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I have a friend who calls me wealthy even while he sold his business last year, owns three homes and lives in the largest condo in our community. My wealth according to him is the result of having a pension.
Am I wealthy? I don’t look or act wealthy, I don’t dress like a wealthy person – whatever that may be? I don’t have a yacht and my once “luxury” car is now over ten years old and has a trade-in value of $6,000. Okay, so I do have two homes, the oldest purchased 37 years ago.,
I don’t like being referred to as wealthy, it makes me uncomfortable. Many people don’t like wealthy people. One of my granddaughters told me out of the blue she didn’t like millionaires. I asked her if she knew any millionaires and she said no. Phew!
There are several ways to gauge whether you’re wealthy, but that wealth is subjective and can be defined in different ways. When I think of wealth Musk, Bezos and friends come to mind, not the millionaires next door. Supposedly the are a bit over 18 million of the next door type in the US.
Many sports stars make my definition. So does Taylor Swift reportedly with a net worth of $1,6 billion outstripping Tiger Woods at $1.3 billion. Interestingly, very average people helped make them billionaires – probably a few living paycheck to paycheck.🤑
But you don’t need those stratospheric numbers to be wealthy.
When asked, Baby Boomers say it takes a net worth of $2.8 million. Generation Xers say $2.7 million. Millennials say $2.2 million to be wealthy. Generation Z is the lowest at $1.2 million. I guess the younger you are the lower your expectations.
In my view it takes more than net worth – especially illiquid assets – to be wealthy. It takes a high income, excess cash flow, the ability to give to charity and causes, to spend as you like and perhaps the ability to not work 9-5 even when not retired.
According to Forbes, the median net worth of all Americans is $176,000 but is you ignore home equity, it drops to $60,000. There are significant variations by location and age. By these measures I’m guessing nearly all HD readers are wealthy. Do you feel wealthy?
Would you rather be wealthy or rich? Yup, there is a difference. It seems being rich is having lots of stuff and spending freely. Being wealthy is long term financial stability with various types of investments. Wealthy people are planners with a sustainable perspective for the future.
Enjoy today or peace of mind forever seems to be the alternatives.
Connie would say we are not rich. We agonize over whether it’s cheaper to buy tissues at Costco or on Amazon.
Wealthy? I guess I have to go with the data, but it still makes me uncomfortable. Some part of me feels guilty.
These terms are relative. In my mind, to be wealthy accounts for your excess of assets over liabilities. I would not consider $1,000,000 net worth to be wealthy, because that is too common, lol! I would also suggest that wealth is a completely monetary/property representation.
Rich on the other hand can be many aspects of life, especially quality of life. This can be work, family, faith, and others. To be rich in these I would call success, regardless of wealth. You can also be rich in possessions which may be the most common connotation. In many cases people rich in possessions are also heavily in debt. IMO that doesn’t make them any less rich.
I’d rather be rich. But not in possessions, in faith, respect, and talent. It is a sense of satisfaction and success. Wealth on the other hand is a charge to protect and preserve and grow that wealth. As many might agree, that can be a stressful challenge!
Words often have a nuanced connotation that you may not always find in a dictionary. I’ve always felt that while being rich refers to having a lot of money, wealth has a more substantial meaning.
Regarding your last sentence, I have never once felt a modicum of guilt for the wealth I accumulated. I attribute it to perspicacity, prudence, perspiration and Providence.
What I do feel. Is extreme gratefulness to have been given all that I needed to accomplish my goals. I pray each day to be a good steward of my largesse. And I’m thankful to be able to give to those less fortunate.
This is what Morgen Housel says in his book, The Psychology of Money “:
Rich is a current income. Someone driving a $100,000 car is almost certainly rich, because even if they purchased the car with debt you need a certain level of income to afford the monthly payment. Same with those who live in big homes. It’s not hard to spot rich people. They often go out of their way to make themselves known. But wealth is hidden. It’s income not spent. Wealth is an option not yet taken to buy something later. Its value lies in offering you options, flexibility, and growth to one day purchase more stuff than you could right now.
Three observations on the question of rich vs. wealthy:
1) I’ve always thought the words “rich” and “wealthy” were interchangeable, but folks preferred “wealthy” because it sounds less crass.
2) Almost everybody considers themselves middle class, no matter how much or how little money they have.
3) Who are the rich? It’s the folks who have more money than you.
Middle class, yes, but everybody is above average.
Define rich and wealthy as you like. Here is what AI thinks.
While “rich” and “wealthy” are often used interchangeably, there is a subtle difference between the two:
In essence, being rich is about having a lot of money, while being wealthy is about having money that generates more money.
Given those definitions, if I’m either, I’d say “wealthy,” but not “rich.”
BUT it depends on what considers “visible wealth” (part of the “rich” definition you shared). We have a lovely condo that we bought new in 2019, but it’s not a huge, opulent house with a pool. We have two paid-off Audis (2018 and 2020), and they’re very nice cars, but there are more upscale luxury cars. We travel well, but I play the points-and-miles game, so it’s not as indulgent as it looks on the surface. I don’t spend a lot of money on clothes and rarely wear jewelry, but we go to concerts and live sporting events, which cost money.
In our college town and by our friend group’s standards, I’d say we’re in the upper-third, probably, in terms of “visible wealth.” But by a lot of other standards, including probably a lot of readers/authors in this group, I wouldn’t say we stand out.
From what you say I’d agree with you on your conclusion. Most wealthy people don’t stand out. The rich may make sure they do.
The other thing is how real are your friend’s group standards? How is it funded is the key and what wealth do they have for the future?
Can someone be both rich and wealthy?
This topic is like “beating a dead horse.”
A recent Wall Street Journal article reported that the financial industry uses the following net worth definitions:
—“mass affluent” — $100,000 to $1,000,000
—“affluent” or “high net worth” —- $1,000,000 to $10,000,000
—“ultra high net worth” —- above $10,000,000.
These ranges seem reasonable.
Rich and wealthy are synonymous terms, despite the efforts to differentiate them with non-monetary qualifiers for the word “wealthy.”
Quinn’s always “humble bragging”. Wealth or being rich has very little to do with money.
It’s just a topic for discussion on a blog that is about money. Not bragging or complaining. And yeah, sorry, but it does. Happiness and a good life, no.
This is nit-picking taken to extremes. Maybe Connie needs to find something useful for Dick to do. As far as I am concerned the words are interchangeable. Which one I use is determined by the rhythm of the sentence I’m writing.
Turns out I’m right. I looked up “rich” in the OED (Oxford English Dictionary). The definition starts out “(Of persons….) wealthy”. No separate definition for wealthy, but the definition of “wealth” starts “Welfare, prosperity, rich…” Online definitions match the OED.
You need to look further. I didn’t make it up.
Hi Richard,
I greatly enjoy your comments. I’m sure you must be wearied by the frequent, unwarranted attacks and misrepresentation by some on this site. I’m not related to anyone, I don’t know anyone, I’m not in any way affiliated with anyone so I’m hopefully being fair in my assessment of what I see after years of reading HD. I find your articles most helpful among all the ones posted. Still, you somehow get targeted for attacks. I don’t think it’s your smile or hair, though, but I might be wrong there :-). Brother, you have very thick skin! I’m not kidding when I say if somehow your comments were posted by Jonathan as his own people would warmly reply, resonate, and many times, agree. But alas, that’s not going to happen. I wish you best as you soldier on. Keep doing what you do so well. Consider me a big fan. Take care and best wishes to you and your family.
Not proofread or edited so forgive the errors. I hope this still makes sense.
Thanks. I was starting to worry I was getting a touch of paranoia. Sometimes it’s not easy being green.
By your definition I am wealthy.
You have written many similar articles. Why?
Most readers here probably have, as John Bogle would say, “Enough,” and they have the strength to be quiet about it. Most likely people use wealth and rich interchangeably. No need to be picky or to be challenged in the definition.
The numbers will constantly change upward for the Baby Boomers, Gen Xers, Millienals and Gen Z every year. Your 37 year old Cape Cod home is obviously worth more today than when you bought it and made improvements; and the value keeps going up. You have a 10 year old Mercedes…how much does it cost yearly to maintain it? Would it make sense to buy a new Benz?
How would you compare yourself to these unknown three until until they passed and they all left their fortune to charity?
Grace Groner – a secretary ($7 million at time death)
Ann Scheiber – an auditor for the IRS ($22 million at death)
Ronald Read – a janitor ($8 million at death)
As Capital One advertises “What’s In Your Wallet?”
It’s interesting you end your article about tissue (aka toilet paper). I won’t go there.
Well, not even close to compare with any of those, and by the way, expand your horizon. It is Kleenex Tissues we’re are talking about.
Ho-hum
How about using the word “comfortable” to describe where you are financially?
As long as it is coupled with “secure” for the long term.
I like that word, Winston. Descriptive but not braggadocious.
My financial ambition was to someday be able to self-describe as “safe” or “secure”… which I defined as never again suddenly waking up at 3am to worry about paying the bills.
Once I got there, everything else has been lagniappe.
I chortled when I saw this headline, wondering how there could be a less relevant topic for this page than a debate over two self-applied adjectives, and yet I see the comments pouring in.
Sorry, I just don’t get it.
It’s not about adjectives, it about reflecting on our current financial state and whether we have an accurate perspective relative to the majority of Americans. Maybe even if we appreciate that state we are in.
What don’t you get, the discussion and differences of opinion ?
I think the challenge of this kind of discussion is in its use of labels. Whether it is the term middle class, or rich, or comfortable, there is no general agreement about what these terms mean. So, there really no way for rational dialogue without beginning with a definition of terms.
And even if you rely on numbers such as from ” https://www2.census.gov/library/publications/2024/demo/p60-282.pdf” the impact of a given income level differs depending on where you live. Someone with a $250k household income in a low cost area can have a higher standard of living than someone in a high cost of living area.
So, you can’t just use income, you can’t use labels. Perhaps you need to use household wealth. I read somewhere that you need to have $6.9M of net worth to be in the top 10% of HHs. So, someone who lived in a high cost of living area might be in the top 10% of HHs by income, but far from the top 10% in wealth, and thus, they might not feel wealthy or even comfortable.
I will guess, that if you are paying IRMAA fees based on your income, and own two homes (free and clear) that you might actually be wealthy regardless of how you feel about it………Just saying…..
According to this website based on Federal Reserve data, $6.9M puts you in the top 3%.
Net Worth Percentile Calculator – United States (and Average)
The top 1% starts at $13.9M – I’ll bet alot of folks at that level don’t really consider themselves wealthy, but many folks below that level do.
For most people I suspect a rich/wealthy person is someone who has more money than they do.
Also, when the media talk about the wealthy – they usually mean billionaires. While we hear much about them, they really are outliers and distort most people’s thinking.
That said – I agree with your take the words don’t really mean alot here. Rich and wealthy are synonymous to me. I will say that I think a sign of financial maturity is understanding that income does not equal wealth, and that wealth is relative.
That said we do need some sort of objective measure – and net worth is probably the best.
I would never confess to being anything more than middle class. If pressed I will confess to “upper” middle class. There is tremendous resentment against the rich or wealthy in this country- unless you’re an entertainer or professional athlete. I’ve always thought that the definition of wealthy was being able to live your desired lifestyle without having to labor, i.e. off your passive income alone.
I wish Jonathan would comment on this topic.
I think he has higher priorities and better taste.
After reading Dick’s post and the comments so far, I’m still not sure of the difference between “rich” and “wealthy.” I know that I live modestly, in a small house with a mortgage and drive a modest car (2019 Kia Optima sedan). Living expenses are pretty low. But I can afford to give away as much as I want, to whom I want and I’m definitely rich in personal relationships and faith. So, am I rich, wealthy or comfortable? I don’t know, but most of the time I find myself not wanting more than I already have.
For Christmas our family does something called Elfster which randomly assigns pairs for gift giving with a few hundred dollars per person limit. We decided to do this a few years back as everyone in the family has a comfortable income and we decided a few gifts are better than many small gifts.
I guess I’m wealthy as I could not think of anything that I wanted so my requested “gift” was a donation to our town’ food pantry. Is it because I am not into possessions?
Or is it simply that I have enough?
I think it’s both, David. We haven’t worked out an Elfster system yet but the adults typically give one modest item-typically something consumable. My kids always want to give me something special but, like you, there’s very little or nothing I want. This year, I decided that it would be fun for my daughter and I to get our faces “done” and she can buy me some higher end makeup that will last me a few years. I don’t wear much and, like many other female HD readers I’m sure, I still have the Cover Girl and Maybelline habit from babysitting days. 😂
Rich is flaunting your money, likely from income, living for today. Wealthy is investing, for the future, sustained net worth and sufficient perhaps excess income from investments over time.
You are thinking of the nouveau riche, or possibly a certain TV program. The ordinary meaning of rich has no connotation of “flaunting”.
Chris Rock has a great bit on rich vs. wealthy, and explains it very well. (Strong language)
I am an HD reader. I have published only one article in HD. I do not feel I am wealthy or rich.
Is what you feel, what you are? What do the numbers say?
“We agonize over whether it’s cheaper to buy tissues at Costco or on Amazon.”
Since you can afford either without blinking an eye, but yet agonize over something like where to purchase tissues, I’d call you cheap! 😂
In this case it’s Connie, not me. I just want to avoid COSTCO or BJs at any cost.
“Wealthy? I guess I have to go with the data, but it still makes me uncomfortable. Some part of me feels guilty.”
Sounds like the good old Puritan ethic at work. I’m more interested in whether I’m “comfortable” than whether I’m rich or wealthy. Of course, these words are all slippery, and the definition varies according to the person making it.
But remember, your comfortable is someone else’s wealthy.
And someone else’s poor.
Isn’t wealthy a subset of rich, so you can’t be wealthy without being rich.
Actually I think it the other way around. You can be wealthy, buy not rich.
It depends, if we’re talking assets and available money, it’s a numerical idea, where rich is the bigger group and wealthy the smaller. (Think top 5% and top 1%)
If you’re thinking metaphorically, it can mean anything. When I’d see my son using a pencil or pen way past it’s lifespan, I’d remind him, son we’re rich in pencils, treat yourself to a new one.
This is a characteristic of the English language. We use adjectives like rich to mean abundance, wealth to mean lavish. So you can think about it however you want. What I’m not sure is useful is trying to create an intersection of the metaphorical and the numerical. They accomplish different things. (Sorta like a hammer and a saw)
Here we are talking 💲💲💲💲💲💲💲only
I never gave the difference any thought. I came across this on another website: The main difference between being rich and being wealthy is knowledge. Wealthy people know how to make money while rich people only have money. Having said that, I agree with comments by both Sal and GW below.
Wealthy is the ability to have time to spend doing things that make you happy. That’s basically it.
Truly, I can’t relate to either of these labels (and others such as, middle class, etc.). They serve me no purpose and I simply don’t care.
Am I comfortable? Yes. Do I enjoy adding more to the $ stockpile? Sure. The last few years have been a financial windfall for us, fortunately. Still not on any Forbe’s list. Could go the other way at any time (= less comfortable) but we’ve fortified our ability to stay comfortable longer should this occur. I’ve no desire for a second home, boat, luxury vehicle (in fact, I wish we could get down to one vehicle). We have enjoyed gifting to our four adult children at a level that would have been more difficult to do previously. There is much comfort and joy in that aspect.
Richard, forget about the $ labels. It’s not worth your time. Are you doing and does what you own make you happy? Have you helped to make others happy? If you’re enjoying the blessing of good health, you’re rich.
So true, but labels or not your and my accumulation of wealth is what allows us to live as described. You are protected against market changes, you gift to children as we do.
You are comfortable, and chances are you are wealthy, but from what you write, not rich.