Urban Thought Collective

Do you want to be rich or wealthy?

I enjoy the song by Calloway, “I Wanna Be Rich,” but let’s enhance this anthem by changing the last word so we can recite instead “I wanna be wealthy.”

Are some so obsessed with becoming rich in order to appear on the series “Lifestyles of the Rich and Famous” or their own reality shows? Consider a title change to “Lifestyles of the Wealthy and Legacy Builders.”

My position is that you should strive to become wealthy if you are willing to put forth the effort to become rich.

What is the difference?

Rich is:
Life-style based upon current cash-flow/income
Possessions newly acquired
High income/cash flow not necessarily accompanied by high net worth
Purchased social prestige and privilege

Wealth is:
Generational/legacy focused
A lifestyle not based upon current work or income
Abundance of assets and net worth that generates cash flow and income
Affluence/social prestige not purchased

Even before the recent mortgage meltdown, how many times have you heard about someone you thought was wealthy suddenly lose assets including homes and cars and started battling with the IRS?

Wealthy people are typically:

Able to purchase cars for cash…financing only for a short-term period until funds are transferred.

Consulting regularly with “advisors”…Attorneys, Investment and Insurance Brokers, CPAs, personal assistants, etc…

Working because they want to work…living expenses are not dependent upon them showing up for work daily.

Invested in diversified assets that they are willing to sell…that have the potential to grow in value and/or disburse income and cash flow.

If you have not already read the “Millionaire Next Door” by Thomas Stanley and William Danko, visit your local library or go on-line to pickup a copy to familiarize yourself with additional characteristics of how wealthy individuals live differently than rich or others.

Whether you’re rich, wealthy or working-class, the life choices you make with your spending plan and investment strategies affect your finances. If you were not one of those who hit the gene-pool lottery (and were born into a wealthy family) taking steps now to save for a rainy day and adjust your lifestyle to make sure that you are investing in assets that will grow in value and not growing debts will help in your quest to become wealthy.

Making good financial choices are especially important during challenging times, so make sure that you are evaluating where and how you live. Depending on what region you live, your expenses will be a certain percentage of your income. Understand how much it takes of your income to live. For example, if it takes 45% of your income for housing, 20% for food and entertainment, 38% for federal and state income taxes, 10% for charity, 15 % for clothing and personal expenses, etc… it’s time to evaluate how you are going to save some money for future or emergency expenses (you’re already negative cash flow by 28%, this means that you are either borrowing or using the principle of your investments). It’s time to increase your income, cut back on expenses, and re-balance your portfolio or all three.

Again, as you work towards wealth to make your desired lifestyle affordable and comfortable, remember you want to have a future lifestyle as well!

Think about it!

Genevia Gee Fulbright, CPA is President & COO of Fulbright & Fulbright, CPA, PA, a business strategist, tax advisor and author of Make the Leap: Shift from Corporate Worker to Entrepreneur and most recent book Make the Leap: From Mom & Pop to Good Enough to Sell (Infinity Publishing). Her sound financial planning advice tips can be read regularly on www.urbanthoughtcollective.com. Visit Fulbright at www.makeleap.com.