Rich vs Wealthy

According to websters-online.com the following are definitions for both rich and wealthy:

Rich: having an abundant supply of desirable qualities or substances.

Wealth: the state of being rich and affluent; having a plentiful supply of material goods and money:

It never ceases to amaze me how many Americans confuse being rich with being wealthy. Just because someone is rich, or a high-income earner, does not mean that they are wealthy.

I will use a recent television show as a prime example. While channel surfing on vacation, I came across a reality show about an actor named Eddie Griffin. As an actor I’m sure that he has earned millions of dollars over his career, however this episode shows the pitfalls of poor budgeting. After coming home from a shopping spree, he heard a tow truck outside his house. After running outside, he realized they were there repossessing his prized Bentley. Of course he cussed and threatened the driver to no avail.

After watching his Bentley be hauled off, Mr. Griffin made a bee line to his accountants’ office. Blowing pass the receptionist, Mr. Griffin proceeded to cuss out Marty, the accountant. After about 10 minutes of threats to fire Marty, Marty finally said what I had been waiting to hear. Marty told Mr. Griffin that because he spends his money as quick as he gets it, there is nothing left to pay all of his bills. Marty then explained that not only did Mr. Griffin not have enough money to pay his car payment, but Mr. Griffin did not have enough money to pay his mothers mortgage payment that month. Wow! And he is rich.

Now let’s compare Mr. Griffin to Warren Buffet, the second wealthiest man in the world. I once saw a documentary on Mr. Buffet that was very interesting. Not only does he live in a small city, Omaha, he lives in the same house for the past 30 years in a middle class neighborhood. And guess what kind of car he drives. An American made Cadillac not a Bentley.

In conclusion, making a lot of money does not mean that you are wealthy. The best gauge for determining your wealth is to figure out your Net Worth. This topic will be discussed in a future blog.