Everybody wants to be rich. Right?
Or do they really?
I recently came across this idea after reading one of those long, in-depth articles that makes you question everything you believe in.
And after some soul-searching, I’ve come to the conclusion that most people don’t actually wanna be rich. However, they have this inaccurate picture of what they think being rich is. And it’s this unrealistic dream that they’re really chasing.
Well like always, I’m here to pop the bubble. Your idea of being rich is probably wrong.
1. Are You Rich? Here’s What the Numbers Say…
We’re (supposedly) rational people, so the easiest way to measure if you’re rich or not is to look at the cold, hard numbers.
And based on Malaysian benchmarks, here’s how much your household (e.g. you + your spouse) needs to earn to be in either the Bottom 40% (B40), Medium 40% (M40), or Top 20% (T20):
- Malaysia Benchmarks (earnings for households)
- B40: below RM 3,860 / month
- M40: between RM 3,860 to RM 8,319 / month
- T20: above RM 8,319 / month
- Top 1%: around RM 25,000 / month
For reference, I’m also gonna include benchmarks for the USA.
- USA Benchmarks (earnings for households)
- Top 20%: above USD 9,333 / month
- Top 1%: above USD 35,833 / month
Of course, there’s no official rule that the top 20% of earners are classified as “rich” and the top 1% are “super rich.” But it sounds like a logical conclusion to make.
(BTW here’s a really fun calculator to estimate how rich you are compared to the rest of the world. Try it — you’ll feel much better about yourself, I promise.)
2. Wait a Minute… How Much You Earn Doesn’t Equal How Rich You Are, Right?
Thanks for catching that one. Damn right!
Because it doesn’t matter if you’re in the 1%, but spend more money than you earn. It’s still very possible to go bankrupt while earning a lot of money. Don’t believe me? Check out this list of broke celebrities.
There’s actually a better calculation for measuring how rich you are, and it’s called “net worth.” Simply put:
Net Worth = Assets – Liabilities
Take the value of everything you own (e.g. bank account, fixed deposits, house, unit trusts, stocks), minus off everything you owe (e.g. home loan, car loan, credit cards), and you’ll get a final figure of how much you’re worth — financially. How’d you do?
p.s. Just like how having high salary doesn’t mean you have high net worth, the opposite is also true. You could have a very small salary, but still be worth a lot *cough cough* family inheritance.
The general global benchmark of a High Net Worth Individual (HNWI) is having more than USD 1 million in liquid assets.
Closer to home, the Securities Commission of Malaysia defines someone (+their spouse) having >RM 3 million in net assets (excluding their home) as a HNWI.
BTW if you’re wondering what kind of wealth you need to live like the crazies in the movie Crazy Rich Asians, I’m putting them firmly in the “Ultra High Net Worth” category — >USD 30 million in net worth. But of course, you kinda already knew that Nick Young‘s a billionaire.
3. Getting Rich Is Not Glamorous
If you’ve made it here, you might be starting to get bored with all the financial calculations. Wasn’t being rich about living a fabulously Instagrammable life? What’s with all the f*cking calculations Aaron!?
This is the part where I try to pop the bubble.
I don’t know where you got your idea of “rich” from, but I got it from TV, and I got it from envy. TV was watching “Lifestyles of the Rich and Famous” and “Benson & Hedges Golden Dreams” as I was growing up, plus all the other lifestyle advertisements that came along.
Envy was visiting rich friends’ homes, seeing their cool toys and clothes, and getting fascinated by stories of their luxurious vacations. And I, like any other ambitious, middle-class person wanted to be rich too. Dreaming of all the cool things I’d be able to do with all that money… fast cars, big houses, hot bitc… (bitcoins I mean).
But I’m a little older and wiser now. And I can safely say that getting rich and staying rich are very different from what’s portrayed in the movies and dodgy Facebook “influencers.”
The truth is, getting (and staying) rich is actually kinda boring. It involves a lot of hard work, discipline, and you guessed it… calculations.
“But why do they keep showing me pictures of hot, stylish people having exotic vacations then?”
Well, otherwise how would they get your attention? And how would they sell their products to you?
You’ve been fed a lie. And it’s a lie so good, most of us just accept it without ever questioning.
The lie is that being rich is about spending money.
4. Living “Rich” Ironically Makes You Poorer
If you think about it properly, the things that make people rich (or make rich people richer) are actually hidden stuff. For example, here’s a list of things that can either generate cash, or increase in value. If you’re an accountant, you’d call it a “cash flow generating asset”:
- Fixed deposits
- Rental properties
- Unit trusts (mutual funds)
On the other hand, think about all the things that society “trains” us to gauge whether a person is rich or not. Here are some examples:
- Luxury cars
- Exotic vacations
- Branded clothes
- Shiny jewelry
- Latest gadgets
But none of these things actually makes you money. And not only do they not make you money, most of these lose value (accountants would call it “depreciation”) immediately after you buy them — and keep on losing value.
Sure, you’ll be very popular with gold diggers and toy boys. The Jho Low way of living. In terms of wealth though, you’d actually be losing money.
(Of course, you could use all the above to be a shameless lifestyle marketer and make money: “Look at me, I have all these nice things and such a cool life — join my network and you can too!” But would you sleep well at night?)
Look at List 1 vs List 2 again. Most people don’t proudly display how much they’ve invested into AirAsia stocks. Or the amount of Bitcoin they have. Or certificates showing how much land they own. It’s weird, distasteful, and only awkward finance geeks would get excited about it.
But those are the things that actually make you richer.
5. “I’m Sick of All You Gurus Who Keep Asking People to Stop Spending Money. Where’s the Fun in Life Then?”
This is where we talk about balance.
Despite my pen name, I’m never gonna be the “frugality guru” who asks you to stop spending money on everything (and lose all your friends). That’s just not my style. In fact, I’d rather you figure out what’s important to you, forget everything else and dump all your money into that. Or as one of my favorite authors says:
“Spend extravagantly on things you love, and cut costs mercilessly on the things you don’t.”
– Ramit Sethi –
What I am saying, is that mathematically, the path to riches doesn’t involve lots of luxurious spending. In fact, if you look carefully, you’ll find the average millionaire is surprisingly frugal.
Probably more frugal than your average middle-class person. As Robert Kiyosaki once wrote, “The rich buy assets. The poor only have expenses. The middle class buy liabilities they think are assets.”
Key Point: If you wanna be rich, buy more assets. Because being rich is not about showing off — it’s about owning more assets.
– – –
As they say, knowledge is power. Or rather, knowledge gives us power to think and act.
What are the important things in life that we should keep spending money on? And what are the less-important things we think we need, but actually make us poorer — in terms of money and quality of life?
Maybe I’ll cover this further in my next article. But until then, I hope you’ll take some time to think about what being rich really means. And I hope you’ll do something about it.
– – –
Great article. Wow, I didn’t realise that my household is top 1% and close to HNW1!
My top money saving tip: learn to ride a kapchai. It’s cheap, economical, low-maintenance, free toll and free parking! I don’t ride nowadays but that’s how I started.
Currently I drive but my cars are cheap and I don’t need HP financing. Some of my clothes are more than 10 years old.
I don’t live like a hermit either. I do indulge in a few luxury items and go for holidays too. But I do keep a tight reins on my spending.
Lesson here is: be careful on where you spend your money, and invest all the balance.
Thanks for the comment, and congrats on being the 1%. Much respect for your frugality despite your wealth. Hoping more people would learn from your example!
Okay I’m M40 .. my household around RM6K.. need to work hard on my blog to earn T20 and maybe next 5 years become top 1%..
Totally agree.. That being rich is not fun if we not spending..
The important part is get more money …
Let’s be rich and you feel the money flow
Thanks Zolar for the comment. But spending a lot doesn’t make you rich. Plus I also believe that being rich can still be fun without spending a lot. Just depends on what you’re spending on. 😀
Just found out your Malay article on says.com. Yup, The 5 tips writing well in English.
It was interesting. Then landed on your blog, i already feel like there are tonnes of golden nuggets in here.
Thanks Ed! Appreciate your comment, and all the best with socialmagix yeah.
Hey Mr. Stingy,
Hope you are well. I just found out you replied to my comment after 1 year 😊 Thanks man!
Oops… I always reply! Hope you’re doing well too!
Thank you for sharing! You are so right about the envy part 😅
Anyway, I have subscribed to your blog (found out your blog from Suraya of RoR)! Looking forward to your next post!
Thank you Nisa. Hope you’ll come back for more!
Thanks for the wake up call~ Realization that we know but we don’t realize~
Thanks Desmond. Hope you’re doing well!
It is not how much you earn but how much you have. It has to be more than USD 1m in assets beside your roof.
Only two ways to be a millionaire: be a Super-high income earner (at least C level executive) and saver/investor or be a businessman.
Thanks Fred. Appreciate your comment.
In today’s world though, i don’t think you need to be a C-level executive anymore to be a millionaire. There are many “non-executive level” jobs which are highly paid as well. A lot of them are in technology/engineering…
Great insight! Thanks for sharing.
Being rich means you don’t have to worry about the basic necessities of living. What you need to worry about how the money will change you mentally. A.P. Giannini, the founder of the Bank of America, stated that money spoils people, always have, and always will which is why Mr. Giannini never was interested in having a huge money account. He lived a comfortable life; however, he gave most of his money away.
Texas billionaire Ross Perot state that rich people are hobos with money and when he was in the Navy, he saw rich people sunbathing on their yachts; however, he noticed that they were never in a happy mood despite all the money that they had. He came to the conclusion that money was and still is overrated.
Appreciate the comment. I look forward to the day I can give most of my money away while still living a comfortable life. 😉
Thanks for giving an insight into what being ‘rich’ really means, both from a monetary perspective and a lifestyle perspective. People definitely have a weird sense of what being rich means (no thanks for media) so really appreciate how you debunked the myth.
I’ve shared this with my community as well 🙂
Thanks CS. Appreciate your support! Wishing you the best with moremoney too!