Wealth vs. Income: What Does it Mean to be Rich?

A few years ago, a financial advisor treated my co-workers and me to lunch – one of those deals where you get a free meal in exchange for listening to a sales pitch for financial planning services.

The central theme of the advisor’s pitch was: “Start planning and saving for retirement now! The sooner you get started, the more secure you’ll be in the future.”

Good advice, to be sure. But none of us left that day feeling particularly motivated to consider the prospect of retirement. And I suspect we aren’t the only ones to feel less-than-anxious about the far-off land of retirement. Why?

Most people aren’t concerned about what money means in the far, far future – they’re concerned about how money affects their lifestyle right now.

Bottom line: we don’t want to be rich; we want to be rich now.

But “rich” means different things to different people. One person might be driven to create a fortune, while another would rather live freely on a tight budget. Each one considers him/herself to be rich, and they’re both right. Force these two people to switch places, however, and they’ll both be miserable.

To be “rich,” you not only need to have money – you also need to follow a financial path that makes you happy. That requires a decision now, rather than later. It is absolutely something that affects your lifestyle today.

This is, in my opinion, the first question you must ask yourself before making any sort of financial plan:

Is accumulating a lot of wealth one of my goals, or am I happy with securing a steady income?

There’s nothing wrong with either option, but they will lead you down radically different paths.

The Path of Wealth

Your heroes are people like Warren Buffet and Bill Gates. You not only want to have money – you want to have more than you could possibly spend in a lifetime. Some people may think your goals are shallow, but you understand that wealth is a tool, and it’s how you use it that counts.

On the path of wealth, generating money is of your primary goals. You choose jobs based on how they’ll help you develop the skills and resources needed to make money, even if you’re not particularly interested in the job itself. You’re willing to spend a lot of time on making money now (and possibly for years to come), in the hopes of creating (or investing in) an immensely profitable and scalable business.

Often you create success, reap the benefits, and move on to the next project.

As you walk the path of wealth, you come to understand that wealth encompasses more than cash. You’re also compelled to create products, businesses, and innovations that make an impact on the world, that create an enormous amount of value – which, of course, usually has the side effect of making you (deservedly) rich.

Your legacy is one of size, breadth, and reach.

Sadly, your brand of life isn’t as socially acceptable today as it once was. People may be suspicious of you simply because you have so much money, and many will presume to tell you what you ought to do with the wealth you’ve accumulated. Your task, then, is not only learning how best to make money, but also how best to spend it.

The Path of Income

I personally walk the path of income. Although I wouldn’t mind being wealthy, I’m not nearly as excited by the idea of being (financially) rich as I am by the idea of being financially free. I am content to make an “average” income for the rest of my life, so long as I can live my life in whatever way I choose.

I’m more likely to start small, personal, but generally less-scalable businesses that offer a modest income and a lot of flexibility in time and place.

My financial focus is on reaching a “critical mass” of steady income that allows me to live comfortably and that, preferably, can be nurtured from anywhere in the world. Once I reach this critical level of income, I’m happy to leave financial growth alone and turn my time and attention onto things I find enjoyable, interesting, or compelling. I enjoy the idea of reaching my financial “endgame” quickly, even if that endgame doesn’t involve a large bank account.

Like those who walk the path of wealth, I recognize the importance of making an impact and leaving a legacy. Unlike them, however, I’m likely to make my impact in a smaller, more personal, more focused manner. I’m more likely to be a thought leader than a market leader. I create change by finding ways around the money barrier, and because of this, I am often more agile.

Even though the path of income is popular nowadays, few people are willing to fully embrace it, because they’re unable to let go of their fleeting desires for the path of wealth. The challenge for many of us is to weigh our values, make a decision, and never look back.

Isn’t there a happy medium?

Yes and no. There are degrees of financial need; for example, someone walking the path of income with a family to support would need to focus on money for a lot longer than someone who’s content to walk the road alone. For some wealth-seekers, creating a $100 million fortune is good enough; others seek to break records.

And there are places where the path of wealth and the path of income intersect. No matter which path we choose, we must eventually learn that money is a means to an end, and our choice is whether to leave a legacy by using money directly (funding cancer research) or indirectly (volunteering for disaster relief).

In that sense, yes, there is a happy medium.

But the crucial difference is in the focus of each path. On the path of wealth, making money is a primary focus. You want your efforts to translate into dollars, and the careful growth of your finances is something you truly care about. You are to be commended.

On the path of income, however, you care about money only as a platform from which to launch the rest of your life. Your emphasis is on creating this platform quickly, then moving on with your life. If your efforts make you wealthy, great – if not, you’re still happy. You are also to be commended.

Here’s what’s important: both paths are honorable, though they are not equally popular. We must decide whether having more wealth gives us pride or weighs us down – and the answer will be different for each of us.

Which path are you on? How will you walk forward with purpose and integrity? Please share your story and opinions.

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