How much defines a wealthy person

I am intrigued as to people’s opinion on what they define as a wealthy person.
And I suppose more specifically a wealthy Irish person. Even more specifically in Dublin (or surrounding counties).

I was reading through a discussion on this website and seen someone say they think someone is wealthy if they have €3m (1m house, 1m pension pot, 1m investments/cash/other).

What are people’s thoughts on this, is €3m THE NUMBER?
Or is this way off the mark?

To conclude, I don’t really have a clue. I would have thought a nice house and €1m combined in pensions and investments would be quite wealthy!!

I am a big fan of the book The Millionaire Next Door. And as an advisor, I speak to millionaires all the time. But most of them don't know it or feel like they are a millionaire. A lot of them have had decent jobs and just saved a lot for their working lifetimes and built up money over the decades. They live regular lives and don't spend lavishly (everyone tells me they don't have extravagant lifestyles!).

There is a big difference between being wealthy and being a high earner. There are lots of high earners who are not wealthy because they are not savers; they don't have to as they always have the income to pay for things. People usually mistake these high earners as being wealthy as they display their wealth through expensive homes, cars etc. What does it look like to have a large pension pot, investment portfolio?

But what defines a wealthy person? I would not put a number on it as it is relative to the cost of your lifestyle. I would define it as financial independence. Being in a position that you are working because you want to and not because you have to. Whatever that number is to you, is your definition of being wealthy.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

i would agree with Steven. To be "wealthy" is a hard one to define. I would be looking at the balance sheet not the income statement. Some may have focused on one item over another. People may look at over paying the pension in their younger years over getting a house or paying down their mortgage. I had a client earning a few million a year who did not know if he could afford to retire. He focused on spending over savings and investing. Ronald Reid would be the opposite to him. Being financially free would be a large part of the definition

Thats similar to my simple definition.

"I am happy and fulfilled with the lifestyle I lead and can confidently afford to maintain it if I were to never work again"

wanttoretire said:

I am intrigued as to people’s opinion on what they define as a wealthy person.

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It's an interesting question and one I've thought about many times over the years but only really have answered it for myself in the last 5 or 6 years
Before that I would have defined a wealthy person as someone who had basically "f-u money" or to put a figure on it a EuroMillions win,
A rich person would have a Lotto win,
And then there is the rest of us.
.
Nowadays I would very much agree with Steven here

Steven Barrett said:

But what defines a wealthy person? I would not put a number on it as it is relative to the cost of your lifestyle.

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It's all relative to your lifestyle and how comfortable you are with what you've got/have vs your expectations
I heard recently of a story with Joseph Heller the author of Catch 22, who was at a party with a friend at some hedge fund billionaires house
The friend asked Heller, "How do you feel that our host, only yesterday, made more money in one day then you've earned from Catch 22"
Heller responded with "Yes but I've something that he'll never have- Enough".

And that to me defines what a true wealthy person is, knowing when enough is enough

I do think there is a lesson to be learnt from the Celtic tiger and the difference between Cash flow and asset value. A lot of people had a lot of high value assets (houses) and were wealthy in theory but did not have the cash flow from those assets to cover their corresponding life style and costs. Hence they were living a lie. A lot of Dubs were millionaires on paper but not in reality

I've seen a few nice houses, 2 BRAND NEW in the driveway cars every year... So some have the LOOK of wealth but scratch the surface and its highly likely its borrowed - especially during the Celtic tiger crazy years....

If I had sufficient to allow me to retire today (61) without worrying about unexpected bills, health insurance costs, helping the kids (a little) I’d consider myself wealthy. I don’t so I don’t feel wealthy.

But my parents have the above, they are long retired but they still worry about dipping into their savings… at 90 and 92…

It seems to be a state of mind.

redstar said:

I've seen a few nice houses, 2 BRAND NEW in the driveway cars every year... So some have the LOOK of wealth but scratch the surface and its highly likely its borrowed - especially during the Celtic tiger crazy years....

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new cars seem to drive people mad, what difference does it make if people have new cars?

Some people love their cars and get enjoyment from driving a new one every few years.
Others travel. Etc
I guess the travelling isn’t so visible daily…

I normally don’t notice but a neighbour has recently added a 241 porche and a 241 Range Rover to their driveway. I’m wondering what 2 cars like that are doing on my road

Love him or hate him but I think its a good quote......

"Have more money than I know what to do with. And have a great life for my kids, grandkids, and everyone in my family" - Conor Mc Gregor

The kids, grandkids, family part is to me what defines a wealthy person. Wealth is something that can be passed on.

Globally, everyone on this website is wealthy so it all depends on the lens you are looking through.

The €3M scenario mentioned in the OP, I would consider very wealthy for Ireland, most people have an outstanding mortgage and substantially less than that in a pension pot or in investments.

To me wealthy is being able to live without watching your spending. I am by no means rich myself but I would have to increase my income by probably a factor of 10 to substantially alter my lifestye, so I have given up on chasing promtions and higher salaries and am instead trying to get more free time and make the most of it.

Steven Barrett said:

People usually mistake these high earners as being wealthy as they display their wealth through expensive homes, cars etc.

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Loved your whole comment in general, but I would say these are more displays of *spending* than necessarily of wealth, especially if they're a depreciating asset like a car. And in many cases that spending is largely from borrowing, in which case it's a display of debt. Thinking of it like this helps me at least.

Some people think spending money is a sign of wealth when in many cases it's frugality and the declination to spend money that makes people wealthy.

Interesting thread. Is it a Euro value or is that just part of the definition of being wealthy? All the money in the world but being unhappy, unhealthy or alone would not make my current definition of wealthy.

Whilst not fully developed, my rough idea of 'wealth' envisages a holistic package that includes strong positions in:

1. Health
2. Family
3. Finances
4. Purpose
5. Time
6. Community
7. Happiness

There is probably an order of operations involved. Many things overlap, intertwine and conflict.

Without your health its difficult to maximise the other positions - your health is your wealth.

You probably need a minimum amount of finances for basic needs but figuring out what that is for you is individual and fluid over time. How much is enough? What you need when 21 and single is different from 41 and possibly married with kids and is probably different again at 61 when approaching retirement.

Once you have your day to day basic needs (food & shelter) for you and your family sorted then, in my version, you would ideally have the freedom of time to maximise the other positions. A euro balance in the bank is only an expression of what options you may have, not necessarily what you're actually doing. Having a fancy car, house, lifestyle may be an expression of your financial options but doesn't give the full (or sometimes even a true) picture. Your net worth may also be a measure of such financial wealth but how fixed and how liquid is it really. Being deemed financially wealthy as a result of your property value is not much good if it can drop in a market crash and if you can't spend it. Probably being debt free and having a sufficiently large cash fund is what ultimately counts as financially wealthy.

Having enough financial assets to make you Time Rich (enough) then gives you options on how you want to spend that time. Ideally it would be something that gives you a strong sense of purpose. If you find a sustainable career or profession that gives you that purpose whilst also giving you enough income without impacting your health too much but still leaves you with time and energy for other activities, then you're pretty wealthy even without having accumulated a particular euro value? Similarly being in a loving relationship can be worth more than any money and involve a 'rich' life of a different kind.

The retirement 'dream' involves being financially and time rich but you still need that purpose and your health to enjoy it. You can obviously ratchet up the euro value but how much of that euro value is internally validated and how much is externally validated? Keeping up with (some of) the Jones is part of the game of life but ultimately you're the one keeping score so you can decide the rules and even that you're winning.

What is the marginal benefit of the extra Euro, hour relaxing, KM walked or other variable? It can come down to being happy and even that is a fluid state. A definition of happiness that I heard recently is when reality exceeds expectations. Therefore its important that your expectations are realistic but also involve a stretch so that there's room for growth. Being involved with Community can add to the sense of purpose but also allows more room for growth as it can be more difficult to mobilise towards a common goal than an individual one.

To me, being wealthy is having enough time, energy and money to do the things I enjoy whilst improving my health, happiness, family and community. Similar to the financial element alone, it can be difficult to define how much is 'enough' as I nearly always want more of all of these but somedays I feel immensely wealthy with what I already have.

Spending aside, I'd like to think of wealthy as when you don't have to worry about money in general and your current asset (liquid or not) is making money quicker than you can spend for general day to day life.

This would be on the extreme (and super extreme) end of things but take Dolores McNamara's lotto winning, those kind of amount is earning more on interest than she will ever spend.

It depends....

DazedInPontoon said:

Loved your whole comment in general, but I would say these are more displays of *spending* than necessarily of wealth, especially if they're a depreciating asset like a car. And in many cases that spending is largely from borrowing, in which case it's a display of debt. Thinking of it like this helps me at least.

Some people think spending money is a sign of wealth when in many cases it's frugality and the declination to spend money that makes people wealthy.

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One would wonder whats the point of wealth if frugality and declination to spend money is your mindset...

Dr.Tom said:

Have more money than I know what to do with. And have a great life for my kids, grandkids, and everyone in my family" - Conor Mc Gregor

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He had a 3 million bet on England to lose the European final, of course he won that bet in the end but I bet he had a squeekee bum time 15 minutes from end when England equalised. Losing 3 million on a bet even for conor mcgegor would be a big downer

GSheehy said:

It depends....

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Indeed and Google doesn't really help

USA news said:

Rich vs. Wealthy​

What’s the difference between being rich and being wealthy? The words don't really mean the same thing, according to many personal finance experts. Still, everything is subjective with these terms.
Most personal finance experts tend to equate wealth with financial freedom.
Some experts think that you’re wealthy if you don’t have a lot of debt and you have enough income to do what you want. You could consider yourself wealthy even if you have a pretty low income. That's provided you have a decent amount of revenue stashed away in your savings account, you never really struggle to pay your bills, and you’re able to spend pretty freely if there’s something you want to buy. In that sense, you could be wealthy without being rich.
"There are many semantics around the term 'wealthy' – and varying degrees and definitions," says Doris Meister, CEO and chairman of Wilmington Trust, a wealth and investment management firm in New York City. "For example, an individual’s wealth can be defined by the conditions in which they live. Someone can be wealthy living in a smaller city or less expensive state and therefore be able to achieve a luxurious lifestyle. Those with a similar income in an area with higher expenses could potentially be struggling to make ends meet. Numbers alone don’t tell the full story."

Some personal finance experts say that being rich is a scenario in which you make a lot of money through your salary or investments. However, you may actually have so many debts weighing you down to the extent that your freedom to spend freely is somewhat curtailed. If that’s the case, you’re probably rich but not actually wealthy.

Of course, for some people, there's no debate. Some people are rich, wealthy and all of the other adjectives that describe having a lot of money.
"When you get to a certain stage of wealth where you have excess capital – making more money than you will ever spend in your lifetime – then that is truly wealthy," Meister says.

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wanttoretire said:

I am intrigued as to people’s opinion on what they define as a wealthy person.
And I suppose more specifically a wealthy Irish person. Even more specifically in Dublin (or surrounding counties).

I was reading through a discussion on this website and seen someone say they think someone is wealthy if they have €3m (1m house, 1m pension pot, 1m investments/cash/other).

What are people’s thoughts on this, is €3m THE NUMBER?
Or is this way off the mark?

To conclude, I don’t really have a clue. I would have thought a nice house and €1m combined in pensions and investments would be quite wealthy!!

Click to expand...

When I read this I am reminded of that great song from meatloaf “2 out of 3 ain’t bad “