Accumulating wealth and achieving real financial freedom is something that many people aim to achieve. The goals is to have your income and investments result in a healthy net worth, so that the financial problems you deal with on a daily basis disappear.
But what does being wealthy actually mean?
The dictionary defines being wealthy as “not only having enough money to meet your needs but being able to afford not to work if you don't want to. It's about amassing assets and making your money work for you. In other words, it's having a significant net worth.”
Is there a difference between rich and being wealthy? Indeed there is.
A wealthy person has resources that are sustainable, while a rich person may only be so until the money is gone. Someone who wins a lottery is rich, but unless they manage that money well and plan their investments wisely, they will not be wealthy .
It may surprise you to learn that location has a significant impact on how we measure wealth. It differs from place-to-place and person-to-person. It often depends on what is important to you. and it even differs state-by-state, and culture-to-culture.
A livestock herder in the mountains of some far off place would measure wealth very differently than a Wall Street professional. It all comes down to priorities and what a person considers important in their life. Wealth, in general terms, can be defined as “characterized by abundance”.
While some people consider being wealthy or being rich as the same thing, apart from the transitory nature of being rich there are other subtle differences. Lifestyle, as well as the cost of living, feature heavily in research done on the subject.
Here are some locations to compare.
If you live in California you probably know how expensive it is to live there. You have to earn more than a quarter of a million dollars every year to be in the top 5 percent of earners there. The living costs are far higher than average, not to mention the state taxes. In fact, it costs you an extra 15.4 percent than most other states in America. California’s San Mateo and Santa Clara counties were ranked 5th and 4th wealthiest in the whole of America.
Living in paradise costs an arm a leg as well. If you are in Hawaii you also have to hit over $250,000 per annum to earn bragging rights of being in the top 5 percent of money earners. However, being wealthy in Hawaii comes with added lifestyle benefits like glorious ocean views, healthy eating, and hiking as well as rainbows and tropical sunsets galore.
Moving to Florida could be an idea, if you like long sandy beaches and no state income taxes. You need less income to become wealthy in the Sunshine State. A minimum annual income of $226,319 to be in the top 5 percent
If you love big skies and open ranges with fabulous mountain views, Montana is an excellent place to be wealthy. And you’ll certainly have a lot more land than if you were in another state. $187,867 sees you in the top 5 percent in Montana.
Being wealthy doesn’t necessarily mean comparing yourself to the top 5 percent of your state or area, but it is interesting to know how it can differ by almost $100, 000, depending on location. And that location might affect how you plan your investments. Decide what you really want out of life and invest accordingly.
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