Why being wealthy is different (and better) than being rich

There are a number of definitions of wealth.

True wealth is not how many properties you own or how much money you have, but what you are left with when they take all your money away — your health, your family, your friends, your spirituality, and your contribution to society.

Yet another definition of wealth is your time freedom.

The difference between being wealthy and being rich

Here’s the thing: Being rich doesn’t mean that you’re wealthy.

In fact, according to Robert Kiyosaki, the rich may have a lot of money but they generally have to work hard to earn it and many spend most of it, too. 

The wealthy, on the other hand, have enough money without working to cover all of their expenses.

Usually, they have worked hard to get to that point through business ventures or property investment success.

The difference is they don’t worry about money, whereas the rich do because they generally spend most of what they earn and don’t quarantine enough of their cash flow to invest in income-producing assets.

Kiyosaki believes that the definition of wealth is how long you can financially survive without physically working and still maintaining your standard of living.

Let’s say your monthly expenses are $7,000 and you have $30,000 in savings – your wealth is therefore about 4.2 months or about 128 days.

So, wealth is measured in time, not dollars.

How do you become wealthy?

At the end of the day, lots of people can become rich. 

They are smart and have professional jobs, but they also don’t have the financial literacy to make their money work harder for them.

Every time they get a pay rise or a promotion, instead of investing their windfall in assets, they buy a new car or a bigger house.

Before they know it, their expenses have risen up to meet their new incomes – which will likely continue to happen throughout their working lives.

The wealthy do the opposite.

They ensure they are always investing a proportion of their income in some way – whether it’s in real estate or shares.

They have also done the required research or gathered a team of professionals around them, to ensure that their investments are the very best ones for their financial goals of one day becoming one of the wealthy.

They also don’t want to spend their lives chasing their tails because their income disappears as fast as they earn it.

They’d rather that their money works for them than the other way around.

Note: If you think about it...the rich are really poor because all they have is money.

On the other hand, the wealthy have a lot more than just money.

having said that...any problem money can solve isn't really a problem, so why not set yourself up for more of it?

However, only a small percentage of Australians ever become self-funded retirees because they are the few who had the financial intelligence to invest wisely during their working lives.

The rest have likely spent the income from their peak earning years on the latest mod cons, exotic overseas holidays, and flash cars because they don’t know the difference between being rich and being wealthy.

And nowhere is that more apparent than when they’re approaching their twilight years and they realise that they have very little show for the millions of dollars they made during their lifetimes.

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.