What Does it Really Mean to Be Rich? | Top 10%, 5%, and 1% Net Worth and Income Explained

[@scottthomas1894]

Once again a very insightful video Erin. I am retired and have a liquid net worth in excess of $7,000,000. I am a widower with no dependents and no debt. In addition, my passive income far exceeds my burn rate. Therefore, by all definitions I would be considered rich. However, I think it is critically important to emphasize that RICH does not equal HAPPY. After living 68 years, I have met dozens of people who would never be considered wealthy but are extremely happy and feel grateful for the lives they have. Enjoying life, even in simple ways, and surrounding yourself with family and friends is much more important than being rich. Too much emphasis is placed on material possessions. Money makes things easier, but it isn’t the be all and end all for a happy life.

[@jamessinclair6113]

Couldn't have been put better. Here's to you, Scott.

[@mart1n10601]

Hi Scott, I'm your long lost son. How are you? how have you been?

[@ReynardHollins]

SPOT ON 🎉

[@TheNativeTwo]

Being rich won’t make you happy, but being dirt poor can make you unhappy. But i do agree with what you said. It’s all about expectations. If your expectations are too high, life will always disappoint.

[@thomasjpuleo8112]

Time and health are two basic components of non-monetary wealth.

[@Rob02138]

You’re rich when you no longer watch KZbin videos trying to figure out if you’re rich. 😁

[@ErinTalksMoney]

😂😂😂 Fair!

[@videoswitch]

This comment wins. I am watching because I’m not yet there.

[@JBoy340a]

No matter what you have there will almost always be someone richer than you.

[@michaelsullivan3553]

@@JBoy340ait’s not a competition

[@Tommy2tone762]

@@JBoy340aOf course but not working and not worrying about money is the point I think

[@Brian-nb6fb]

I feel rich when my Doctor tells me I am healthy. Everything else in life is secondary to health!

[@2anonymous]

I wish I could afford to go to the doctor.

[@bmccorm2]

100% agree. The one thing you can't buy.

[@bluethundar]

cliché

[@estegman10]

So true! It is very easy to take this for granted until you or a loved one experience a serious health issue!

[@michaelfortney7510]

Agree

[@LostInThe0zone]

Charles Dickens “Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery” I read this as a young college age student and never forgot it. It's not an easy goal all the time, but one I recognize from my own experience to be true.

[@sailor123ize]

I was young with a family and working, not rich and very happy. Now I am old, still healthy but very rich. I still yearn for when I was young and not rich.

[@Ethan-bu2zy]

My passive income is larger than my burn rate, so I’m Rich. 😊

[@mikeg9b]

In the middle of watching your videos, I almost always think, "But what about...." And later in the video, you almost always answer my question.

[@ErinTalksMoney]

haha! I love to hear that!

[@plainegrace5712]

You want to read something bizarre? When you asked the question, for the first time in my life my first thought was "I am rich". I don't have anything near what brokerages think of as rich, but I do not fear economic insecurity. I am so glad you asked this question, because it made me realize how very fortunate I am.

[@joeysawdust]

Simply, if you don't care how much stuff costs at the supermarket or how much gas costs - you're probably wealthy. Galloway's definition is very good.

[@nevrock1]

I have no idea what eggs or milk costs and I buy it every week.

[@eurly93]

lol no. Groceries and gas are cheap commodities. Middle class doesn't care about gas prices or price of milk in terms of "can we afford it" they only care in so far as it's annoying when the prices go up but it doesn't impact their ability to purchase. Wealthy is when you don't cross shop which trim level of a car to buy or which hotel to stay at to save $100/night, or which flight to take. You just pick the top trim of the model you want, or choose one of the nicest hotels or pick whatever flight leaves at the time you want regardless if it costs 4x the Spirit Airlines 5am flight. When you don't care if your vacation cost $5k or $10k you're wealthy.

[@joeysawdust]

@@eurly93 I'll agree with you (and guilty of all of your examples!)

[@TheBeagle1956]

Rich is being able to help others in need, without concerns about your own finances.

[@philochristos]

Or being able to go to the grocery store and get whatever you want without looking at the prices. That is a very liberating feeling.

[@PelosiStockPortfolio]

@@philochristos That is going from poor to middle class. Rich is something very different

[@socalstr]

“Help” meaning you pay them or employ them? Or “help” meaning you go over and mow their lawn or walk their dog for them?

[@TheBeagle1956]

@@socalstr There are many ways to help others, either by giving money or material needs, providing labor, counsel, or jobs. Anything given out of love for your neighbors.

[@whatup8107]

When you "help" others you hurt them. they need to learn how to help themselves.

[@samzach2057]

I’m 55 and plan to retire in the next couple of years. I have saved and invested fairly wisely, with rental property making up a good portion of my wealth accumulation. I use to think that having a large amount of money would make you rich, but over the last few years, my thinking has changed a little. I now feel that having enough money to cover everyday life, along with health and free time is what really makes you rich. I’ve spent 40 years of my life trading my time for money. Free time and being healthy are what truly make you rich!!!!

[@asdf123411288]

I'm about to turn 41 and thus is where my head is at. So close I can taste it.

[@lkjacob1]

Living below your means has always been what I've done. I've told others that it doesn't matter how much you make, you adjust to spend differently. Whether you make $20/hr or $100/hr spend below your means.

[@mikeg3439]

Wisdom.

[@Dave-sw2dm]

Even at $100 an hour you have to prioritize what is important to you. Travel? A vacation home? Boat? Motorhome? Can't have it all.

[@DS-gt1ft]

Living below your means is ubiquitous. EVERYONE must do it. The poor do it and are -poor and the rich do it and remain rich.

[@MrSupernova111]

You can't live on $20. Not in any major US city. That's for sure.

[@MrSupernova111]

@@Dave-sw2dm $100 is more than enough to enjoy life and save enough for retirement. Anyone struggling with that kind of income have no financial acumen.

[@DavidKnicks]

Erin you are one of my top 5 favorite KZbinrs

[@kenpumphrey8384]

I don't have a number. When I quit having any debt, quit knowing when payday comes around, and quit being worried about paying for unexpected expenses, I started feeling comfortable. My income / net isn't the biggest, but it's enough to grant me financial serenity.

[@BillySBC]

Yes, wealth is scale-able. A homeless person with no possessions and $50K in the bank is wealthy.

[@JackDaniels1965]

And that's my retirement in a nutshell...and I'm enjoying every minute. 😉💵

[@wlittleman]

I won't deny it. I like watching the blooper takes at the end because I would flub things up trying to put together a video like this too.

[@victordegrande1628]

When I was in college, an accounting professor asked our class how much money you would need to be considered rich. Some students suggested certain amounts of wealth, and finally the professor said, "No, you're all wrong. When you can get up in the morning and decide whether or not to go to work, that's when you're rich." Which is basically the same thing your professor said.

[@ld5714]

Another great video, analysis and discussion Erin. I agree, generally, with Scott Galloway's definition of wealth. In discussions around the meanings of the terms wealth and rich, it is hard to keep short and simple as everyone has nuances in their view. I have always enjoyed work and do it because I want to, not because I had to. I feel the fullness and enjoyment of ones life, family relationships, friends, and activities also factors into the discussion as it applies to the individual. I am retired for 13 years, have a close family, great friends, am active and have expensive hobbies and interests. My passive income exceeds my burn rate by a good margin and I have a healthy 7 figure liquid net worth. My emphasis has always been focused on family, what I am doing, learning, helping my kids and others when needed, activities, and my relationship with God rather than posessions. Keep up the great content Erin and I'll see you on the next one. Larry, Central Valley, Ca.

[@soveinaaraceli]

It's important to set goals and make a plan. Remember, wealth can mean different things to different people,One thing i can say that helped me in life to reach my first million was starting early, i got curious and informed i became open to passive income, investments in equities , etfs and the likes. Also sought help to handle my portfolio which was my foundation. i'm ever grateful to Susan Kay Mack my FA.

[@NamsaAlcantar]

An everyday millionaire. Well done

[@calerothenis]

I did read about Susan Kay Mack on the web., quite a great resume she has.

[@kalineats]

Everyone knows what to do, but not everyone does what they know.. long lasting results come from steady and consistently applied effort kudos

[@steveperreira5850]

My investments, I did much better passively By myself rather than with a financial advisor. All my financial advisor for relatively lousy, and I far and away outstripped them in my private investments without using a financial advisor. Far and away. Not even close. Financial advisors are overrated

[@edshred1657]

Best definition of rich I've ever heard - so good i wrote it on my investment folder when a sharpie

[@DLK27609]

My favorite financial vlogger on the internet! A great definition of rich!

[@ScottParadisS101W]

Excellent insights, Erin - and a great job delivering those insights! I used to ask audiences: "Who wants to be rich?" surprisingly, fewer than half the people would raise their hands. Then I'd rephrase: "Who wants to be financially independent?" That got everyone. "Rich" is subjective and ultimately within our control. Keep up the good work!!!

[@anthonyjanes9973]

First time I have watched your videos, I'm in the UK and have just subscribed, excellent presentation and content.

[@paulg2132]

You nailed it, Erin and that's my retirement goal. Living comfortably below my income.

[@bladmoreno]

I believe what Galloway says is to be Financial independent. To be Rich for me is to be able to access exclusive spaces, groups, experiences, objects, investments with the money that you have or generate

[@tmy727]

I stumbled across your channel.. quite enjoy and informative to watch. Gorgeous and intelligent.. keep it up!

[@ErinTalksMoney]

Welcome to the channel! 😊

[@miketheyunggod2534]

A loving family is being rich.

[@DQ-su6qf]

So you’re broke…

[@FibbonachiCrusader]

Until you can't afford medical care for them.

[@dogetoshinakamoto7057]

The state in which passive income exceeds expense just tells you that you’re financially free or independent without having to slave away for a paycheck while being able to keep or grow your nest egg. As the barometer is expense, this depends on one’s lifestyle. So in the end being rich or wealthy becomes a moving target using this definition.

[@dstevens518]

Agreed. As soon as you reach the point where passive income > expenses, you're already worried about lifestyle creep. I think of rich as never worrying about money. You have enough to live as well as you want, you have enough to withstand lifestyle creep, you have enough to not think about running out. BTW, if you follow the Bigger Pockets podcast, there's an episode where they discuss FI folks and that it's extremely common their FI number keeps moving...

[@danh2716]

Exactly. Being financially independent is NOT the same thing as being rich. This trend of wanting to redefine words to make oneself feel better is silly.

[@BigFunAgency]

Exactly. It's a terrible definition. It basically means almost anyone could be considered "rich" if they live like a poor person. It makes no sense.

[@Tacticalform]

Big fan of Scott Galloway and his approach. Completely agree with that formula. Additionally real-estate income can be passive if you own a lot of rentals and also have a management company be the landlord for you.

[@nathanyoder4509]

I like professor’s idea about passive income! I would say being rich is having enough for your needs and a few wants as well😃

[@hakune4724]

When my daily job becomes an option, then I consider myself rich! Living frugally and invest; waiting until that amount in my investment

[@jonathanfisk3572]

I am so on board with this philosophy. I considered myself wealthy when the math says that I could stop working, continue to live my current lifestyle, and not run out of money in my expected lifespan. Oddly, that does not take a huge amount of money.

[@PeterParker-wj3cr]

This is a great diadiatic video! Since financial literacy isn't taught in school. These videos are that much more consequential. Thank you!

[@Al-mk4xl]

I define being rich by being secure in my finances enough to not worry about running out of money if any unpredictable events took place: stock market crash, health issues, natural disasters, divorce, other events affecting my family including grandchildren. Yes you buy insurances for most of the above, but sometimes that’s not enough especially if they fail you when you need them the most. To summarize: you’re rich when money is not any of your worries ever.

[@glasshalffull2930]

Excellent definition! My wife and I bought long term care insurance and a nice life insurance policy on me. I no longer am concerned with running out of money and now I’m concerned with minimizing taxes. 😉

[@BigFunAgency]

This is all great, but everyone here is describing financial security but calling it "rich". Why? Those aren't the same thing at all. Financial security is great, but it doesn't necessarily make you rich by any stretch of the imagination.

[@glasshalffull2930]

@ A man who can always be able to take care of his family is a rich man. I could die tomorrow and my wife and children, and potentially a few relatives, will be taken care of.

[@BigFunAgency]

@@glasshalffull2930 No, that isn't what "rich" means in the context of finances. What you describe is financial stability, which is not the same thing as being rich. I don't understand why everyone wants to redefine this word. I guess it's because they aren't rich, but want people to know that what they have is actually more important. That's great, but use a different word.

[@glasshalffull2930]

@@BigFunAgency So, let’s hear your definition! Exactly how much does it take to be rich?

[@kliff8586]

Another wonderful presentation! Great perspective. Very practical, informative and concise. Keep up the great work!!!

[@ErinTalksMoney]

Glad you liked it!

[@toddrosvold1212]

You included pension as passive income; are you also including social security as passive income?

[@mikebridges20]

Erin, that's a great definition of "rich". It defines rich in terms that are relatable for each individual, and not a dollar amount. In our situation, between an annuity, our SS income, and my pension, we have a surplus to our normal budget. This allows us the luxury of not having to pull any funds from our IRAs, instead using that money for luxury purchases. This January we're checking off a bucket list item by taking our entire family (5 of us) to Kauai for a week, as an example.

[@MrJuliansnow]

I like to think of rich as when your needs are met, and the majority of your wants are able to be handled without a lot of thinking about price. Some people based on this definition, will never be rich. There are people that there is never enough and are never satisfied or content.

[@MOTrav]

Your bloopers at the end. Now that’s rich!

[@davidbest8912]

Truth wealth is your own time and freedom

[@johnurban7333]

I think you described what is rich perfectly. Love watching your videos and learning. You always have an interesting take on things.

[@SamLillo]

In the graph at 3:29, why is the Top 5% lower than the Top 10% for some ages?

[@StormGod29]

I noticed the same thing.

[@restingsmirkface]

Either two values got swapped or its AI-generated

[@montezuma6962]

Because its wrong

[@TyrionLannister1998]

@@montezuma6962 Yeah there's no way that the top 10% of 25 years olds have a net worth of $300K or 1% have a net worth of $2.5M. That is absurd.

[@aloofmeatloaf1467]

Came here for this comment. Definitely a data error.

[@martinyeager7948]

Another well presented concise subject. Thank you. I can't help but wonder how much time a week you put into this website. It is amazing you have a full time job/business as well as a husband and small child. That all takes a lot of time yet you still present regular well researched and produced video. Thank you.

[@ErinTalksMoney]

This is certainly not a solo effort. It takes me anywhere from an hour to four hours or so in preparation for a video. Depends on what kind of video it is and how much prep work needs to happen. It takes about 30 to 40 minutes to film each video. I have a wonderful editor, who works hard to make these videos, beautiful. And I am so lucky to have him. I know he puts many hours into making them beautiful. A thumbnail takes me anywhere from 2 to 4 hours to make. My day job I probably spend about 35 hours a week on. But again, I have a handful of really amazing employees. So that’s certainly not a solo effort there. And my son goes to daycare throughout the week. And we are so lucky to have a wonderful daycare where he has so much fun, he is making little friends, and learning so much. So, while it’s a lot of work, I would imagine in any given week. I probably spend 80 hours or so between both jobs. A lot of that is once my son goes to bed, or while he’s in daycare. Because once he comes home, it is one on one time with him. But it takes a whole team to make everything happen. And I’m very lucky to have a wonderful team. 😊

[@tft24tft]

Loved reading your reply. Thanks for all of your dedication to your family (peanut too) your work and your KZbin fans. You are an inspiration to all of us. Hard work, amazing talent and dedication/passion is an impossible trifecta to beat.

[@martinyeager7948]

@@ErinTalksMoney Thank you for sharing some of your time with us through your postings. Bless you for the life you live and example you set.

[@billy2807]

Hey guys! What's up? Came into this video looking for a number, and came away with a MUCH better definition that makes more sense to me, and made me realize I'm closer than I thought. Great stuff, as always Erin. Thanks!

[@thirdman1228]

Best Personal Finance Channel on You Tube. Continue the good work Erin!

[@ErinTalksMoney]

Wow, thank you! 🙏

[@77magicbus]

Love you Erin. Good video. I think Henry David Thoreau's definition is better than Scott Galloway's. "Wealth is the ability to fully experience life."

[@ErinTalksMoney]

That’s a great one!

[@syafiqullahazmy9086]

I am happy with the data source you provided, so I can read it in full.

[@perfectstar-mb]

His achievements are nothing short of phenomenal! He’s showing that with vision and perseverance, anyone can build a lasting legacy.

[@educatedwanderer9293]

I fit into the top 10% in both net worth and income. This is the first time I've been at the same level on both that I recall; aka middle class millionaire. My annual expenses are right at half my annual income. My passive income is equal to or greater than annual expenses every year that the markets return 2.5% or more.

[@Spladoinkal]

Scott Galloway's definition would be the same as mine. To expand on it, the "Wealthy" normally aren't going to just passive income a little higher than their expenses. They have accounted for inflation AND the fact that they want their lifestyle to be better and better as they get older. This means bare minimum they're making twice their burn rate meaning only living off of 50% of the passive income they make. That's very conservative too cuz many will say it's best to live off of 25% or less so they can reinvest the other 75%.

[@gigimccoy1753]

I totally agree with professor Scott Galloway’s definition of rich, at least it makes me feel rich! Hahahaha, thank you Erin for bringing that up 😊❤.

[@TampaFloRaider]

Your definition of rich is my definition of wealthy. To me rich is while working you are able to pay for your needs and wants. While I am rich, I am investing more so I can be wealthy.

[@TeslaRules1856]

For income its best to look at 1,5,10 percent by area you live. As to what I consider "rich", a well maintained home in good area with no mortgage, a Honda car, good medical insurance/care, ability to go out and get fajitas and margaritas when ever I want, and Netflix.

[@brothashawn3391]

That is hands down the best explanation of rich I’ve ever heard. Thanks!

[@ErinTalksMoney]

Wow, thanks! 😊

[@ayeflippum]

Was that truly a revelation for you? That has been obvious to me for some time.

[@Blocktelligence]

Super sharp audio. Love it! Great content.

[@TheModernStoicg]

I like the definition of wealth based on passive income exceeding expenses. It helps many people see that becoming wealthy is more achievable!

[@bootsmith8016]

We feel relatively wealthy because we can afford anything we want, but not everything we want. Our tastes are pretty modest except for a healthy travel budget. I do not know about Galloway’s definition though because we expect to spend down some of our portfolio before I draw SS at 70; I do have to keep reminding myself that it is ok for the portfolio to go down (it has gone up this year despite spending though, and I do not expect that to be the case every year)

[@marka9083]

The definition of passive income of more than expenses seems to define a comfortable lifestyle assuming the expenses are based on a planned budget. To make the jump to "rich", I'd think the passive income would need to support a lifestyle where you only had to loosely follow budget, eg not having to be concerned if you decide to spend more on some luxuries or extravagances (fancier/upgraded vacation, vehicle, dining out, etc). The biggest thing is to be able to support a lifestyle that makes you happy overall with a low worry on expenses vs income regardless of what that level is.

[@RubbingPotatoes]

@7:55 it needs to be pointed out that passive income exceeding expenses doesn't mean you can retire or no longer need to work. Your passive investment portfolio in the market can return 10% on average and cover your expenses in a typical year, but you should generally use 4% to determine whether you can quit working. Those are vastly different percentages.

[@rayc3103]

Of all the friends I have, the biggest factors contributing to their wealth are: 1) Rich parents (half of us are in the 90% percentile. Of us, we are all part of wealthy families) 2) investment savvy (real estate, crypto, stock market) 3) intelligence (works for Google, software developers) 4) unethical business (MLM) 5) conscientiousness (hard work)

[@simonworsley8631]

I earn over $1m dollars a year but this has only recently been the case. Nearly half of this goes in tax and a further $150k repays the bank in capital and interest on a business loan. I don’t really consider myself rich. I live in the same house I bought when I was earning $70k a year 10 years ago. I’ve managed to invest around $1m dollars and will feel comfortable when I’ve got no debt and around $3m to take early retirement. My main luxury is travel and now being able to turn left on a plane rather than right. As others have said though, good friends and family are more important than having a lot of money (although it is nice not to have to worry about money any more).

[@BKNb77]

You will get used to the nicer things and the goal post will change

[@LegoStarWars217]

Best rich definition I heard so far

[@lilyll9930]

Very well presentation. Nice job!

[@ErinTalksMoney]

Thank you!

[@michaelfortney7510]

No matter how much you have you always look up to that next tier and want that. The secret is to separate “enough” from “more”. I have enough, and I feel bad for people who can never say that regardless of their bank account.

[@albertk5572]

I love your video. I have Passive income as a landlord and yes it is truly passive! The tenant is a commercial express carwash and being a true NNN, I have no responsibility at all. They even pay my property taxes! And the rent covers my expenses and more 😎

[@thebossfanman4900]

As corny as it sounds, as we get older, we know the true meaning of wealth is health! Financially, everything else is the cherry on top!

[@toddbenfield6546]

Great explanation of different types of rich👍I’ve always lived below my means, and have always been a saver✌️I’ve still enjoyed life, and frugal also

[@TheFirstRealChewy]

I define rich as having enough money, after taxes, to pay 2X my annual expenses. Of course, this will fluctuate depending on lifestyle. I'd love to be in this position.

[@pasoroblesbruce7370]

Im thinking A person who is spending less than total passive income is disciplined. Does not mean they are not compromising/ Sacrificing to achieve that. Being well off is having the lifestyle you want to have while still being able to set aside savings.

[@dinosaurdude5668]

Very informative video. Living wishing means and saving and investing is key.

[@Hurdy_guy]

I’m rich, not because I have money, but because I have retired early, have a lovely wife, have a great social group of friends and family, have my health and an active varied life. Happiness and health are far more important than money…..although money does help! Net worth schmetworth, once you reach a level where you can do what you want, when you want, with whom you want then the rest is just superfluous.

[@robertgregory1927]

Rich and wealthy are different terms. I feel wealthy because I retired at 55 and I am able to help my kids when they need it and offer larger tips when I eat out.

[@jglee6721]

About 24 years ago, a guy from our message group cashed out with 4M from a bubble stock. Just recently, a former coworker mentioned he and his wife have around 3M in their retirement account. From what I've seen, I’d say 10M in assets is what I’d consider rich.

[@steverichdrummr]

When I was hearing about the net worth, I thought I was ok, until you said "without your home included". Yikes, but I still think I am rich because my passive is more than my burn rate in my retirement. Win win! ( and none of my numbers are high at all.

[@effwitt]

I've thought for years that it's 2 - 3 times what you have / earn. In another video that interviewed people on the streets in the Philippines, they asked a guy what he did for a living and it was an IT job that would pay about $100K / year where I live. He was getting $700 / month. When asked how much he would need to earn to be "rich", he replied $2000 / month. That's less than I get from Social Security. It's always relative...

[@moneywithjustliving5258]

New Subscriber here. I just came across your channel. This video really makes you think about where you are and where you want to be. Depending on your values and ethics being rich isn't monetary.

[@ErinTalksMoney]

Welcome to the channel! 😊

[@mymail6601]

Whoa, awesome editing when the screen backed out to show the likes and comments!!!

[@wayward03]

One reason a brokerage would not consider your home as part of calculation is that its more of a liability than an asset. You continue to pay towards it even without a mortgage and won't be easy to sell ( you pay a large penalty to realtors) and now you have to rent something to live in.

[@espesq]

Good job avoiding calling being a landlord a passive activity. I realized this the hard way.

[@stevemaggs6781]

I look at being rich when one doesn't have to work and can afford anything they want or need, based on their lifestyle. Right now, my wife's and my collective passive income is about 2.5 times greater than our expenses, and from a financial perspective, we don't have a care in the world. Living stress free, from a financial perspective, is something that I can't put a price on. It's invaluable.

[@SuburbanBBQ]

I agree with Scott's definition of rich. I go to work because I enjoy it, not because I'm reliant on the paycheck. The stress of "I gotta keep this job to survive" mentality is soul crushing. I'm usually not impressed by or jealous of higher salaried people. Lifestyle creep almost always comes into play and they are worse off than I am.

[@boundaryconditions1119]

I would add in a single addendum: the ability to survive a financial shock. If my expenses are $40k, and my passive income is $50k, I'm in a very good position as long as I don't have a major event that costs me $100,000 or more.

[@Sensei_Sifu]

Also there are two types of incomes (1) sweat income (2) auto-generated income… sweat is where one is working and some illness or physical ailment happens that needs to be treated 24/7 for 2-3 years then income is gone ; auto-generated is you can just sit at home and read a book and be with your kids and travel somewhere and pay your grocery bills and 2-3 hours a week you sit at a computer and maintain/touchup your stock portfolio, and every fortnight of monthly you get cash into your bank account from somewhere

[@BigFunAgency]

The correct term for "auto generated income" is passive income.

[@jamestucker8088]

If your passive income exceeds your expenses it doesn't mean you are rich, it just means you can retire. And household income/wealth is more useful to determine if you are rich or not. There is a big difference between a two doctor household with no kids and one with a single doctor and a say at home husband with 6 kids.

[@pauljackson3209]

Very well said! Thank you

[@jbfrodsham]

I’m 70, I retired at 46. Since then I have consistently improved my income. My goal now is to totally consolidate, I’ll be dept free in 2 years. All my properties will be owned. My income is over $200,000 per year, i could make it more but I watch tax brackets. Best advise is this, don’t work for money, have your money work for you. Don’t spend too much on depreciating access, in particular, CARS. Never borrow money to buy a car, a car should never be more than your assets minus liability equal equity at 2%. So to buy a $100,000 car you need to be worth $5,000,000. Do: assets minus liability equal equity at least twice per year, keep records, if it’s not going up at least 5% per year, cut your spending. Know the rule of 72. Always live like you are not rich. Even if you are.

[@markrcca5329]

there are two components to feeling or beeing seen as rich: (1) financial freedom - being able to live on what you own and not having to work whenver you don't want to; if your passive income is sufficient for your lifestyle, you certainly are financially free; (2) luxurious lifestyle - being able to afford luxurious and prestigious options in each choice we make - homes, cars, food, clothes, travel, etc. Some people emphasize the 1st component, some people the 2nd, or some combination of the two. I would not consider rich a person who has a luxurious house, car, etc, but is deep in debt and has to keep plugging away at his job just to pay his mortgage, car loans and credit card bills; but many people would consider him rich. Meanwhile if someone lives middle-class but only works as much as he wants doing exactly what he chooses to do - that sounds much more rich to me; but many people would not consider him rich because he doesn't display they outward signs of wealth compared to the 1st person.

[@johnellwood8307]

Rich is a very relative term. Agree that having passive income greater than expenses would put a person in a certain category. However, if you look across the globe, even our poor, below middle class live much better than a large portion of the population of the world. Just being an American citizen (for the most part) puts you into much better position in terms of material wealth. We typically take a lot of things/stuff for granted. // On another note: I was able to retire early and my time is my own..., that is also another way to define rich. I would hope many more people than 10% are included.

[@robelliott3049]

I would say that being able to pay all your bills and have a safety cushion on the 4% rule is the best goal to be considered wealthy

[@j.wilkerson1905]

5M, I think I finally understand how to be financially wealthy, "make more than you spend".

[@CDmatt]

I’ve probably watched too many old movies where people were content sitting on a porch in old age and were happy to have a home and food on the table. If you have enough money to maintain this, you’re rich enough.

[@Kimonha]

I was happier when I thought my house was part of my net worth.

[@stevevenn1]

It is. 💯pct.

[@BigFunAgency]

It is part of your net worth, just not included in these silly categories.

[@CarlosBustamanteRestrepo]

Thanks for the video

[@joeyvitamins]

100 beeeeellion dollars! Justice for Peanut!!

[@xlerb2286]

Yes, that was a terrible thing. They acted like thugs and also threw away a wonderful educational opportunity to educate people on the complexities of helping wildlife. No respect for anyone involved with that.

[@bills1995vette]

Government gone wild.

[@yuckyool]

Here's a question from those that calculate Net Worth for a living: Should one subtract out tax liability from a non-Roth IRA/401k, say 22~28% (depending on ST and income level)? Reason, I ask is that an IRA => Roth conversion of say $200K within a tax-year/family in the 24% bracket generates perhaps a bit under $45K in tax liability, BUT can be considered a net positive if expected future tax rates exceed 24%. So why/should that conversion show as a decrease in net assets?

[@foxtrotwolf6081]

I keep on getting an advertisement that is rubbing in the phrase, "The key to being rich is knowing what counts."

[@tommylee3934]

IMO networth should include a primary residence. Of course Fidelity is only interested in readily available investable assets or liquid assets, but for the purposes of measuring networth, individuals may choose how they want to allocate their dollars. A primary residence can be sold and converted into other assets.

[@kirklandphil]

Galloway nailed it.

[@penguingobrrbrr353]

I do real estate rentals and they cover all my expenses but it is like a job. However, I do feel like I get more returns despite the work and the appreciation coming from it. I will certainly invest in global index fund just for the sake of stacking up cash later on and long term in general.

[@sonjaarrasi]

I love your content so much. When you say “get invested,” is there something specific you mean? Or generally speaking just start investing?

[@amorestperpe]

I think rich is when your cash flow is an order of magnitude greater than your expenses over a given time, and is sustainable within any additional input from ones own efforts.

[@RobS282]

i agree with your idea of being rich to a point that point would be if and when your income stops (like a job) what do you have left to survive on add to being rich, enough to survive on when if when your income stops