What is the Definition of being “Wealthy”?

by | Oct 10, 2018


As you may be aware, I work in wealth management and my firm, The St. Louis Trust Company, is a multi-family office and trust company. In my role at our firm, I’ve spent a lot of time over the past decade plus pondering the nature of wealth. This IFOD is my thoughts on the amount of wealth or income at which being “wealthy” begins. I believe this concept of being wealthy is useful and important in examining at wants, needs, life goals and purpose. Here is my proposed definition of “wealthy”:

Wealthy [wel-thee] Adj.:

  1. The state whereby if your income doubled tomorrow very little or nothing would change about your life other than the amount you save (or give to charity).
  2. The state whereby if the amount of your net worth doubled tomorrow very little or nothing would change about your standard of living.

I also call this “being in the gravy.”

This definition of wealth is not a dollar amount of income or assets, rather it is completely related to what you “want” or “need” to spend money on. It’s totally relative to spending and wants.

For example, I have a good friend who spends very little money, and he is quite wealthy on what most would consider a modest income and net worth. I’ve also known people who objectively have a large income or a great amount of assets but don’t meet the above definition of being wealthy because they have a desire to spend more and to have more. If they had more money they’d buy a bigger house, or a second (or third) house, they’d travel in greater luxury, etc. The point is here is not to judge people’s choices in terms of how they spend their money, but rather it’s possible to be “wealthy” at all sorts of different levels of income and assets.

The point isn’t that once you reach the level of “wealthy” according to the above definition that all your money problems are gone. It doesn’t mean that we shouldn’t desire more money or more financial security. Rather, being wealthy means that you’ve hit a significant point – one where additional monetary resources have no real effect on how you live. Much of America lives sub-wealthy where doubling of income or assets would have a huge effect, like the difference between taking a vacation each year or not; living in an area with a decent school district or not; moving to a location with a shorter commute; having a nicer car (or a car at all); being able to send a child to college, etc. A similar concept is found in the fantastic book Factfulness by Dr. Hans Rosling where he divides the world into fourths based on income levels with each level hitting a milestone of standard-of-living.

Many people with a lot of wealth don’t consider themselves “wealthy.” According to the Wall Street Journal “studies have shown that when people are asked how much it takes to be rich, they always give a number that’s twice their current net worth or income. Those with $100,000 in incomes say $200,000, while those worth $5 million say $10 million.” Similarly, a UBS survey of investors found that of respondents with $1-5 million of investable assets only 28% considered themselves wealthy and only 60% of those with over $5 million thought they were wealthy.

Related, fantastic article by David Brooks about home size and happiness: The Haimish Line. Well worth the time to read, IMO.

Related IFOD on What Does it Mean to be Middle Class?


  1. Many years ago I read a book or perhaps a chapter in a book about the affluence of stone age man. It was entitled Stone Age Economics. It demonstrated that these people were often very affluent (the author uses this term for what you are defining as wealth). His point was that these people had finite needs and so were satisfied with much less and lived very satisfied lives. I think this is another way of phrasing the same thing but it is interesting to mention it explicitly because the problem with most modern (first-world) people is that we are bombarded with information geared to tell us we need more than we have. If you can see past that, most of us are capable of being quite affluent…

  2. Apropos to the idea of what makes one wealthy, here’s a quote from an article from Julian van Winkle who is the head of the distillery that makes Pappy van Winkle, arguably the greatest whiskey in the world. The quote: “On the road back to Louisville, I ask Van Winkle why, with a high-volume distillery in his corner and the public in full ferment for his product, doesn’t he seize this moment to crank the stills to capacity and cash in? ‘Well, the quality would go down,’ he says, as though this is explanation enough. ‘I don’t need a ton of money. I’m comfortable. Why get bigger? I mean, yeah, I guess I’d like to have a jet to fly around in, but things like that just complicate your life.'”

    IFOD on Whiskey: http://www.theifod.com/whiskey/

  3. Spot on. I consider myself wealthy though probably don’t meet many folks’ definition of that, with our Toyota cars and modest log home. Also the non-monetary aspect of wealth (loved the David Brooks column) is a huge component. I saw 3 turkeys in my back yard today and felt quite wealthy.


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