Is there a difference between rich and wealthy? Not by definition. According to the oxford dictionary, the definition of rich is having a lot of money or property. As one might guess, the definition of wealthy is the same.
Rich and wealthy both indicate an abundance of valuable material possessions.
Search for a synonym for rich, and you’ll find the word wealthy. Search for a synonym for wealthy, and you’ll find the word rich.
We use the words rich and wealthy interchangeably, but are there subtle differences between the two?
The difference between rich and wealthy is semantic. We know the definitions of the words are the same, so why do we interpret them differently?
Rich vs Wealthy
We hear terms like filthy rich or stinking rich, but we don’t say filthy wealthy or stinking wealthy.
When you hear the name Paris Hilton the word rich may come to mind. When you think of Warren Buffet, the word wealthy might pop up.
Good, old Warren Buffet wants to better the world with his money, while Paris Hilton wants to spend hers on designer dresses and overpriced champagne.
While the definition of the words is identical according to most standard dictionaries, we think of the words differently.
In social circles, it’s much more acceptable to say someone is wealthy than rich these days.
The Difference Between Rich and Wealthy
How else are the terms rich and wealthy different? Rich may refer to the amount of money and assets you own. While wealth refers to how that money grows and how it makes you feel.
Is a millionaire rich? According to net worth, most definitely.
Does that millionaire feel wealthy? It depends on the breakdown of their assets and expenses.
Let’s imagine this millionaire owns an expensive home. They chose to live mortgage-free by paying their house off early, but they don’t have a lot of other income-producing assets.
Overall, their net worth is significant, but their net worth excluding home equity pales in comparison. They can’t easily tap the equity in their house, which means they don’t have much money to spend on day-to-day expenses.
Does this millionaire feel wealthy? Probably not, and they definitely won’t if they have hefty expenses like childcare, student loans, or medical debt.
A millionaire with low expenses and more money in income-producing assets like stocks, bonds, mutual funds, or real estate will feel infinitely wealthier.
Similarly, an individual with less money may feel wealthier if their expenses are low.
Is Wealthy More Than Rich?
I associate the word rich with dollar amounts. If you’re a millionaire, you’re rich in my mind. Considering the average American family’s net worth is less than $300,000, it’s obvious I think a million dollars is a lot of money.
But will $1,000,000 make you wealthy? Not necessarily; it depends on how you invest that money and how much you spend each month to pay your bills.
Being wealthy is about more than having money in the bank. It’s about having assets that continue to build and grow without excessive amounts of work or effort.
A rich person and a wealthy person may have the same number of assets, but the distribution of those assets may be different.
A rich person may have the same amount of money in the bank, but a wealthy person watches their money grow.
Rich vs Wealthy: It’s Not About Income
Remember, the definition of rich is an abundance of valuable material possessions, which means you aren’t rich just because you earn a lot of money.
Spending your money on extravagant trips and pricey possessions doesn’t make you rich or wealthy either. The resale value for previously purchased items is low.
Any way you look at it, rich people and wealthy people both have a lot of money. The amount of money you earn has no bearing on the definition unless you use that money to buy real estate, businesses, or financial assets that continue to grow.
You cannot be in debt and be rich at the same time. A person’s assets must outweigh their liabilities.
Wealthy Beyond Money
To achieve financial independence, I focused on accumulating assets. But, despite growing my nest egg, I didn’t feel wealthy until I calculated how long I could pay my bills without earning another paycheck.
I know the definitions of rich and wealthy are the same, but in my mind, I felt rich when I reached a specific dollar amount and wealthy when my mindset around my financial situation changed.
Before that day arrived, I struggled to spend money on myself without feeling guilty about it. I held on to dysfunctional money blocks and prevented myself from feeling the joy of my accomplishments.
The Emotional Difference Between Rich and Wealthy
Wealth is a reward that comes after saving. According to net worth statistics, I might’ve been rich, but emotional hurdles prevented me from feeling wealthy for a while.
True wealth arrives when you stop focusing on money or worrying about your bills.
With your mind freed from the emotional toils of earning and saving, you are free to explore all of the other ways you are wealthy in this world.
Rich and Wealthy Beyond Money
When you hear the words rich and wealthy, your brain may think about money, but the terms do not always refer to financial assets.
A flower might be rich in color. Fruit may be rich in anti-oxidants. A tour may be rich in history.
Remember that true wealth and the richness of our lives extend well beyond money.
I only wish I had recognized that fact earlier in my financial journey.