What Does It Mean to Be Wealthy?

Page Updated on July 28, 2007

We see it on television all the time. A mansion. Servants. A garage filled with expensive cars. A private jet. A closet filled with hundreds of shoes. Shopping sprees. Ahhh, to be rich. It is true that some people do indulge in such purchases and activities, but why, and are these people really wealthy? Is it really better to live in a multimillion dollar mansion? Is it better to own two dozen cars? Would you actually wear all of those shoes? It all depends on your priorities.

Let's pretend that you just one the lottery. You decide to take a lump sum payout, and after taxes you have $100 million dollars (it was a huge jackpot). What would you do with that money and why? (This is where you get out a piece of paper and actually write down the response. I suggest writing it in your journal. Go ahead, I'll wait.)

What was on your list? "Buy a mansion" is usually the first thing on most lists. So, why do you think that was on your list? What would having a mansion give you? The admiration of your friends and even total strangers? Let's pretend that you get a mansion, but nobody ever knows about it. Now what does it give you? An ego boost? If you said "Oh, I appreciate fine craftsmanship and architecture and want to support such artisans and engineers and surround myself with their beautiful creations because it inspires me" did you actually specify this in the original list? (No, it doesn't count to say "That was implied in my definition of mansion.")

The point to all of this is to ask yourself what it means to be wealthy and discover where you developed your beliefs about wealth. Most of the time, we equate wealth with materialism, and we equate materialism with having friendship, respect, happiness, joy, and love, but materialism doesn't give us any of these things. It just gives us stuff.

I have a different way of looking at wealth. I divide "wealth" into types of wealth: working wealth and accumulated wealth.

Working wealth is the income that you currently use to sustain yourself. Most homeless people have very little working wealth. If you are able to put food on the table, clothe yourself and your family, and pay for other necessities, you have a reasonable amount of working wealth. (Note, I didn't say "have your own personal chef, designer outfits, and necessities like a weekly professional manicure." I'm talking about the real things we need to live comfortably. If you're living in a homeless shelter, you're probably not comfortable, but the average home most likely is, even if it isn't a mansion.) Want to instantly realize how much working wealth you have, go volunteer at a homeless shelter. You'll suddenly let go of your self pity because you couldn't afford to go to Disney World this year, and you'll probably declare yourself "well off."

Where does your yearly income stand based on the 2000 US Census?

• 9.5% of households earn less than $10,000 (most of them live in the South and in Puerto Rico)
• 12.6% of households earn between $10,000 and $20,000
• 13% of households earn between $20,000 and $30,000
• 12.3% of households earn between $30,000 and $40,000
• 10.7% of households earn between $40,000 and $50,000
• 9.0% of households earn between $50,000 and $60,000
• 10.4% of households earn between $60,000 and $75,000
• 10.2% of households earn between $75,000 and $100,000
• 12.3% earn more than $100,000 (most of them live in Alaska, Hawaii, California, and the East Coast where the cost of living is high)
• 2.4% earn more than $200,000

Accumulated wealth is your net worth in relation to your lifestyle. Being rich in terms of accumulated wealth means being able to quit your job with full confidence that you will still have enough money to sustain yourself comfortably for a very long time and to have the experiences you want during that time (not the experiences television and movies tell you that you should want) without having to go into debt. When you can tell your boss to go to hell because you know that you can live without struggling financially for the rest of your life (or at least a decade, anything less is more like a well established emergency fund), you can admit that you have a reasonable amount of accumulated wealth and declare yourself wealthy.

Having lots of accumulated wealth is not about having a fancy car and a big house. It's about having security in the lifestyle you want. A person who spends only $20k per year can be just as wealthy as a person who spends $200k per year if both of those individuals can quit their day job without fear of losing their current lifestyles.

Sources: http://factfinder.census.gov/servlet/QTTable?_bm=y&-geo_id=01000US&-qr_name=DEC_2000_SF3_U_QTP32&-ds_name=DEC_2000_SF3_U&-_lang=en&-_sse=on, http://factfinder.census.gov/servlet/TMSubjectAllThemesServlet?_ts=119991547646,