web analytics

My Youthful Perception of Rich, And How My Perception Evolved

July 25, 2011 · 35 comments

in Personal Finance

What does the word “Rich” mean to you?

According to Dictionary.com, rich is defined as follows:

“having wealth or great possessions; abundantly supplied with resources, means, or funds; wealthy.”

My Definition of Rich As A 10 Year Old

The above definition is pretty much how I viewed rich when I was growing up.  Except, I also pictured rich people to have a huge home with marble floors, things made of gold, Rolls Royce cars in the driveway, and more.  In other words, I thought that rich people spent big, and that their wealth was obvious to everyone around them.  I had no idea what these people did for a living, unless they were a professional athlete or maybe received a big inheritance.  All I knew was that being rich was something extraordinary, and was something that a very small percentage of people would ever attain.

My Definition of Rich As A 40+ Year Old

Now that 30 years have passed and I have met many ‘rich’ people, my definition has changed.  I have found that many people that lived like they were rich were mostly in debt and house-poor.  Many people I met that looked ‘rich’ really were not.  Some did not have much saved for retirement or emergencies.  Spending for some was their ‘therapy’, and they spent to feel good, not because they had the extra money.  I learned that many people had a monetarily rich exterior, but their financial foundation was build on quicksand, and not gold.
On the other side of the coin, I have met people that truly are rich, and you would never know it.  Some are highly educated and some have actually inherited money.  Some have high school degrees and started their own businesses, and some are retired teachers. Many of these people were able to take buyouts in their early to mid fifties, and they now live the life they always wanted to.  I know one person that avidly pursues one of her hobbies and owns some rental apartment units.  I know someone else that is able to help with her ailing mother and still has plenty of  time to enjoy other aspects of life.  These people have the luxury of choice, which is a wonderful thing.

What Are The Keys To Becoming Rich?

Keep in mind, I am not rich, so my opinions are based solely on observations.  However, there are a few things that MOST of the rich people I know have in common, they…
  1. Work Hard.  I do not know of one rich person that just sits back and collects money.
  2. Have Multiple Revenue Streams.  What I have noticed is that most of the rich people seem to have income not just from their main job, but also from other areas, such as rental properties, side jobs, investments (like dividends and annuities), etc.
  3. Earn More Than They Spend.  This might be common sense, but I think one of the key aspects to obtaining wealth is to just earn more than you spend.  You can call this frugal or whatever you want, but many rich people seem to really hate spending money when it isn’t necessary.
  4. Learn and Evolve.  The wealthy seem to find ways to make more money.  Maybe it is through smart investing, or learning something new that can be applied to making more money.  Stagnating is not an option.
  5. Take Risks.  Many people did not become rich on the first ‘try’.  Some changed careers, expanded their businesses, and a lot of other things to attain the wealth they have.  They have accepted failure when it happened, learned from it, and moved on to the next challenge.  (Instead of living in denial and refusing to give up on a ‘failing’ dream.)
  6. Started Saving Young.  Many of the rich I know of did not start out rich by any means. They may not have had much money, but they still found a way to save.  They understood the time value of money and how important is to save when you are young.
  7. Are Health-Minded.  All the financially secure people I know are also fairly health conscious.  None are obese, most try to eat healthy, and many put a premium on getting exercise.  Actually, I don’t know one wealthy person that is lazy or has a steady diet of junk food.

Of course, there will always be the people that inherit their way to fortune, and that is OK.  However, I believe that the ‘inheritors’ are a small percent of rich people.  (I have no statistics to back this up.)

Remember, it is never too late to try to become rich. Even if it is just a concerted effort to spend less than you earn, you will still be in a better position than if you just spent money when you felt like it.  Also, not everyone has to be a doctor or a lawyer to become rich. There are plenty of plumbers, teachers, and ordinary people that fall into the definition of rich.  Sure, it is harder to become rich with a smaller income, but it is definitely possible.

What are your thoughts?  Do you know many ‘typical’ people that are rich?  Or, is my perception completely different than yours?

If you enjoyed this post, please leave a comment or subscribe to the RSS feed to have future articles delivered to your feed reader. Thanks for visiting!!!

{ 32 comments… read them below or add one }

Money Reasons July 25, 2011 at 6:57 am

I don’t know many lazy people that are rich. I suppose their might be a few that won lawsuits, but that is hard to do and I bet most don’t hold onto that money long (like lottery winners).

Overall, seems like you nailed it! Very nice writeup!

Reply

Kris July 25, 2011 at 8:04 pm

MR, I completely forgot about the lawsuit aspect- good catch!

Thanks for the kind words- I love your comments! 🙂

Reply

First Gen American July 25, 2011 at 7:19 am

The rich people I knew growing up with the fancy cara almost went bankrupt at one point. They owned a lot but they were highly leveraged.

My perception about rich people these days is highly jaded. The executives at my firm who have a lot of money, have very little free time. They’re always working and are never home. If working is their passion, then great, but I feel bad for their families. Sure they have a great homes and vacations, but at the expense of time. Ive also met rich people’s kids and the few I know have no or terrible relationships with the breadwinner because they always put work first over anything else. I’m positive I could have achieved this type of job if I kept myself on the fast track, but in the end, I didn’t want the money that badly and started working a lot less once the kids came along. I also didn’t want 100% of my identity to be tied to my job.

I’d rather be rich in a way where my cost of living is far below my earnings. That way I can work a relatively normal job but still have time for my family during the week and weekends and plenty of buffer to keep emergencies from being catastrophic.

Reply

Kris July 25, 2011 at 8:04 pm

I am jaded too First Gen. What is the point of having all that money and vacation homes if you don’t have the time to enjoy them anyway? Not to mention the people you alienate along the way just because you don’t have time for them.

Reply

101 Centavos July 25, 2011 at 7:41 am

No use being rich if you don’t take care of human relationships. One of my good friends became financially independent at 37, worked long and hard at it, but at the expense of his marriage. It took many years for him to reconnect with his daughter. So much wasted time.

Reply

Kris July 25, 2011 at 8:02 pm

Oh my gosh, what a terrible story 101. You are right, you have to balance earning money with taking care of those you care about (and care about you). It is one thing if it is a 6 month assignment or something, but long term is a relationship killer.

Reply

Niki July 25, 2011 at 9:20 am

You mean rich people don’t all wear top hats, a monocle and carry a hand-crafted cane? How ae we suppose to know then?

My perception has changed as well, but just recently.
I only recently realized the people I thought were rich are probably not and are in debt up to their eyeballs. Now, I look at people who don’t flaunt money and think hmmm.. maybe they can be considered well off. They have a nice car and home but nothing over the top.

Reply

Kris July 25, 2011 at 8:02 pm

Are you modeling your idea of a rich person from the Monopoly guy? 🙂 (Don’t forget the moustache.)

Our views are very similar. I sometimes look at a very simple living individual and think “I bet they have a lot of money stashed away somewhere…”

Reply

First Gen American July 26, 2011 at 12:00 pm

Actually, I had the image of Mr. Peanut flash in my head myself.

Reply

No Debt MBA July 25, 2011 at 10:27 am

I think your traits of the rich are spot on. Hopefully I can join their ranks some day!

Reply

Kris July 25, 2011 at 8:01 pm

Hopefully both of us can MBA. I think you are off to a great start though!

Reply

MoneyCone July 25, 2011 at 11:08 am

Those 7 tips should be framed and given to all fresh graduates! Being debt-free is a good starting point towards being rich, that was my profound realization.

Reply

Kris July 25, 2011 at 8:01 pm

Not having debt is a great start for sure. For me, having a little debt may have helped because it made me hate it so much that I never wanted to have it again. I would have rather taken my chances and started out with a nice clean balance sheet instead though!

Reply

Kellen July 25, 2011 at 11:23 am

I have heard some statistics (on NPR, but of course, I don’t know how to find the source material) saying that very few families move between classes over generations. (i.e. the American dream that anyone can work hard and become rich is not true, because chances are you will be in the same economic class as your parents.)

However, I still have faith that it is possible to have everything you want if you work hard. However, I think that if your “want” is to spend more time with your family, you will end up more satisfied than the executive whose “wants” include fancy cars and beach houses for his family, but leaves out actually spending time with them.

Reply

Kellen July 25, 2011 at 11:25 am

Oh, and my point about the not moving between economic classes is that many of the people who end up rich in the money sense probably had parents with quite a bit of money. They may not have inherited a fortune, but probably had better access to education and fancy jobs *because* their parents were well-off.

Reply

Kris July 25, 2011 at 8:00 pm

I totally agree with you Kellen, I think it is hard to move between ‘classes’ for a lot of people. Having examples to follow and people who encourage you are a big part of being successful, and if you are young and don’t have a path, then it can be easy to settle for the status quo.

I wanted to stay home with my kids, and gave up a lot of income to do so. For me, it was the best decision I ever made. Sure, having more in savings would be great, but I am perfectly happy just the way things are!

Reply

Crystal @ BFS July 25, 2011 at 12:50 pm

I completely agree with your current definition of rich and how to get there. I don’t even have a dollar figure in mind anymore when I think “rich” – just that they have more than enough to afford the lifestyle they want. I guess in that way, my husband and I are already rich, but we are aiming for rich without having to work, lol. 🙂

Reply

Kris July 25, 2011 at 7:58 pm

If I were to quantify rich in how I feel about the ‘richness’ of my life, I would say I am one of the richest people on earth. However, looking at it strictly from a monetary point of view, I have a ways to go unfortunately!

Reply

krantcents July 25, 2011 at 4:47 pm

I can assure you that my children will not be inheriting my wealth, although I have no problem contributing to my future grandchildren’s education. Rich seems to have a lot of definitions, so I decided that I am going straight to wealthy. A definition of wealth or wealthy is equally unclear, but it seems it is more than rich.

Reply

Kris July 25, 2011 at 7:57 pm

I agree KC, Wealthy does seem a step above rich. However, I think once you are above a certain amount, it doesn’t really matter anymore.

Reply

Jenna, Adaptu Community Manager July 25, 2011 at 6:52 pm

Did you really know what a Rolls Royce was when you were 10?

I know a lot of “typical” people who live rich lives. Some own boats, nice houses and other toys. I just think being able to share your wealth with family and friends is all that really matters. Having things and no one to enjoy them with isn’t worth it to me.

Reply

Kris July 25, 2011 at 7:56 pm

Jenna, I think I learned what a Rolls Royce was from the game of Life or something like that!

Money without love does seem kinda useless!

Reply

Suba July 25, 2011 at 6:57 pm

Rich to me is giving away all my income and still live off the streets. Weird definition but that is what we are shooting for. Our kids won’t be inheriting much. Something that comes easily never sticks…

Reply

Kris July 25, 2011 at 7:56 pm

My kids won’t inherit much either, except maybe my old vinyl albums from the 80s!

Reply

The Biz of Life July 26, 2011 at 8:16 am

Compound interest— the most powerful force in the universe.

My definition of rich is having enough resources to satisfy all of my needs (which aren’t many) and having to ability to give it away to worthy causes.

Reply

Kris July 26, 2011 at 9:33 am

Good definition Biz.

I do like compound interest, and am so glad I started saving early. Unfortunately, the market has really taken some hits since I started investing in the early 90s.

Reply

Little House July 26, 2011 at 10:06 am

The definition of rich has definitely changed for me as well. I used to think that being rich was associated with owning lots of stuff. I’ve done a 180 on this one.

Rich to me is having enough money that you don’t have to stress out over emergencies, you have cash on hand, and a fat retirement fund that will allow a person to actually retire at or before retirement age. I know I started saving for retirement a little late, but with working a few years longer, I should be able to catch up. Staying healthy is also very important. Hard working people usually work hard at exercise and eating right as well. Being lazy doesn’t get you anywhere.

Reply

Kris July 27, 2011 at 10:38 pm

It is interesting how certain traits seem to fit together.

I am sure you will be able to catch up. You are very smart with money!

Reply

Jacq July 27, 2011 at 12:56 am

I like to think of it as abundance in a way – of having Enough and then a little bit more for insurance – as Little House above said. Many people I know and many I am related to are far more materially wealthy in terms of pure $0`s in the bank account than I am. But I think my life itself is richer than most of them – in my own mind at least. 🙂
OTOH, I also like one of the definitions in The World English Dictionary: very amusing, laughable or ridiculous.

Reply

Kris July 27, 2011 at 10:35 pm

That comment was Rich! 🙂

I totally feel happier than some of the rich people I do know. However the people that really overcame obstacles to get to where they are monetarily seem pretty happy too.

Reply

Joe Plemon July 27, 2011 at 2:43 pm

Another take on “richness”: Although I am probably not considered “rich” by any American standard, I am certainly rich by world standards. According to http://www.globalrichlist.com, I am richer than 99% of the people in the world. I love Suba’s definition, although I am not too keen about living on the streets.

Reply

Kris July 27, 2011 at 10:18 pm

I totally agree with you Joe. I feel rich on so many different levels, and incredibly blessed. If only the rest of the world had it as good as we do in the US.

Reply

Leave a Comment

{ 3 trackbacks }

Previous post:

Next post: