What it Means to be Rich

In my five year study of the daily habits of the rich and poor (http://richhabits.net/rich-habits-study-background-on-methodology/) I defined rich to mean those individuals who passed a two-part test:

  1. Gross Income of $160,000 or more and
  2. Net Liquid Assets of $3,200,000 or more

In reality, being rich is much more complicated. There are many variables that can make one person rich and another person not rich. It’s not a simple financial test as much as it is a lifestyle test. As a result, being rich is very much a subjective matter. Nonetheless, I thought I’d provide some clarity and share with you some of the variables I uncovered from my research that definitively make you rich. If you meet all of these 12 tests, then you are a rich person:

Test #1: You no longer have to work in order to fund your lifestyle. If you work it is because you want to work not because you need to work.

Test #2: The unearned income you generate exceeds your living expenses.

Test #3: You can afford to take the number of vacations you want to take during the year, irrespective of what that number is.

Test #4: Your can afford any and all healthcare or medical costs that may arise for you, your spouse or any family members, including the cost of long-term care inside or outside your home.

Test #5: You can afford to purchase new cars for you and your family without relying on bank loans.

Test #6: Even if you got divorced, it would not require that you or your family alter their lifestyle.

test #7: If you wanted to, you could afford to pay college costs for all of your children or grandchildren without it affecting your lifestyle.

Test #8: You own your home and/or your vacation home outright. You have no mortgages for either.

Test #9: You can afford to meet large, unforeseen expenses, without it affecting your lifestyle.

Test #10: You have no financial constraints on your activities. You can do what you please, when you please, without considering the cost.

Test #11: You have zero debt.

Test #12: You no longer require life insurance, health insurance or long-term care insurance. You can self-fund the costs associated with these types of insurance. If you carry insurance it is either for estate tax planning purposes or to protect the assets you’ve accumulated.


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Thomas C. Corley About Thomas C. Corley

Tom Corley is a bestselling author, speaker, and media contributor for Business Insider, CNBC and a few other national media outlets.

His Rich Habits research has been read, viewed or heard by over 50 million people in 25 countries around the world.

Besides being an author, Tom is also a CPA, CFP, holds a master’s degree in taxation and is President of Cerefice and Company, a CPA firm in New Jersey.
Phone Number: 732-382-3800 Ext. 103.
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