My passion is helping women become wealthy. I notice, however, I rarely, if ever, use the word ‘rich.’
I remember when, decades ago, David Bach sent me a copy of Smart Women Finish Rich. My first book had just been published, one of the earliest finance books geared to women, and he wanted to talk.
I loved what he wrote, but the word, ‘rich’ turned me off. I couldn’t understand why.
Then, last week, I received a newsletter from Nick Maggiulli, titled: Rich vs Wealthy: A Comprehensive Guide to Different Financial Lifestyles.
Finally, I realized why ‘rich’ never resonated.
Rich people, explains Maggiulli, have outsized incomes, lavish lifestyles, expensive possessions, and “a consumptive focused mindset.”
Wealthy folks, on the other hand, have diverse investments, passive income streams, economic stability and solid financial plans for “accumulating assets and resources that generate long-term financial security.”
In other words, the rich have a lot and spend a lot. The wealthy have a lot and save a lot.
No wonder I was drawn to one word and turned off by the other. Wealth doesn’t come from what you earn. It comes from what you keep.
In fact, whopping wages can be dangerously deceptive. I call it the Illusion of Affluence. Sadly, too many fool themselves into feeling safe because they earn a bundle. Yet, high earners are as vulnerable to hard times and sudden change as anyone else.
The true measure of wealth is not your net profit. It’s your net worth, which is the sum total of everything you own (your assets) minus everything you owe (your debts).
If you want to check your net worth, click here for a calculator to figure it out.
Growing your net worth requires you to follow the Three Rules of Wealth–spend less, save more, invest wisely. A simple strategy, right? But one that has been practiced by too few of our parents, taught in too few of our schools, and therefore never integrated into our lives.
Which is why I created The Wealth Connection, an online community for women to learn how to transform their thinking, invest with confidence and receive much needed support.
“If you do the work,” Maggiulli writes, “You may just find that becoming wealthy isn’t as out of reach as you once imagined.”
How about you? Would you rather be wealthy or rich? Leave me a comment below.