Do you ever wonder what it really means to be rich?
This is a question that has many different answers, as it depends on a person’s individual definition of wealth. Some people might say that you need a certain income or net worth to be considered rich, however, this is not always the case.
There are many factors that contribute to a person’s wealth, such as their age, education level, location, and more. So what do you need to be considered rich? Let’s dig in.
Income
Earning more money can make it easier to pay bills, fund your financial goals, and spend money on what you enjoy. The exact number of income that qualifies you as “rich” is subjective. To keep things simple, let’s take a the top 10% and 1% of household income in the United States:
Having a high income doesn’t necessarily make you rich but it can help you get there.
This data shows an overview of how much the highest earning households make. This can help you determine for yourself what it means to be rich.
Net Worth
There is a big difference between income and net worth. Some people make a lot of money, but don’t have anything to show for it. Other people who don’t make as much money are disciplined savers and have a high net worth. Having a high income does not guarantee a high net worth.
Here are the top 10% and 1% of net worth in the United States:
One of the best ways to achieve a high net worth is to pay yourself first. That means consistently saving your money and investing in appreciating assets such as stocks, bonds, and real estate.
It’s a common myth that most millionaires inherited their money. A study from Fidelity found that 88% of millionaires reported being self-made, and that only 12% had inherited more than 10% of their current net worth.
Being Rich
Having a high net worth doesn’t necessarily mean you are rich. A number of CEOs fall into this category: they have an abundance of money and not a moment of free time.
What you define as rich depends on your expectations. Some people find fulfillment in their work, relationships, hobbies, travel or something else entirely.
In my opinion the highest form of wealth is having the ability to wake up every morning and do whatever you want, when you want, and with who you want.
Of course money still matters. It can make doing these things easier. However, like many people say, money itself won’t make you happy. A truly rich life goes beyond money.
George Maroudas
847-550-6100
george@pmgwealth.com
Twitter @ChicagoAdvisor
Disclaimers / Sources:
Net Worth and income data from the Federal Reserve’s 2019 Survey of Consumer Finances (SCF). The next survey results will be released September 2023.
88% of millionaires are self made from Fidelity Investments.
Please consult your financial advisor regarding your specific situation. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
