What do you think about these two terms: wealthy and rich?
These two terms are used synonymously everywhere. Both are used with a meaning of having a great deal of money, assets or wealth.
Let’s see the definition given for Rich and Wealth in dictionaries
Definition of Rich in dictionaries
Rich describes someone possessing wealth. (Definition from Wikipedia)
Having a great deal of money or assets; wealthy. (Definition from en.oxforddictionaries.com)
Definition of Wealth in dictionaries
Wealth is the abundance of valuable resources or valuable material possessions. (Definition from Wikipedia)
An abundance of valuable possessions or money. (Definition from en.oxforddictionaries.com)
The fallacy of being rich
Many of us are middle-class people running day after day for the paycheck to make ends meet together. Most of us blame our fate and dream of becoming rich at one point in our life, assuming that becoming rich will solve all the problems. In the quest of getting rich, we decide to work hard and spend most of our life for our job. We may not have enough money and time to spend with our family. Well, from a middle-class point of view this might be acceptable.
Now, what about a rich person? Just have a look at the richest person whom you know very well. Without considering the possession he is holding, just look at his daily routine life. You will find that he is no different from a middle-class person in terms of his routine daily life. Even after being rich, he too runs behind money day after day just like a normal middle-class person. In fact, in most of the case, you will find a rich person with less time to spend with his family than a normal middle-class person.
Being rich means, either by doing a job or a business, you are generating a hefty cash flow monthly whereby you have set a high-level lifestyle.
Following a lifestyle continuously for a long time will set a habit. Now, once the habit of a high-level lifestyle is set, it is merely impossible to break it and come down to a more simplistic or minimalistic life unless some external factor force you to do so.
The problem with merely being rich is, you have to continuously generate that hefty cash flow monthly to maintain the lifestyle you have set. If you are dependent on only your job, to generate the cash flow, you will be forced to continue to work till you start to feel your age. Splashing money around just because you are rich will force you to generate cash flow in the same rate month after month and this directly forces you to spend most of the time of your life depending on your job. And the result is, you have the money, but you don’t have the freedom to do what you want to do in your life. Unknowingly you start to live only for one thing; money.
When a middle-class person works to become rich, a rich person works to stay rich. No matter whether you are a middle class or a rich person, you will always be behind money. You start working to make you rich and end up keep on working to stay rich.
In the quest of getting rich and richer, everyone forgets one thing – “TIME”. The time you have in your life is limited; no matter whether you come under a middle class or rich category.
- What is the point if you have to work hard continuously till the end of your healthy life to make a better life?
- What is the point if you are rich but still you cannot make enough time for you and your family to make that better life?
Here comes the value of knowing the real meaning of being wealthy. What differentiates wealthy people from rich and middle-class people is TIME. Understanding its importance can help you to stay away from the rat race and you can focus on what you really love to do in your life.
The real meaning of being wealthy
As Robert Kiyoski wrote in the book Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!
Wealth is a person’s ability to survive so many number of days forward-or, if stopped working today, how long could I survive
Example 1 – Assume that your monthly expense is Rs. 5000 and your passive income (Cash flow other than your salary or business where your physical presence is not required) is Rs. 2500. Based on the definition given by Robert Kiyoski, the number of days you could survive is only half a month. So, in this case, again you have to find a source of cash flow to meet the expense for the remaining 15 days and for that, you will be forced to do a job.
When you reach a stage where your monthly passive income generates equal to or more than your active income or your monthly expense, you can call yourself wealthy.
Passive income is the revenue that generates from different sources where your physical presence in not required. Active income is the revenue that generates only with your physical presence. Examples of passive income are a rental property, equity, bonds, a business that can run without your presence. Examples of active income are your job and business that runs only in your presence.
You still may not be in a position to splash your money like a rich man does; you may not be able to buy everything in your “WANT” list. But you will have the freedom to do what you want to do in your life. You don’t have to do a job anymore just because you need to pay the bills at the end of the month.
Being wealthy means
- You can maintain your lifestyle without doing a job which you don’t like
- You can maintain your lifestyle and at the same time you can do what you like to do most in your life
Here comes the importance of the statement given by Robert Kiyoski in his book Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That The Poor And Middle Class Do Not!
Don’t work for money; make it work for you – Robert Kiyosaki