Do you know the difference between being rich and being wealthy?

People have a tendency to interchange the words “rich” and “wealthy” in their everyday conversation, thinking that they mean the same thing.  However, there is a major difference between the two.  

Being rich

You are rich when you have a very large income.  CEO’s are generally considered rich.  The same goes for famous actors/actresses or singers.  Their monthly salaries are massive when compared to yours and they can buy pretty much whatever they want. But what happens when their income suddenly and dramatically stops coming in?  That’s where wealth comes in. There is a major difference between rich and wealthy. Share on X  

Being wealthy

Wealth is not calculated as an amount of money or assets but as an amount of time.  A person could say they’re rich to the tune of a whopping €1 million but the same person’s wealth might only be 1 or 2 months.  

Here’s how it works…

Let’s take as our example that millionaire.  They have €1 million in the bank but they also have monthly expenses totaling 500,000 per month.  Should their income stop coming in they will be broke within 2 months. Now if that same millionaire had decided that they would not live a life of excessive opulence their total monthly expenditure may be €2,000 per month.  If that was the case they would increase their wealth from a mere 2 months to a whopping 41.7 years. Wealth is determined by how long you can survive before your account runs dry if your income was to stop suddenly. How much money do you save each month?  How much do you spend each month?  Calculating your total expenditure is a lot more involved than you think.  Most people neglect to account for their parking fees or the 4 cappuccinos you drink every working day. If you don’t trust a bank to look after your savings (and you shouldn’t considering the large amount of personal and corporate savings that have vanished since the economic crash of 2008) then consider investing in property or precious metals. A word of warning:  your investments should be in tangible assets and never in a stock portfolio. If you invest in Gold or silver you should purchase the actual commodity and not shares, as 99% of shares in precious metals don’t have any real items to back them up. So… how wealthy are you?