Words are strange things. They can make us laugh, or cry; they can clearly define a concept or be as clear as mud; and they can create one image to one person and a completely different one to another. In a country where capitalist concepts drive nearly every aspect of society, some words are used interchangeably but, are they really? While the words “rich” and “wealthy” are often used as if they were the same thing, the reality is that they describe very different sets of characteristics so, are you “rich” or are you “wealthy”?

What does it mean to be rich? When most of us think of someone who is “rich” we think of someone living a luxurious lifestyle with a robust income, expensive possessions like a big house, fancy car, and perhaps some understated but clearly opulent bling. In the U.S., the top 10% of the population has an income that exceeds $191,000, the top 5%’s income exceeds $290,000, and the 1%’rs have incomes of more than $867,000 per year. What we need to remember, however, is that someone’s income doesn’t mean that they are financially stable or that they are going to be in the 10%, 5%, or even 1% for their lives. Let’s look at that 5% bracket. If that person happens to live in one of our more expensive major metropolitan areas, they are going to have far less disposable income after paying for housing than if that same person lived in a second-tier city. And we all know people who make very good money and are dancing on the edge of fiscal collapse.

Think of all the famous people who have made poor financial choices (sometimes astonishingly poor financial choices) and now either have nothing or have had to claw their way back from financial ruin. We can look at the early rich like the Vanderbilts (who lost nearly everything after having nearly everything), or the athletic rich like Boris Becker (yes, you can spend time in prison for being a financial deadbeat) or Curt Schilling (who rolled the dice on one $50 million investment and came up snake eyes), or the artistically rich like Michael Jackson ($400 million in debt when he died), Willie Nelson (with a $16.7 million tax bill for avoiding his taxes, for quite a while – it’s a good thing he can still tour…), or Francis Ford Coppola ($98 million in the hole at the time of his second bankruptcy). Even our Presidents aren’t immune from being tragically inept with their resources and No. 45 wasn’t No. 1 given that our 18th President, Ulysses S Grant lost it all to an embezzler and went bankrupt in 1884. For each of these, and many others, prioritizing material possessions and worrying about how they were perceived by others drew their attention away from keeping an eye on their financial situation.

Which brings us to what it means to be “wealthy.” While being “rich” might have the trappings of external opulence, being “wealthy” has more long-term characteristics. You can be “wealthy” at any socio-economic level if you have good financial habits that are working towards your long-term financial security. That would include having a diversified investment portfolio, understanding how you are spending your income, and having a well-thought-out financial plan that incorporates the here-and-now as well as your future. Someone who is in that top 10% income tier could be far wealthier than someone in the top 1% if that ten-percenter lives on a spending plan that includes saving appropriately (or even aggressively), makes smart purchases, and incorporates some sort of philanthropy in their lifestyle while the top one-percenter spends everything and can’t figure out how to pay the tax bill every Spring.

When I look at the people who wander through my office, I am often struck by the ones that understand that being “wealthy” allows for a level of freedom while those who are focusing on the “rich” characteristics often exhibit signs of stress and anxiety.

Is it time to think about how “wealthy” you are? If, perhaps, upon reflection, you aren’t feeling all that “wealthy” what might you do to make that change? It might mean making some big changes (changing houses, habits, or spouses) or it might mean making some simple changes (nibbles at the park with friends rather than a restaurant dinner, or shopping in the back of your closet rather than a boutique). Regardless, we all have the ability to be “wealthy” if it is important enough to us.