They’re often used interchangeably, but being wealthy and rich aren’t the same thing. While they both involve having a lot of money pass through your hands, being wealthy is far superior, according to George Kamel.
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In a recent YouTube video, the Ramsey personality explained why the two distinctions are actually very different. Keep reading to find out which category you fit into.
“Rich people spend their money on a fancy lifestyle, while wealthy people spend it on income-generating assets and passive income,” Kamel said.
He noted that rich people often flaunt their extravagant spending, because they want to maintain an image of being wealthy.
“They’re more concerned with looking rich than actually being rich,” he said.
Consequently, he noted that rich people tend to buy more depreciating assets than wealthy people. This is due to the latter being more focused on building lasting wealth than impressing others.
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“Rich people measure their financial success by their income, whereas wealthy people look at their net worth,” Kamel said.
He said rich people often focus on their income, because they need to earn a certain amount to maintain their lifestyle. What wealthy people realize is that a high income doesn’t guarantee long-term financial stability, unless they make solid financial decisions now.
“Rich people live paycheck to paycheck, despite their high income and wealthy people have financial peace,” Kamel said.
Despite having a high income, many rich people are still stressed about their finances, he said. This isn’t the case for the wealthy, as they enjoy financial security in a variety of ways, such as having money in the bank, an emergency fund and retirement savings.
“Rich people owe, wealthy people own,” Kamel said.
He said it’s not uncommon to see rich people trying to impress others with their spending habits, but they could actually be heavily in debt. On the other hand, wealthy people only spend money they have, instead of borrowing it.
“If you live fake rich, you’ll end up real broke,” he said.
Wealthy have people more options and flexibility with their money, because the funds they’re spending are all their own, he said.
If you currently fall into the rich category, it might be time to make some changes. Adjusting both your money mindset and spending habits can allow you to make the shift to wealthy.
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