So you to become rich but wondering how much money you need to call yourself “RICH”?
The notion of “rich” might vary based on one’s point of view and cultural circ*mstances. However, the simple definition of wealthy is a person who has significant money and financial independence.
Additionally, the amount of income required you to be considered rich depends on multiple factors such as lifestyle, location and personal goals. For example, if you are living in Asian Countries, a 6 figure income may be considered rich as compared to a 6 figure income in New York.
The amount of income required to be called wealthy will be determined by individual circ*mstances and financial aspirations. Instead of merely relying on income levels, it is critical to concentrate on financial stability, savings, and investments to build long-term wealth.
Let’s dive into different steps to become Rich.
Income Rich And Capital Rich
You must be thinking what are these terms and why you need to learn about them. So, the monetary wealth are divided two different categories such as Income Rich and Capital Rich.
Income Rich is defined as people who have a high annual income, typically 5% to 10% of earners in any country globally. According to Economic Policy Institute, the income of top earners was $832,763 in 2020 whereas the income of top 5% earner was $343,000 in 2020.
However, the income doesn’t define how wealthy you are but the remaining after deduction such as personal expenses, taxes, bills, property rent and personal financial goals.
Whereas Capital Rich is defined as people who have a signifiant amount of capital or income generating assets such as Real Estate, Digital Assets, Stocks, Golds, Bonds and other investments. The value of these capitals and assets appreciated over time which will grow your net worth faster compared to Annual Income.
Let me explain you with an example, Suppose A person has a apartment worth $1.4 Million and investments worth $600,000 with no debts or labilities then their net worth will be $2 Million, making them capital rich.
Liabilities refer to an individual’s financial obligations or debts that are owned to other parties such as Financial Institutes or other parties. Example of liabilities are Short-term loans, Tax Owed, Student Loans, Car Loans and other form of debt.
The amount of financial security you get with Capital Investments is crucial for future grown but that does not mean a person is financially savvy or successful in all aspects of life such as saving, budgeting and many more.
How To Build Good Financial Habits?
The term “Financial Habit” refer to the financial behaviour of an individual in their day-today life. As you know that your financial decision and financial challenges are controlled by specific patterns, attitudes, routine behaviour and limits.
Financial Habit plays a crucial role in your current finances, and it determines how much you will be financially stable in the next 5-10 years. Financial Habit will help you taking your financial decision responsibility so that you can save more money without making multiple changes in your lifestyle.
For example, you moved to different city and finding a house is getting difficult but you get a nice apartment which is expensive but due to so much stress of finding a homer, you are now ready to sign the lease. Here you financial decision is derived by the stress and emotions.
What Income Considered To Be Rich?
Any income can be considered to be “Rich” but it also depends on where you are living, how much your spend on your lifestyle, your investment plans and how much you are making. In general, it is totally depends on you and what you want.
For example, if you are making a 6 figure income in Vancouver, you annual cost of living will be expensive compared to living in Langley. I know you will miss a lot of beauty but if you are taking a saving approach then moving to Langley or sharing your apartment will be great idea. Let me give you some number.
Is $50,000 Per Year Considered
Cost of Living In Vancouver
| Types of Expense | Langley |
|---|---|
| Income | $8000 (Annually After Taxes) |
| – Rent | – $2,400 – $3,500 |
| – Grocery | – $400 – $600 |
| – Phone Bill | – $60 – $150 |
| – Transit | – $100 |
| – Own A Car | – $500 – $800 |
| – Electricity | – $40 – $120 |
| – Outdoor Activities/Party | – $500 – 800 |
| – Miscellaneous | – $200 |
| TOTAL | $3,800 – $6,250 |
Finally, you can understand that income is subjective to an individual needs that can be altered if you choose to save more money.
Final Words
The definition of “Rich” is debatable as people have their personal views behind the term “Rich” or “Richer”. There are people who call them rich if they manage to secure a million dollar but on the other hand, people with the same amount doesn’t even feel financial stable.
Furthermore, if you want to get rich, you have to follow certain rules and an action taker. Additionally, you have to build good financial habits where you can differentiate between a good investment or a bad invest. Once you understand the difference between these small steps, then it will become easier for you to achieve your goals.
