Everyone hopes to be rich at some point in their life. You might be looking at successful people’s lavish lifestyles and wish you were in their shoes. And of course, there’s nothing wrong with that. Looking forward to a better life is one of humanity’s essential motivations.

However, there’s a general misconception about being rich versus being wealthy. For many, these two words have the exact same meaning. But this couldn’t be further from the truth.

The goal of this article is to demystify this misconception of money vs wealth. To achieve this, we take a closer look at both sides of the spectrum and define each term precisely.

More importantly, by understanding the difference between wealth and money, you should be able to adopt a healthier mindset, geared towards building wealth over time. To this end,  we explore the essential steps you should undertake in your life and set yourself up for future success and a better financial future.

Money vs Wealth – A common misconception

Money vs Wealth

We appreciate money for the power it grants us to buy the things we want and need. That being said, very few people see the real potential of increased value that money can bring in their lives. Because of this, two very different concepts have emerged:

What does it mean to be rich?

Being rich essentially means having a lot of income or cash money at your disposal. As such, it often becomes the measure of one’s success. We see rich people driving the latest sports cars or wearing the most expensive clothes.

However, these luxuries come at a cost. You might be earning seven figures a year, but if your expenses surpass your income, you aren’t accumulating any wealth. Moreover, poor choices and expenses can lead to severe debt.

There are so many high-income earners out there that haven’t invested any of their money in assets. Once their unique source of income is shut down, they are quickly left with nothing. As a result, many celebrities succumb to their opulent behavior.

In short, being rich means that you, as an individual have a lot of resources at your disposal, but are not necessarily using them strategically to attain financial freedom. This highlights the difference between money and wealth – being wealthy isn’t all about money.

What does it mean to be wealthy?

In contrast to being rich, wealth has more to do with the financial freedom it provides. Wealth allows you to stop living paycheck-to-paycheck. It’s about amassing assets that can work for you, so you can eventually stop selling your time to earn money.

As such, wealth is rarely represented by luxury, fancy cars, or houses. Instead, it’s portrayed by the free time you have while simultaneously being able to reach your desired lifestyle. It could also mean that you can stop working at any point in life, without the risk of financial failure.

Furthermore, wealth makes money more valuable. The things you can buy with money are ephemerous. But if you use it to increase your net worth and create more value, you are on your path to becoming wealthy.

All in all, rich people earn a lot of money and spend a lot of money. On the contrary, wealthy people invest their money strategically in order to set themselves up for automated cash flow through assets that are protected from inflation.

To head towards this goal, you need to let go of the “poor mentality” a lot of people tend to get stuck in. And the best way to do this is by understanding the difference between rich and poor mentality.

Rich vs poor

Rich vs poor – mindset differences

It’s no secret that there are two types of people in the world – those that are successful and those that aren’t. Many initial factors contribute to these differences, such as upbringing, or your starting wealth – all of which cannot be altered in the course of your life.

However, the characteristic that stands out the most is our mindset. The way we think about ourselves and the world shapes our decisions. And this is easily reflected when observing rich vs poor differences in thought patterns. Let’s analyze the most common ones:

Having control over our lives

Wealth-minded people believe firmly that they have full control over their lives. Poor-minded people (the so-called “Rich”), on the other hand, accept life for what it is and let it happen to them.

To be able to create wealth, you must make difficult decisions and take risks that lead toward financial growth. This requires bravery and self-confidence.

Conversely, the victim mentality is often predominant in poor people’s lives. People get consumed by unfairness and blame external factors for their failures, therefore never actually improving.

The wealthy mindset is about taking control of your life and holding yourself accountable for the decisions you make at all times, financial or otherwise.

Working for money

The wealthy understand that we are limited by our regular income. If you are constrained to hourly pay, you will never be able to build significant wealth. No matter how much you optimize, you will always be able to only earn so much in the end.

The mindset of success understands this. As a result, the wealthy do not rely on their income to build net worth. Instead, they either invest in assets that generate passive income or use their money wisely to earn from the work of others.

Poor people, on the other hand, work for others and towards someone else’s dream. They use all of their precious time for a limited wage, never really getting ahead in life.

Employment should be used as a basis to raise capital and invest in assets that will build your wealth over time.

Risk vs reward

The wealth-oriented mindset sets itself for success by taking risks and investing resources in ventures that don’t provide immediate payback. 

The wealthy take calculated risks, using references and logic in the process. For instance, they can take advantage of a downtrend in the crypto industry, accumulating more assets for the next bull run. 

The poor mindset is either zero-risk or all-in, both of which don’t work toward building wealth in the long term. They either prefer to

  • keep their money in their bank account and let inflation eat up their savings. 
  • or keep taking poor and impulsive financial decisions, investing without doing due diligence.

Smart use of resources

Another difference between money vs wealth is the usage of resources. The wealthy mindset understands that the initial goal is to create a surplus of resources. Then the goal becomes to use this surplus to build passive income which compounds their wealth.

The poor mindset can also create a surplus of resources but sees it as an opportunity to immediately overspend. They create a new lifestyle that needs more upkeep, which never actually allows them to use the surplus on appreciating assets such as stock or cryptocurrencies.

Learning continuously

The difference between rich and poor is that the wealthy mindset understands the importance of ever-going education. Most millionaires and billionaires set aside at least one hour in their day to learn something new.

Unlike people with a poor mindset, successful people believe in knowledge. As such, they invest a part of their time in becoming better at what they do, continuously learning new skills and delving deeper into their field. This allows them to excel at their work and build towards the ever-important surplus income.

By reading and learning about finances, for instance, you will be able to understand more about how money works and detect passive income opportunities.

Meaningful relationships

The wealthy mindset seeks relationships based on trust, competition, respect, and shared values. Furthermore, they cultivate these relationships while at the same time expecting nothing in return. They thrive by connecting with smarter and better people, which helps them learn and grow.

The poor mindset often has a “What’s in it for me?” attitude in their relationships. They seek an entourage where they can feel superior, which doesn’t allow them to budge from their stagnating mindset.

This is known as the “crab mentality”. It makes a parallel to crabs that are trapped in a bucket that could easily escape if they helped each other. Instead, they hinder their peers and everyone remains trapped forever.

Focus on solutions instead of problems

The wealthy understand that the road to success is filled with challenges. Thus, they focus on finding solutions to their problems and consider them as mere hurdles to their ultimate goal.

The poor mindset is filled with excuses, and will often give up at the first sight of disappointment. And as we mentioned earlier, they have no means to pick themself up, as they haven’t invested in learning new skills. Nor can they rely on their relationships, as they haven’t surrounded themselves with the right people.

Short-term vs long-term

Considering money vs wealth, money provides short-term satisfaction, while wealth is a long-term goal. The rich mindset looks at least 10 years in the future, understanding that it will take time and effort to build sustainable wealth. To this end, they work towards building multiple streams of income and plan ahead.

The poor mindset looks for instant achievement. They think of their money as a short-term asset, meant to be spent right away. Poor people work towards their next meal, trip, or coveted item, instead of working towards financial freedom.

Rich vs Poor

Essential steps to implementing a “wealth” mindset

The previous chapter helped us establish that wealth greatly depends on your mindset. However, improving your money vs wealth mindset is only the starting point in your journey to financial success. In case you want to see some real results, it is paramount that you begin applying some of these improvements in your life.

1. Establish a clear set of goals for your financial future

One of the most important steps in your money vs wealth journey is to decide how you are going to achieve wealth. Below is a practical example of such a roadmap:

  • Max out all tax-advantageous accounts such as 401k, pension or health savings account (HSA). 
  • Spend an hour a day educating myself about finances and investing. 
  • Start budgeting and put aside at least 15-20% of my salary each month. 
  • Begin investing regularly in cryptocurrencies and stock, using DCA strategies. 
  • Keep my daily job, but start cutting back as soon as investments and passive income starts bringing in considerable amounts. 
  • Open a business that will be a steady stream of funds even after I retire. 
  • Etc… 

This is only an example of a financial future checklist, as it will be different for everyone. It should help you, however, to start building your own.

2. Start budgeting and repay all short-term debt

In a previous article, we already talked about the importance of living on a budget. Make sure you take advantage of this knowledge and begin by repaying all of your debt that might be hindering your access to some excess income.

Focus on repaying the high-interest debt types first, such as credit cards or short-term leasing for vehicles.

Besides, budgeting will hold you accountable when you are about to splurge on unnecessary expenses. This will allow you to organize your wages more effectively so you can begin investing a portion of your income into non-depreciating assets.

3. Begin educating yourself on how to invest your excess money

Before you can invest, you need to educate yourself on the best ways to do it. Read about the stock market, cryptocurrencies, commodities, real estate, anything that could be a sustainable stream of income in the future.

There’s also a good number of books written on how to improve your relationship with money and thrive toward financial freedom.

If it seems too complicated,  you can also get advice from a professional advisor to get you started.

4. Start investing as much and as early as you can

Once you have acquired some decent knowledge on investing, don’t waste your time and begin right away. The sooner you begin investing, the bigger the opportunity.

For instance, compounding interest is a powerful wealth-building tool. This means that the profits you gain from your investment are reused to bring in even more interest.

Just remember that investing in stocks and crypto remains a risky venture, so never risk more than you can afford to lose.


In this article, we talked about money versus wealth and how these terms can signify two completely different things. To this end, we established that looks can be deceiving and big spenders that may appear rich on the surface aren’t actually wealthy.

Additionally, we covered the difference between rich and poor mentality, and how to distance yourself away from the poor mindset to begin building wealth. We also talked about how long-term financial achievement requires a good deal of self-discipline and how to implement a plan for yourself.

Hopefully, by understanding the differences between money vs wealth you will be able to plan ahead and strategize for a better future and your eventual financial freedom.