I’ve asked many immigrants and working people if they prefer to be rich or wealthy.
Many don’t understand the question. Some tell me they prefer to be rich, they believe new wealth is unattainable or not possible. They understand financial wealth as a generational endowment that few people will ever experience. In addition, they remind me that life is unpredictable, “who wants to plan for a long-term strategy”. I don’t believe this to be completely true, however I have learned something from their answers. There is a distinct difference from those who are rich or wealthy. Comedian Chris Rock has it wrong when he says, “Shaq is rich, the..man that signs his check is wealthy”.
In my work, I encourage wealth creation, even if it means never becoming rich. Most people ask, how can this be possible? What is the difference between richness and wealth? Is it long-term planning, community planning, trust? In my experience, there is no one simple answer.
Those who are wealthy have the freedom to do as they please with their time.
Every prosperous decade, more workers find themselves making strives to enrich themselves and increase their income. Many people gaining excess income for the first time choose individualistic expressions of materialism (shop till you drop). This behavior is common in working and immigrant communities. With immigrants, the closer their non-American relatives live to them the more pressure they feel to express their financial accomplishments.
In my work, I’ve asked community members if they would prefer to be rich or wealthy. Many seem to be confused with the question. I’m usually asked to explain the difference. At times, I have given this simple definition. If you are rich, you make more income than you need to survive and have the opportunity to place your discretionary income into any place you want. If you are wealthy, you can make any level of income, but you don’t have to work to survive. Those who are wealthy have the freedom to do as they please with their time.
After clarifying my question, I find many responses surprising. Some feel their family and community gives them a greater type of wealth. Several cultures and traditions treat this type of wealth as a greater value. Their investment is their family and children, who will support them at an older age. When pressed to comment on the integration of their children into our modern American culture, they pause and complain. They feel their heirs might not have the same values. Many blame themselves for not being good mentors. Finally, many immigrants confess that if their plan for retirement fails in this country, they will move back to their homeland and retire were it is less expensive.
I remind them of their work, sacrifices and how their accomplishments would be better served if they created a foundation for the next generation. At this point, I really lose their interest. The prospect of enriching someone’s life to improve theirs is confusing. Yet, this is the way the rich became wealthy. Rich people are those with disposable income but not necessarily disposable time. Those that choose to invest in their future have wealth that is transferable. Richness cannot be transferred and it will go away once someone with a single source of work income stops working. Some rich people are a paycheck away from being poor.
Many who are wealthy have someone who will support them.
Financial hardships are a part of life for anyone who needs to work. Making financial choices may lead to losses. I talk to people about the need to build out a plan to be wealthy. The concept of retirement takes on a very crucial meaning for those who have lost their richness. There are many theories about how to build a wealth portfolio that will bring in passive income and allow the freedom of time. Many of today’s retires have a fixed and passive income that provides the freedom to pursue happiness. There are many examples of wealthy people who have their home paid, live without a car expense and have a monthly income of less than $1,000 per month. These are the people who rely on a fixed income which provide them with the freedom to spend the day as they wish. The hard part is that this theory takes time to materialize. However, planning and encouraging your children to honor and care for their parents also takes time. Both goals take planning and managing skills.In today’s financial reality, there is less discretionary income to invest. Pensions are being replaced with voluntary, non-matching, 401K’s. Where does that leave the current financial system if the new large majority of immigrants and new Era minorities will not invest and might leave during retirement. Today, many states with high costs of living are suffering from the exodus of the baby boomers. Imagine if this occurs throughout the country.The good thing about our current recession, is that we are thinking about money matters. It is during these opportune times when we should restrain from spending and execute on the long-term plan. Creating these behavioral changes can happen if we share our financial knowledge.
Any part of this article may be used freely with the condition that the author Miguel Vasquez, CEO of the California Foundation Fund be credited.