Is there a difference between being rich and being wealthy? Everyone will have a different definition of this if you ask. I remember the comedian, Chris Rock, saying that professional athletes are rich and the people who own the teams are wealthy. I guess that’s one way to look at it. Let me tell you how I define these terms. When I hear about professional athletes making a lot of money, I think gosh—that guy is rich…he makes 10 million bucks a year. That’s a lot of money. Mike Tyson, the boxer who bit off Evander Holyfield’s ear, had huge payouts in the nineties. He WAS rich back then. He went broke a few years later. This is actually the story of a number of athletes. They were paid a lot of money, and for a period of time, they were quite rich. However, they made bad investments (or none), spent all their money and now they aren’t rich anymore.
On the other hand, there is the real estate owner who makes a million dollars per year in passive income from properties. He doesn’t have to show up to work. The property manager takes care of things and sends him a summary of activities at the end of the month showing how much money he made. I would say that this guy is rich too, but he is also wealthy. He does not have to show up to work in order to make money. Many of the doctors and lawyers that I know do pretty well, and some of us might even be considered rich. But, few of us are truly wealthy. That is, if we don’t go to work, we will eventually run out of money. We are no different from anyone else who has to work for a living. If you work long enough with a nice salary and put away a good chunk of money toward retirement, you’re still not wealthy. Your savings are finite. If they are used without replenishing, they will be used up over time. On the other hand, someone who has built a substantial amount of passive income will never run out of money. A wealthy person is a person who no longer has to show up to work for a living to maintain a given lifestyle. There is no correlation to “showing up” and “getting paid”. If you can maintain the lifestyle that you want and not show up for a job, you are wealthy.
Let’s look at this in a slightly different way. Most of the time, we think of money as the commodity for which we work. After all, it is the money we get for our hard work that makes us secure in our own minds. I’m suggesting that you start looking at TIME as the true prize. After all, if we spend our money, we can make more of it. However, once we spend our time, it’s gone forever. When you are wealthy, your time is your own. You can spend it in any way that you want. If that means you keep working your day job, great! At least you know it’s your own choice to do so.
So, if you have created passive income of 200K per year, you might not be rich, but you are likely wealthy. That is, you make enough money that you could probably pay the bills and live a pretty comfortable life if you never showed up for a “job” again. I’d rather be wealthy than rich any day. How about you? What are you doing to become wealthy? If you think that becoming wealthy is out of your reach, you are wrong. If you’re a doctor, lawyer or any other kind of high wage earning professional, you are bright and able to do this. I guarantee it. After all, many with far less intelligence and means have done it over and over again. The key is to change the way you think. You must reprogram yourself into thinking about investments and entrepreneurial activity that can generate multiple streams of passive income.