What is the Difference Between ‘Rich’ and ‘Wealthy’?
Owning a big house and earning a six-figure salary doesn’t necessarily mean you have a secure financial future. What you might not know is there is a difference between being rich and being wealthy. So what’s the difference?
That’s exactly what The Cheat Sheet decided to ask The New York Times wealth columnist Paul Sullivan. According to Sullivan, it’s better to be wealthy. And it will take more than living within your means to get there. In his new book, The Thin Green Line: The Money Secrets of the Super Wealthy he explains why and offers tips for how you can turn your riches into wealth. Join us and learn more from our chat.
The Cheat Sheet: What prompted you to write this book?
Paul Sullivan: In the spring of 2011, when the economy had started to improve but few regular people believed it, I met with some super-wealthy men who were part of a group called Tiger 21. It was an investment club for deca- and centa-millionaires, almost all of whom had made their money themselves. They had invited me to participate in their monthly meeting, where at each one a person presented every financial decision he and his family had made and the group critiqued them. I don’t have $10 million, but I figured I was well-prepared for something like this, given that I have written about money for the better part of two decades. I was wrong.
CS: What were you wrong about?
PS: These men could have cared less about my relatively simple investments; they tore me apart for the way I thought about money more broadly. One thing they drilled into me was that the future would not resemble the present, and however it turned out, life was likely to be a lot more costly than it was today. These were guys who thought about when something would go wrong, not if. It’s a subtle but important distinction in our thinking about how we save, spend, invest and think about money. I left that meeting in a daze but a few days later I began thinking about this book.
CS: What is the main difference between being rich and being wealthy?
PS: Rich is a number, be it on a savings account, a brokerage statement or what Zillow tells us our house is worth. If it’s larger we can buy more things; if it’s smaller we can’t buy as much. Simple. Wealthy is more complicated. It is a sense of security no matter how much or how little you earn. It is what allows you to make choices in life, whether you’re a school teacher or a hedge fund manager.
CS: What is the key to wealth?
PS: Being wealthy isn’t the same as earning a lot of money. Often those two do not align, which may shock some people who are just scraping by. The key to being wealthy is the choices and decisions we make every day coupled with the behaviors we have around money. And these behaviors are not confined to how we invest money; they radiate out to everything that money touches, from how much we pay for our home each month to how often we eat out to what or when we decide to spend on our children’s education or a charitable appeal.
CS: What do you want readers to learn from this book?
PS: The visual of the thin green line in the title. Think about it as a stock chart over the past 50 years, starting out low and gradually rising, in fits and starts, to a much higher point. You want to be on top of that line, standing comfortably whether you’re near the bottom or at the peak.
In either place, your choices have to reflect your resources and your goals. You do not want to be on the other side of that line, hanging beneath, by your fingertips, or in free fall. That’s when choices will be made for you — many of which you won’t like. Keep that green line in mind no matter what financial decisions you’re making.