3 Key Differences Between the Rich and the Wealthy — Which To Strive For
Written by
Josephine Nesbit
Edited by
Cory Dudak
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True wealth doesn’t just offer financial benefits. It gives you the freedom and ability to take control of almost every aspect of your life.
The Economic Policy Institute said the average income in the U.S. is $50,107, but to make it to the top 1%, you’ll need an annual salary of at least $1,316,985. By most standards, everyone in this group is rich, but it doesn’t mean they’re wealthy.
“When someone is considered rich, we would classify that as someone with a current larger income than their fixed expenses, allowing them to live an extravagant lifestyle,” David Morgan, managing partner with the High Net Worth Advisory, explained to Forbes. “When someone is wealthy, their assets are more substantial than their liabilities, allowing the assets to generate an income large enough to cover fixed expenses.”
While wealth undoubtedly refers to money, it also relates to time and relationships, according to Dr. Jim Dahle, founder of The White Coat Investor.
The Financial Benefits of Wealth
Wealth allowed Dahle and his family to book a last-minute flight to visit his wife’s family in a time of need. Plane tickets aren’t cheap, and neither is the cost of gas, parking and transportation. Dahle wrote that he didn’t even need to think of the price, and he could have taken a private jet if no seats were available.
Most people have an emergency fund to cover these expenses, but Dahle said he is truly financially independent. His entire portfolio is his emergency fund. This additional expense just means he’ll invest a little less and save more the following month than he otherwise would have.
The Financial Benefits of Time
The most precious resource of all is time.
Dahle said he and his wife, Katie, are busy, but they’re still in control of their time. For example, the couples’ work with The White Coat Investor is location-dependent. Katie was able to take a flight and move all meetings to Zoom. According to Dahle, wealth allows his wife to leave for multiple days on short notice without significantly altering their lives.
The Financial Benefits of Relationships
Dahle needs to be at a specific location at a specific time several times per month to care for patients. This can sometimes interfere with school drop-offs. But luckily, Dahle said wealth allowed him and his family to build relationships with other families in the neighborhood who can help in this situation.
“Taking control of your finances and living a deliberate life leads to wealth. Wealth, however, refers not just to money but also to time and relationships,” Dahle wrote.
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