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Being classified “rich” has, at times, attracted strong feelings from society. Some people are envious. Others are downright mad. But just how much money do you need to be rich?
Fortunately (or unfortunately), I’ve never had this problem. I certainly don’t think of myself as “rich.” At least not financially.
I was raised by a single mother who had very little disposable income. We rented an apartment, and then a house, drove late-model used cars, but I never did without thanks to her strong work ethic and help from my grandparents.
Now, in terms of family, friends and relative health I consider myself blessed, but there is certainly not a string of zeroes behind my net worth.
The Difference Between Earning Money and Having Money
Speaking of net worth, what net worth is considered rich? Or is it a big salary?
That’s an important distinction in addressing the question of how much money is needed to be considered rich.
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Politicians like to draw the line at “those earning more than $250,000 a year.” I know a lot of people who earn that much – power couples, business owners, etc. I certainly don’t consider them filthy rich at those levels.
I know others who earn a very modest W-2 income, but have inherited seven figures from relatives, or sold a business. They make money from interest and dividends, and from real estate income.
I’m jealous of neither group, but who doesn’t dream about the long-lost uncle leaving you a million dollars?
Do You Have Everything You Want, or Everything You Need?
Warren Buffett said it best when asked about the inheritance his children should expect.
Buffett said, “I want to leave them enough money so they feel they could do anything, but not so much that they could do nothing.”
Feeling like you could do anything would be my definition of being rich. There are many passions each of us would like to pursue were earning an income not so important.
If I were independently wealthy I would probably:
- Volunteer more time coaching youth sports
- Get involved with more charitable causes about which I am passionate
- Devote more time to my side hustles (particularly the ones I most enjoy, like writing)
- Invest money in rental properties
- Start my own business
Few of us have everything we want, but most of us have everything we need. As a friend of mine often puts it when he hears someone griping about Starbucks forgetting to put cream in their coffee, or their backup camera on the Suburban going out, he says, “It’s nice to have first-world problems.”
He’s right; we don’t have to worry about where the next meal comes from, or the next cup of clean water.
So from that perspective, we should all consider ourselves “rich” despite other’s definitions of how much money do you need to be considered wealthy. We have everything we need, if we think of needs as the foundation of Maslo’s pyramid.
How Much Money Do You Need To Be Rich?
We all have a number.
A number to shoot for in which we feel comfortable enough to retire. A number in mind which makes us feel rich.
An amount of money in the bank that helps us sleep more soundly, or tell a crazy boss to take his job and…well, you know.
For me, the answer to how much money do you need to be rich is not fixed. It ebbs and flows along with my expectations for a comfortable retirement; a paid-for education for my children; the addition (and occasional subtraction) of bucket list items my wife and I would like to check off while we still can enjoy them.
So to answer the original question, “How much money do you need to be rich?” My answer can be summed up in one word: Enough.