the rich and the wealthy

Last Wednesday night, the wife and I were with our business partner Dennis in our new Alabang office. He talked about the difference between being wealthy and being rich. I never really thought that there was a difference. I thought those two words mean the same thing, that they can be used interchangeably, e.g., the wealthy are rich, and the rich are wealthy. Good thing I just listened, or I would have embarrassed myself. The next day, I googled a bit, and these are the things that I found.

oOo

There is a big difference between being rich and being wealthy. When I think about someone who is rich, I think about someone with a lot of money. And I typically think about someone who is quite showy with their money. They drive fancy cars and live in a fancy house. They wear fancy clothes and eat at fancy restaurants.

Rich people come into their money in a number of ways. They may inherit it. They may win the lottery. They may earn it in a few short years as a professional ball player or entertainer. Or they may invent a new mousetrap that is worth millions of dollars. Or they may simply earn it over many years as a professional or a business owner.

But doesn’t this also describe a wealthy person? Is there really a difference? I believe there is a major difference between rich and wealthy. The difference is in duration. How long does the money last? Will it be gone once the person’s earning power is gone? Will it be passed on to future generations?

The difference between a wealthy person and someone who is simply rich is that a wealthy person has sustainable wealth. In other words, a wealthy person will always be wealthy, whereas someone who is merely rich will only be so for a short period of time until the money is gone.

The difference between rich and wealthy is very simple. It’s knowledge. Wealthy people know how to make money. Rich people only have money. Once you know how to make money, you can build sustainable wealth. The money never stops coming. If you have a reversal of fortune, it’s not a big deal. You just make it back.

Think about Donald Trump. Several years ago, Mr. Trump was deeply in debt. But, oddly, he didn’t change his spending habits and didn’t go away. Why not? Because Donald Trump understands how to make money. He is a wealthy individual.

There are many examples in history of wealthy people who obtained their wealth through knowledge and valued knowledge more than money. The most obvious one perhaps was King Soloman, king of all of the Israelites. He was extraordinarily wealthy. And he was extraordinarily wise. When he first became king, God came to him and asked what he wanted. Solomon asked for wisdom. And throughout Solomon’s writings, he lists wisdom and knowledge as the two most important gifts to ask of God. Wisdom and knowledge are what created Solomon’s great wealth.

Wisdom and knowledge can create great wealth for anyone who desires it. Once he had the knowledge, then he could begin formulating a strategy and work with a coach to build the wealth. But the knowledge needs to come first. Otherwise, if we do happen to get rich, the money is not likely to last.

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