets overdue, while a person may have overextended their credit, but the result is the same. In the short term, you will have trouble getting credit to cover your expenses and in the long term, you will have trouble buying the more expensive things – such as houses or cars – that most people cannot pay for out of pocket.

Protect your credit rating like your life depends on it. Having less-than-good credit makes it much more difficult to increase your quality of life when you reach the point where that becomes an overriding concern.

There are fundamental differences between people and corporations, but there is a great deal of overlap in the importance of fiscal discipline and wise investments. For most of us, the one thing we have to invest is our time. Unlike money, time is finite. Once you have used it, it’s gone with no way to get it back.