Wealthy vs. Rich: Understanding the Financial Differences

Read our Advertiser Disclosure.
Contributor, Benzinga
May 19, 2023

Are you wondering whether you should aim to be wealthy versus rich? If you dream of a work-optional lifestyle where you can earn money while lying on the beach or spend weekdays with your kids, you dream of being wealthy, not rich. You can build long-term wealth and financial stability without being rich, and you can be rich without being wealthy. Read on to learn the differences between wealthy and rich and how to become wealthy to live the life of your dreams. 

Wealthy vs. Rich Meaning

Someone rich has a high income and may have a lot of money to spend on material possessions and a luxurious lifestyle. You could see them wearing designer clothes, splurging on lavish vacations or driving a luxury car. But their wealth is temporary if they cannot sustain their income or investments long term. Being rich is wealth by appearance but may be unsustainable.  

On the other hand, a wealthy individual has long-term stable income from assets like investments, real estate, royalties and businesses. The wealthy build sufficient passive income streams to live a work-optional life. They may have multiple sources of income to create greater financial stability. 

A wealthy individual won't necessarily have the latest designer clothes, own a private plane or throw big parties. Instead, wealthy individuals prioritize financial independence and security over a lavish lifestyle. Unlike being rich, which can come and go quickly, being wealthy is typically built over a longer period of time through strategic financial planning and investments.  

For example, someone with $3 million in assets and annual spending of $150,000 can sustain their lifestyle and continue to build their wealth; they're wealthy. Someone earning $300,000 a year and spending $275,000 with only $50,000 in savings or assets is rich but not wealthy. 

What's the Difference Between Rich and Wealthy?

Here are key wealth and rich differences to help you create a sustainable financial wealth-building plan

Income vs. Assets

Being rich is typically associated with having a high income, while wealth is associated with having a high net worth or assets. You can become wealthy at nearly any income level, whether you're rich or not. To become wealthy, you must spend less than you earn and invest and save for long-term goals. You won't become wealthy overnight; a long-term mindset of frugality can build financial freedom.  

Short-term vs. Long-term

The wealthy prioritize long-term goals. Riches can come and go quickly, while wealth is typically built over a longer period of time and is sustainable. That's why strategies like buying and holding real estate or investments can lead to long-term wealth. In the short term, it can mean less cash to splurge on other things. 

Lifestyle vs. Financial Freedom

Wealthy versus rich is compassion for your future self and your family. Rich people may live a lavish lifestyle with expensive cars, homes and vacations, while the wealthy prioritize financial freedom and independence. Appearances can be deceiving. Some of the wealthiest people you know may drive old cars and wear the same T-shirt for 20 years, but they enjoy financial freedom and security.  

Status vs. Security

Rich people may value status and recognition, while the wealthy prioritize security and stability. Those who recently started earning a lot tend to want other people to know they are rich, while those who work to build and sustain long-term wealth prefer that others don't realize they are wealthy. 

There's nothing wrong with wanting recognition for being rich, but long-term wealth can offer greater freedom and security to live a fulfilling life with your family. Eventually, you could have both. 

Income Source

Being rich often involves having a high-paying job or career, while wealth can be generated through multiple income sources such as investments, real estate, royalties and business ownership. Creating multiple income streams leads to greater long-term stability; if something happens to one source of income, you have others to keep you covered. 


Building wealth needs a long-term, strategic mindset focused on building and preserving wealth. It might mean you make sacrifices in the short term, from choosing a smaller house to opting out of expensive vacations or shopping at the cheapest grocery store. You don't have to penny-pinch all the time, but long-term wealth is often a greater reward than other short-term splurges. 

On the other hand, being rich is often associated with a short-term, consumerist mindset focused on spending and consumption. It can be fun in the short term but can leave you depleted in the long run. 

What it Takes To Build Riches and Wealth

It's never too early or too late to start building wealth. These tips are smart money moves for most goals but are particularly helpful for building long-term wealth.

Develop a Long-Term Mindset

Building wealth requires a long-term perspective and the willingness to delay gratification. Instead of buying a new car or clothes, focus on how much you're saving and the long-term freedom you'll gain. With a long-term mindset, you'll prioritize savings and investing over short-term spending and consumption.

Start Early

Wealth-building compounds over the years. The earlier you start investing and building wealth, the more time your money has to grow through compounding interest. If you start at 20 and plan to retire at 65, your money will have 45 years to compound, whereas if you start at 40, you've got just 25 years for compounded growth. 

If you have children, you can help them invest and save even earlier to take advantage of more years of compounded growth. But it's never too late — you can still build long-term wealth if you're well beyond your 20s. 

Live Below Your Means

The biggest secret to long-term wealth is to live below your means. To live below your means, avoid excessive debt to free up more money for savings and investments

If you make $20,000 a month and need only $5,000 to live, you could save or invest $15,000 a month and build wealth faster. But even if you make $5,000 and spend $3,000 a month, you can put that other $2,000 to work for you and build long-term wealth. 

Create a Budget and Stick To It

Often, the best way to build more savings for long-term wealth is to create a budget and stick with it. Creating a budget can help you understand where your money is going and where you can cut back on expenses. Sticking to a budget can help you stay on track with your financial goals.

When you're tempted to go beyond your budget, remember your long-term goals. You can also make a list of free or budget-friendly activities instead of expensive options to create fun opportunities that don't cost much.

Invest in Assets That Appreciate in Value

Savings will only get you so far. Long-term wealth-building depends on investing in assets that appreciate faster than inflation. Consider high-yield investments and long-term investments like stocks, real estate and business ownership to grow your savings and increase your net worth over time. 

Diversify Your Investments

Never invest in just one thing. Like having multiple income streams, the wealthy diversify investments. That way, you don't lose your wealth if one stock collapses or one real estate property loses value. 

Diversifying your investments across different asset classes and industries can help mitigate risk and increase the likelihood of long-term growth. Remember, a little of many things is always safer than a single investment. Even if you could make a lot with one investment, diversify.

Seek Professional Advice

Consider seeking advice from a financial planner or investment adviser to help you develop a long-term investment strategy that aligns with your goals and risk tolerance. These professionals can guide you in current market trends and long-term strategies and provide insight into investment types and asset classes.  

Continuously Educate Yourself

If you want to be wealthy, it helps to keep learning about personal finance and investing strategies to stay informed and make educated decisions. Continuously learning can help you better understand the markets, investment strategies, tax-advantaged accounts and other long-term wealth-building strategies. 

Stay Disciplined

Building wealth requires discipline and consistency. Stick to your investment plan, avoid impulsive decisions and stay committed to your long-term goals. Surround yourself with friends and family who share similar goals. 

You could keep a splurge savings account that fits your long-term goals but allows you to buy or do something outside your regular budget. And remember, the feeling of self-sufficiency and meeting long-term goals increases motivation

You could be wealthy

Your current income and whether you're rich won't determine whether you can be wealthy. Remember to live below your means, prioritize long-term wealth-building and diversify your assets to build financial freedom and wealth for your family and your future. 

Frequently Asked Questions


Are rich and wealthy the same thing?


Wealthy and rich aren’t the same. Rich implies a high-cost lifestyle, while the wealthy have financial freedom. The wealthy may be rich, but the rich aren’t necessarily wealthy. Focus on building long-term wealth first to enjoy the richness of a work-optional lifestyle long-term.


What’s the difference between looking rich and being rich?


Looking rich implies you wear designer clothes, drive an expensive car, have a big house or have other things that imply you have money. Being rich or wealthy means you have significant assets and savings that generate passive income.


How do the wealthy and rich handle their finances differently?


The wealthy and the rich handle their finances very differently. The rich spend a lot and prioritize status or appearances. The wealthy prioritize long-term wealth-building and place less value on outer appearances or buying the latest luxury items. 

About Alison Plaut

Alison Plaut is a personal finance writer with a sustainable MBA, passionate about helping people learn more about financial basics for wealth building and financial freedom. She has more than 17 years of writing experience, focused on real estate and mortgage, business, personal finance, and investing. Her work has been published in The Motley Fool, MoneyLion, and she is a regular contributor for Benzinga.