So, you want to be rich!
Not like your poor teachers, slogging away to teach you. Ok, this is possible, wish I’d put some serious thought into it when I was your age. Note, ‘serious thought’ and action are keys.
First, what do you understand is meant by being ‘rich’ or being ‘wealthy’? Are you mixing up being ‘comfortable’ with being ‘rich’? Can you get rich by working a job?
Well, let’s unpack the concept of ‘wealth’ or being ‘rich’.
The average income (ONS 2015) calculated the average annual income in the UK at around £27 600. The Living Wage Foundation puts the Living Wage at £16 478 and the Minimum Wage for a person working full time is on average, £14 040.
We all, once in legal work, pay taxes. Once a person hits £45 001, they start to pay the higher tax rate of 40% on their earnings.
Those making £150 000 or more each year, pay 45%. This is known as the ‘Additional’ income tax rate.
Now, being on a six-figure or seven-figure income sounds OK 🕺🏽. If you are in this salary bracket you are considered a high-net-worth individual (HNWI)pronounced Henry but the ‘r’ is with the ‘w’ sound. This term is often used in the financial services industry.
The exact figures differ by financial institution measuring and the size of the household, but the general agreement is that earning between 6-7 figures earns you the HNWI title. A 2013 study on global wealth puts the measure of a wealthy individual as having £600 000 in addition to his/her own home. In the UK, the Financial Conduct Authority (FCA) regards an individual with an annual income of no less than £300 000 or net assets of no less than £3 000 000 or whose obligations are guaranteed by a person with an income or assets of such an amount.
However, to become an Ultra-High Net Worth Individual (UHNWI), you need $50m equivalent to approximately £40m of investible assets. Getting the picture yet of the difference between being comfortable versus wealthy/rich?
Now as you have seen there are certain careers that definitely put one in the UHNWI division – top-performing athletes in football, basketball, etc, music artists e.g. Rhianna, Taylor Swift, etc, Actors e.g. Denzel Washington, Emilia Clarke, Peter Dinklage, etc. Creators such as George R. Martin, J.K. Roland, Shonda Rhimes, etc.
So, you’re wondering, "how do I even get comfortable far less rich?" There is some truth to the ‘luck of the draw’ thinking. But my research does seem to support ‘a starting early approach’ linked to ‘conscious actions being taken early’ paired with staying the course and taking opportunities, constantly learning, and being focused on what it is you want to achieve.
There are all sorts of rich categories –
They just got rich. Maybe they invented something new and it trended for a while.
Or a new inheritance came into being – rare but it happens.
The old or established inherited.
Five-minute fame on tv or social media which reaped major financial benefits in the short-term.
The celebrity rich – spoken of earlier.
The creator rich, I also mention a couple above.
But let us move away from the categories and study how you can consider working towards your own individual financial comfort and possible wealth if that is what you really want!
Have you noticed that a lot of wealthy people you know of from the media have studied some sort of STEM qualification and went on to work in and/or created something in this area? Popularly known ones are Steve Jobs – Apple Inc, Elon Musk – Paypal & Tesla, Larry Page - Google, Jack Dorsey – Twitter, Travis Kalanick – Uber, just to name a few!
CEOs and top tier managers of these companies also earn enough to make them either comfortable or in the HNWI / UHNWI bracket. In 2020 and the future, this will depend on what the economy demands, the skills you have to meet these demands, the governmental policies, and the opportunities you seize to enable you to work towards financial comfort and stability.
LS will bring to you a number of ideas, industries, and thought topics on this.
A definitive difference between being wealthy and being rich.
Wealth is considered to be sustainable. A person who is considered wealthy will always be wealthy because 1. Their assets considerably outweigh their liabilities and 2. These assets continue to generate income (much of which is passive) throughout that person’s lifetime, in many cases over generations.
The rich person has lots of money too, but often this based on income (see above) and the number of flashy liabilities owned such as luxury cars, jewelry, clothing, etc.
Being ‘comfortable’ can be defined as having an annual household income that is more than double the national median e..g. a household of one on an average income of £60 000.
For now, consider which of the following areas you may use through study and working smart to be financially comfortable.
Company stock/shares (intrapreneur)
Entrepreneur / serial entrepreneurial
Trading and hedge fund
Creative – film, writing
In summary, let us all make these practices part of our mindset and lifestyle:
Work hard and smart
Don’t just put an emphasis on saving, put an emphasis on earnings
Don’t buy things you can’t afford
Don’t be content with a steady paycheck
Don’t pursue someone else’s dream – pursue your own
Step outside your comfort zone
Have goals for your money
Pay yourself first, then spend
Don’t harbour the belief that getting rich is out of your reach