What does Being Wealthy Mean, Anyway!

What is wealth?

Wealth is the ability to live happily and comfortably without worrying about running out of money. Wealth means being able to control and manage your money effectively. The essence of wealth is being financially free.

We spend our lives seeking money, yet, there are a number of us who end up with little to no savings. I recently read an article that profiles an NYC family who earns $500,000 a year but still ends up with little savings besides their 401K.

Many high-income earners confuse income with?wealth. You might be rich (high income), but not wealthy.

Put simply this way, to be rich is to earn a lot of money, spend a lot of money, and accumulate a lot of material possessions such as a sprawling home, sleek car, and dinners out at your leisure. But just because you’re rich, doesn’t mean you are wealthy. In fact, being rich may actually indicate debt.

Wealth means being able to control and manage your money effectively no matter what your income is. We basically have three options for what we can do with our income once we receive it: Consume it, Save it, or Invest it.

Consume it: We spend money to meet our immediate needs and desires such as food, water, clothing, shelter, and other materials things.

Save it: Not many of us set aside money for future use. Americans typically save between 3% to 10 % of their earnings, depending on whom you ask. Numerous reports claim that the American saving rate is closer to 3%. In either case, just having a saving account is insufficient.

Invest it: Few people actually invest. A successful method of putting money to work and accumulating wealth is investing. The power of compounding and the risk-return trade-off are principally responsible for investing's higher growth potential. Saving significant amounts of money is not required in order to invest. Compound interest allows you to profit from both your initial investment and the interest that has accrued over the course of prior periods.

While someone who is just rich will only be that way for a short while until the money runs out, a wealthy person has sustainable wealth and most likely will always be prosperous.

It’s no surprise that wealthy families are some of the biggest savers around.

Again, being wealthy is being able to control and manage your money effectively.

These are the best articles I've read this week.        

1. The first step to attaining wealth — at least for people who are not born into it — is much more personal. ... it's changing your mindse, or building a mindset conducive to wealth, that is the real first step.

2. Ray Dalio no longer believes "cash is trash" in light of tighter monetary policy.

3. When Bad Thinking Happens to Good People