Rich vs Wealthy, what’s the difference?

Many people dream of being rich. Luxury cars, designer clothes, and extravagant vacation seem like the ultimate goal. But what if that’s not the true measure of financial success?

Being rich and being wealthy are not the same thing. One refers to having money, the other, to keeping and growing it. True wealth isn’t about how much you earn, but how well you build a financial foundation that lasts. 

In this article, we’ll explore the key differences between being rich and being wealthy and how you can make the shift towards lasting financial independence.

Rich vs Wealthy introduction

At first glance, rich and wealthy people might look the same. They both have money, right? The difference lies in how they make, spend, and sustain it.

What does being rich mean

Being rich often means having a high income and a luxurious lifestyle. Rich individuals might earn six or seven figures a year, but their financial well-being is often tied directly to their ability to keep working. Their money comes from active income—jobs, businesses, or performances that require their constant involvement.

The problem? Many rich people spend as much as they earn, leaving them financially vulnerable.

Common traits of the rich:

• Live paycheque to paycheque despite their high earnings
• Spend money on luxury rather than investing in assets
• Rely on their job or business to sustain their lifestyle
• Have little to no financial security if their income stops

For example, a millionaire athlete or celebrity might seem incredibly wealthy. But if they spend every penny on flashy cars, designer brands, and a massive mansion—without investing or saving—what happens when their career ends? 

The same applies to a tech executive earning £500,000 a year but spending £450,000 on an extravagant lifestyle. If their income stops, their financial house of cards collapses.

Being rich can be exciting, but without financial planning, it’s temporary wealth, one unexpected event away from disappearing.

What does being wealthy mean

Wealthy individuals don’t just earn money, they build systems that keep generating income, even when they’re not actively working. Instead of relying solely on a paycheque , they focus on financial security, long-term assets, and financial freedom.

Common traits of the wealthy:

• Have diverse investments (stocks, crypto, real estate, businesses)
• Generate passive income that covers their expenses
• Can maintain their lifestyle without relying on a paycheque 
• Think long-term and build generational wealth

For example, an investor who consistently puts money into assets like stocks, real estate, and crypto creates multiple income streams that compound over time. A business owner who builds a company that operates efficiently—even in their absence—achieves true financial independence.

The key difference? Wealthy people ensure that their money keeps working for them. This shift from spending to strategic investing is what separates short-term riches from lasting financial freedom.

Financial Literacy: The Key to Sustainable Wealth

Building wealth is about knowing how to make money work for you. Financial literacy is what separates those who accumulate lasting wealth from those who simply have a high income.

Understanding how to invest, manage risk, and build passive income ensures that money is strategically grown. Without financial literacy, even the highest salary can be eroded by poor spending habits, debt, and a lack of long-term planning. The wealthy make informed financial decisions that allow their wealth to compound over time.

Case study: Investing over time

To truly understand the difference between being rich and being wealthy, let’s follow the financial journeys of two individuals: Lucas, who invests a portion of his salary consistently, and Daniel, who earns more but spends everything without investing.

Lucas – The Wealth Builder

• Age: 30
• Salary: €4,000 per month (€48,000 per year)
• Investment Strategy: Invests €1,000 per month (25% of his income) in the S&P 500 ETF (SPY)
• Average Annual Return: 10% (historical average of the S&P 500)
• Lifestyle: Lives below his means, controls expenses, and focuses on long-term financial security

Daniel, The High Earner with No Investments

• Age: 30
• Salary: €8,000 per month (€96,000 per year)
• Investment Strategy: None, prefers to enjoy his high income now
• Savings Rate: Close to zero
• Lifestyle: Luxurious, spending on designer brands, and expensive vacations

At first glance, Daniel appears to be better off, since he earns double what Lucas makes. However, let’s see how their financial situations evolve over time.

The Power of Consistent Investing vs. High Spending

Twenty years have passed, and now Lucas and Daniel are both 50 years old. They’ve each spent the last two decades living according to their financial habits, Lucas investing consistently and Daniel enjoying his high-income lifestyle without saving or investing.

Daniel still appears to be the more successful one. He drives the latest luxury car, takes extravagant vacations, and lives in an expensive home. Lucas, on the other hand, has continued to live comfortably but modestly, prioritizing financial security over material status.

But what happens when we look at their actual financial positions?

Lucas’s Wealth – The Power of Investing

Because Lucas consistently invested €1,000 per month in the S&P 500, he now has a portfolio worth around €690,000. Even better, his investments are now generating passive income through dividends and growth. If he chooses, he could withdraw a portion each year to cover his living expenses while letting his wealth continue to grow.

Lucas now has options—he can retire early, reduce his working hours, or continue investing to build even greater wealth. Money is no longer something he worries about.

Daniel’s Reality – The Illusion of Wealth

Daniel, despite having earned twice as much as Lucas, has a very different financial situation.

He spent his entire salary for years—on designer clothes, luxury vacations, and a lavish home. However, he never built true wealth. Now, at 50, he still needs to work to sustain his lifestyle. He has no passive income, and if his job were to disappear, so would his financial security.

While Daniel looked rich for many years, he never achieved financial freedom. Meanwhile, Lucas, who earned less but invested wisely, now has the ability to work less and enjoy life on his own terms.

Building Passive Income: From Traditional Investments to DeFi

Passive income has long been a key strategy for wealth creation. Traditional methods like dividend-paying stocks, bonds, ETFs, and real estate have allowed investors to generate returns without actively working. Stocks provide dividends, bonds offer fixed interest, ETFs diversify risk, and rental properties generate long-term cash flow. While effective, these strategies often require substantial capital and patience.

With the rise of DeFi, new opportunities have emerged. Crypto investors can now earn passive income through staking, yield farming, and lending. Assets like Ethereum and Polkadot offer attractive staking rewards, while DeFi platforms provide higher returns compared to traditional banking products.

Platforms like SwissBorg have made investing in cryptocurrencies accessible to everyone, offering tools to manage risks and maximise returns. We also provide opportunities for passive income through tools like SwissBorg Earn , which has offered annual returns of up to 14% on staking Polkadot ($DOT) and previously reached 11% on Solana ($SOL). These options make investing dynamic and consistently grow wealth.

Conclusion

The difference between being rich and being wealthy comes down to financial literacy, smart investing, and creating sustainable passive income streams.

Whether through stocks, real estate, or crypto, the key is to start. You don’t need a fortune to begin investing—just the discipline to commit, learn, and adjust over time. Wealth is built through consistent effort, not overnight success.

Now, the choice is yours: continue relying on active income or take control of your financial future. With the right strategy and tools, wealth creation is more accessible than ever. The first step is always the most important, so start today.