What Does It Mean To Be Wealthy?

With the recent election, we heard a lot of talk about the wealthy. How much money would it take for you to feel wealthy? According to research studies, the answer is consistent – we think another person is wealthy if they have more than we currently have. Very few people actually feel they are wealthy. Before we can say someone is wealthy, we first have to define what it means to be wealthy.

Which of the following people would you consider to be wealthy?
Person 1:  Makes $400,000 per year as a corporate executive. They recently brought a new car, boat and RV. They haven’t saved much for retirement, and have a net worth of about $50,000.

Person 2: Makes $40,000 as a butcher at the local grocery store, and has never made more than this. They have diligently saved their entire life, and have about $500,000 saved for retirement.

So which person would you consider wealthy? It is the person with a high income but nothing in savings, or is it the person with average income and a lot in savings?

The common thread for most of my clients is that they have been diligent savers. They spent less than they made each year, and have done so their entire lives. Although some have higher than average incomes, many are more like Person 2.

What does it take for you to feel wealthy? What makes you think another person is wealthy? It is the flashy new car, huge home, or big screen TV? Or is it the person who always buys used cars, has lived in the same home for many years, and has built a good sized nest egg for retirement? The truth is, it is really hard to identify the latter group of people. They really are The Millionaire Next Door.

For most, we consider someone wealthy if they have more than us… whether it be income or assets. There really is no definition of wealthy… it is “I can’t define it, but I will know it when I see it.” Just keep in mind that this means you are wealthy to those that have less than you.

Remember, even though most would consider Mitt Romney wealthy, he has only 1% of the net worth of Bill Gates… To Bill Gates, Mitt Romney is poor. It’s all relative!

Between high income earners and high net worth individuals, which represents wealthy? Which do you aspire to be? I would love to hear your feedback in the comments section!

About the author

Alan Moore, CFP®, MS
Alan Moore, CFP®, MS

Alan is passionate about providing individualized financial advice to individuals and families, regardless of their net worth, income or investable assets. An educator at his core, he strives to serve as his clients’ guide, available to help with the sometimes stressful or exciting financial situations that life inevitably brings.

Alan is the founder of Serenity Financial Consulting, which he started after noticing the lack of hourly, as-needed financial planning advice available to consumers. With experience working in several nationally recognized firms including Kahler Financial Group and Financial Service Group, Alan combines his industry experience and technical knowledge with his entrepreneurial spirit and penchant for teaching others to create a refreshing style of truly personal financial planning.

Alan is a Certified Financial Planner™ professional and Certified Retirement Counselor™. He earned his bachelor’s degrees in Family Financial Planning and Consumer Economics and his Master’s Degree in Family Financial Planning from the University of Georgia. Driven by his desire to educate, Alan also taught undergraduate financial planning courses while in graduate school.

Alan prides himself on being active in his community and feels privileged to have served in the Georgia National Guard for four years before receiving an honorable discharge. Originally from Georgia, Alan now lives in Shorewood with his wife Melissa, and enjoys taking advantage of the abundance of activities that Milwaukee has to offer.

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