What Does It Mean to Be Rich?
"There are people with money, and there are people who are rich."
-Coco Chanel
A businessman visits a small village on vacation and every day sees a fisherman rowing a small boat after catching a few large fish. Finally, the businessman asked the fisherman how long it takes him to catch all those fish. The fisherman says it doesn't take long.
The businessman asks why he doesn't stay out longer and catch more, to which the fisherman replies that he catches enough to feed his family and that's all he needs. The businessman asks what he does for the rest of the day.
The fisherman tells him that after fishing, he goes home to play with his kids, takes a nap with his wife in the afternoon, and goes for drinks with his buddies and plays music all night long.
Puzzled, the businessman offers a suggestion. He tells the fisherman he has an advanced degree and decades of experience in business and offers to help the fisherman. He suggests spending more time at sea to catch even more fish, since he seems to be successful doing so. He can sell the fish he doesn't need and eventually afford to buy more boats and a team to help him. Together they can run a successful business and the fisherman can become very rich.
The fisherman asks what happens after he is rich.
The businessman replies that he can then retire, spending his days fishing, playing with his kids, taking afternoon naps with his wife, and playing music while enjoying drinks with his friends.
Rich is Not Income
I don't have any research to back this up, but my gut tells me that most people would view someone who has a high income as being rich (I'm using "rich" and "wealthy" as synonyms). That certainly seems right, because having a high income, all else equal, makes it easier to become wealthy. Unfortunately, income only equates to wealth if it's saved. If you get a million dollars you are a millionaire. If you spend $1 from your million, you are no longer a millionaire.
It's not what you make, it's what you keep. That phrase tends to be used a lot with regard to taxes, but it also applies to spending. If you earn a lot of money, but you spend a lot of money, you'll have a lot of stuff and a lot of cool experiences, but won't have much money left.
Is that rich?
Rich Can Mean Wealth
If we take that a step further, let's suppose someone saves all their money and doesn't spend a dime (other than enough to survive). Sometimes these people are referred to as misers or cheapskates.
At it's extreme, you know this person as someone who resembles Ebenezer Scrooge. Scrooge saved up an enormous amount of wealth, but he didn't spend any of it. He was miserable and hated everyone and everything. He had money in the bank, but he wasn't happy.
Is that rich?
On the other hand, there are some who live on far less than they earn and give themselves a comfortable lifestyle they enjoy, all while building a nice nest egg. That sounds rich to me, but of course you wouldn't be able to tell these people just from looking at them.
It's All Relative
One thing is for sure; no matter how you measure wealth, people aren't happy with absolute measures. Humans have a tendency to feel "rich" only when they compare themselves to others. The funny thing is, this relativity only works one way. We don't really care if we have more (whether income, savings, wealth, or otherwise) than someone else. We seem to only care that we don't have as much as another person.
There seems to be a tendency for people to think this kind of thinking applies to "poor" people. If you're poor, then anything more than what you have is going to be considered rich.
Of course, we know that this doesn't just apply to those in or near poverty. Someone who would generally be considered middle class only looks up the ladder, as well. Whoever has more will be considered rich. No matter where we are on the spectrum, we ourselves are the starting point upon which everyone else is measured. Those with less are "poor" and those with more are "rich."
In case you are wondering; yes, this phenomenon even applies to the top tier. Remember, we only know what is in our world. If we live in a neighborhood where everyone has more (whatever that means) than us, then we will feel poor by comparison.
Where's the Gratitude?
Somewhere along our path up the mountain, we forget to turn around and appreciate how far we've come. This used to be me; I used to think that people who turned around to bask in how far they've come were wasting time. I've now started to focus on gratitude and focusing on what's been going well.
Focusing only on upward mobility takes away from truly being happy with our lives.
Life Satisfaction and Comfortable Lifestyle
Think back to that opening story about the fisherman. This fisherman had comfort, happiness, security, freedom, and time to do the things he likes doing. It seems to me that's what rich means.
If you you are leading the life you want and don't have to worry about how to fund it, what's the point in searching for more? Avoiding lifestyle creep is a great way to build wealth while being happy with your current lifestyle.
As always, I'm open to discussions. Let me know whether you agree or disagree.
Read More:
References:
Jonathan Clements: How to Think About Money
Ted Klontz, Rick Kahler, Brad Klontz: The Financial Wisdom of Ebenezer Scrooge
Thomas Stanley, William Danko: The Millionaire Next Door
Thomas Stanley, Sarah Fallaw: The Next Millionaire Next Door
Money Crashers: What Does It Mean to Be Rich?
Paulo Coelho: The Fisherman and the Businessman
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