This video from Chris Rock does a pretty damn fine job of showcasing the difference between rich and wealth. Warning: Extremely explicit language. Plug in head-phones or bookmark this post for a later date if you’re located in an office or school.
Obviously, Rock is using the example of the super wealthy (see: Bill Gates) and the super-rich (see: celebrities that could lose their money in a summer with a drug habit).
But the general concept is the same for “middle-class” citizens.
Usually, we use the words “wealth” and “rich” interchangeably. Someone who has a really nice home, car, and job is said to be rich. Likewise, we assume they are wealthy.
But realistically, the two terms don’t mean the same thing. At least, I don’t think they should.
Rich is subjective. My definition of rich might differ from yours. Plus, you can appear to be rich when you’re actually broke. Rich can be taken away or lost in the blink of an eye. This is because the rich are often controlled by other entities like banks and corporations. Or, they squander away their new-found richness (see: lottery winners).
The financial crisis going on over the past few years is proof of this. Tons of people in the U.S. borrowed to “buy” private school educations, fancy cars, and huge homes. They whipped out a credit card to fuel exotic vacations and a nicer day-to-day life.
Then, banks tightened up credit. Credit card interest rates went through the roof. Companies downsized and rightsized. People suddenly found themselves in a big mess.
These individuals may have been rich (by living off credit cards and using their decent income to secure financing) in appearance, but they certainly were not wealthy.
Wealth can’t be faked. Wealth can’t be taken away because of the decisions other people make. Wealth, in its simplest form, is a set of behaviors that lead to financial success.
Some of these factors include:
- Saving a certain amount or percentage from every paycheck
- Refusing to take on debt except when necessary (like a home mortgage)
- Spending less than you earn
These factors aren’t new or exciting. They’re honestly just common sense. If the entire working population (including teens) were to just simply start saving 10% of their pay, millions of people would be better off. And that’s just one small behavioral modification
At the end of the day, remember that you have the power to make wealth happen. Being rich though, is often just a fad.
