Difference Between Money and Wealth
What is the difference between money and wealth? It may seem to be the same thing, but it is not, although they are inextricably linked. If one cannot be achieved without the other, one is necessary to achieve the other.
In the end, the difference between money and wealth is the means to an end: one is what you work for and the other is what you have accumulated over years of effort.
Definition of Money
Money is what you earn from the product of your work, whether in business, as a self-employed person, a manager or a manual worker. It allows you to buy goods, merchandise, and services that we use for personal purposes.
The very definition of money is that it is used for transactional purposes: to eat, to travel, to be entertained. We start making money as soon as we work for it. It is an immediate reward for our efforts and it is the means by which we can buy a car, a house, and clothes; or pay tuition, go to the movies or run errands.
Definition of Wealth
Wealth is defined as the sum total of our net worth: our assets, such as investments, property, and savings, minus our debts, such as loans or debts, and what we have leftover is our level of wealth. The definition of wealth is the value we possess and that has been acquired over time.
Wealth and money are not terms or concepts that can be used interchangeably, although they are intimately, inexorably linked. We can have money but not wealth, although we can reach a position in life where we have money AND wealth.
What is the Difference Between Money and Wealth?
Money and wealth should not be confused as one and the same thing. Money is what you earn and wealth is what you have managed to accumulate and put aside after paying all your expenses. One is immediate, the other is an accumulation over time that allows you to save, accumulate wealth and assets such as property and investments.
A person who earns millions of dollars each year may be considered wealthy, but despite having a large income, they may have debts that have accumulated over the years due to an expensive (perhaps extravagant) lifestyle.
So while, for example, she may have an income of $2 million a year, after taxes, mortgages on her primary residence and vacation home, repayments on her luxury German cars, studies at a private school or college, regular dinners out and vacations abroad, what she has leftover is really not much.
So, while outside and visible to those who know him, he may appear rich because he has the lure of wealth, all he does is earn and spend money, not set money aside for the future.
He may earn a lot of money every month, but he does not accumulate wealth over time. That is the difference between money and wealth.
Money vs Wealth Comparison Table
|Basis of Comparison||Money||Wealth|
|What is it?||Earnings||Savings|
|Definition||Cash||Abundance of possessions|
|A measure of||Income||Net worth|
|Achieving it||Converting work to cash||Converting cash to investment|
|Acquiring it||Short term||Long term|
Conclusion of the Main Difference Between Money vs Wealth
Wealth is an accumulation, over time, of money that has been saved to invest or retain value and describes a certain financial situation of someone who has been able to save. Money is the income we earn from working, which is a short-term renewable financial affair where we receive it and then spend it.
The difference between the two is the value we place on them. Money for wealth is a long-term investment for your future and the future of your loved ones, where you place a higher value on what you might own than on what you’ve already bought.