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Reply #11: Most Americans don't understand the difference between income and wealth. [View All]

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Xithras Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-09-11 02:41 PM
Response to Reply #1
11. Most Americans don't understand the difference between income and wealth.
You can make $250,000 a year, which is a great income anywhere in America and will allow you to live any sort of lifestyle, but a $250,000 a year income alone doesn't make you wealthy or rich. "Wealth" and the state of being "rich" are generated by the accumulation of assets unrelated to your actual income. Donald Trump and Bill Gates could start giving away every penny of their income tomorrow, and they'd still be among the richest men in America. Why? Because their wealth is derived from their accumulated assets, and not their paychecks.

If a doctor and a lawyer get married, and have a $250,000 annual income, they can live pretty high on the hog, but that doesn't make them rich. If they both lose their jobs, they'll be just as broke as you and I. Unless they specifically invest their income to start building a base of wealth, they're ultimately just living a more opulent version of the paycheck to paycheck lifestyle that you and I live. When the paycheck goes away, so does the opulence.

Not a single member of the 1% relies on a paycheck to pay their bills. The truly wealthy don't actually have to work to live their lifestyles.

To me, that's the difference between having a good income, and being "rich". You're "rich" the day you have the assets to quit your job without taking any financial hit.
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