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  • Writer's pictureJWA Team

The meaning of Wealthy or Rich.

Updated: Jan 20, 2022

When we think of someone being rich vs wealthy, we might think it’s the same thing but it’s not. Being rich is simply having a lot of money or income. It comes down to how much cash you have in your bank account. But just because you’re rich, doesn’t mean you are wealthy.

In fact, being rich can often mean that you are spending a lot of money. It can also mean that you have a lot of debt. It doesn’t matter how much money you have if your expenses are higher than your income, being in debt is definitely not something to aspire to!

MC Hammer at one point had $30 million in the bank, a $1 million house with 200 staff members, and a horse stable with 19 racehorses. But all those expenses took a toll and all that spending (along with a number of lawsuits), resulted in Hammer declaring bankruptcy in 1996. He ended up in $13 million in debt.

Being wealthy is not only having enough money to meet your needs but being able to afford not to work if you don’t have to. It’s about amassing assets and making your money work for you. In other words, it’s having a significant net worth.

Being rich means little if you can’t stop working and are busting your tail to buy liability after liability to keep up with your friends and how much all those liabilities cost you.. This is why so many millionaires can feel poor if they don’t know how to be wealthy instead.

Ultimately, it’s not how much money you make that matters but how much money you keep—and how long that money works for you. And the best part of achieving wealth? It leads to even more wealth.

What is Net Worth?

Net worth is the way that Wealth is measured. It’s your personal Balance sheet. When the Rich Lists are compiled each year, Magazines like Forbes or the Financial Review research and estimate the richest people in the world’s personal balance sheet and list them all in rank. It bases their rank on their net worth.

How to calculate net worth?


Note that your income is not included in a net worth calculation. A person can bring home a big pay check but have a low net worth if they spend most of their money. On the other hand, even people with modest incomes can become wealthy and have a high net worth if they buy appreciating assets.

You can do this calculation each year to work out if you are increasing in wealth or not. This also helps you to work out which part of your wealth strategy is working or not.

What does it mean to be considered wealthy or rich?

The financial and banking Industry already has a ranking system themselves. They call them High Net worth Individuals ( HNWI), referring to somebody with around $1 million in liquid financial assets. These HNWI are then broken down into 3 subcategories. Capgemini ,a company that studies High Net Worth Individuals in the world every year ranks the wealthy according to these 3 tiers.

No 1. millionaires next door . This person has $1 million to $5 million in investable wealth), Globally there were at 17.6 million people in this category around the world.

No 2 is mid-tier millionaires They have $5 million to $30 million to invest

There were 1.75 million Mid-tier millionaires in the world.

No 3 is Ultra-High Net Worth Individuals. They have more than $30 million. Globally, the Ultra-HNWI population numbered 183,400 in 2019.

How does Robert Kiyosaki measure wealth?

Robert and Kim Kiyosaki refer to wealth as something measured in time. What do they mean by this? They see it as being able to survive a certain amount of days forward. In financial terms, this translates to the question, “How many days could you survive if you stopped working today? How long could you survive on the amount of money you have?”

The formula for this number called the wealth number is below.

Wealth No = Net Worth / monthly expenses

This tells you how many months you can survive without any form of income, say if you lost your job or decided to stop working.

So in an example let's say You have $500K in Net assets and your current monthly expenses are 10K a month then your wealth number is 50 Months ( roughly 4 years) By which time your money would run out and then you would have to start working again and build everything up from scratch.

So even if you have a huge pay check but you have equally high expenses coming out of that pay check but not much in the way of net assets, your Wealth number could be very low. In fact as low as 1 month in some cases!

Kiyosaki's measure of wealth is Freedom from Work, measured in time.

This measure requires financial freedom, which means being in a financial position where all your expenses are being taken care of by your passive income. That’s the income you don’t have to actively work for.

So for a truly wealthy person, if their passive income (on the top of the equation) is higher than the expenses going out (on the bottom of the equation) then their wealth number is infinite! This is really what being wealthy is about and much more reachable than being a billionaire on the Forbes List!

What does being wealthy mean to you?

Wealth really is a personal thing and for some people it might be a certain fixed number that they want so they can live a certain priced lifestyle. For others it means that they can buy their close family a roof over their head, live a comfortable but not lavish existence. It really is up to you where you want to set the bar for yourself as each level of wealth comes with different sacrifices and ways to get there.

Anyone can become wealthy if they truly choose to be and desire to be.

Famous wealth coach Bob Proctor Says “ Anyone can become financially independent”

Although there might be some caveats in that but in the majority of cases in the free world, that statement is true.

There’s another way to work out a rough number for financial independence by Bob Proctor.

FG + E = I

Financial Goals + Expenses = Income ( your income goal for financial independence)


This is just like an air conditioning thermostat that you set but for your level of wealth. This explains how many lottery winners or people that get handed sudden inheritances manage to spend most of it quite quickly and their financial thermostat brings them back down to the level it was set at before they got the money. It also explains how some business people can lose everything and be able to restart another business and get back to their same level of wealth within a few years as well. Their financial thermostat also brings them back to the level of wealth they had set it to before losing their business.

You can see that your financial thermostat can be set for Wealth or poverty and no matter what the situations happen in life your thermostat will generally bring you back to the level you had set it to and you were comfortable at.

So What is My Financial Thermostat Set For?

Your financial thermostat is set for the level of wealth you currently have. Your thoughts and beliefs about money are reflected in precise detail in your environment. Whether you live a life of wealth, poverty, or somewhere in between, it’s all determined by where your financial thermostat is set.

The quickest way to change your thermostat is to accept this reality and find a way to adjust it, preferably upwards! Adjusting this upwards is all about mindset. The wealth mindset is as important as the practical knowledge of wealth if you want to get to where you are aiming for financially.

If you enjoyed this blog and want to learn about money skills and the wealth mindset then check out our series of great courses on this link!


These 3 courses are broken up into:

"The Fundamentals of Wealth" ( 8 week course )

" The Wealth Mindset " ( 4 week course )

"Your money plan in 30 days" (4 week course)

Also you can try out our free mini course here!


We look forward to seeing you there! 🙌


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Be wealthy! 👊

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