Ep 225: RICH

Welcome to this week's episode of the Weekly Wealth Podcast.

My name is David Chudick, and being a wealth podcast, today, we're going to talk about rich.

What does it mean to be rich?

What are some of the qualitative and quantitative aspects of being rich?

And most importantly, what do rich people do?

And maybe what do rich people not do?

So I hope that you enjoy this episode.

And here we go.

Welcome to the weekly Wealth Podcast.

I am certified financial planner David Chudick.

This podcast and my wealth management practice are both designed to help the mass affluent to live better lives by how they handle their money.

We talk about financial strategies, prosperous mindsets, and simply how to build true wealth.

So come on and let's enjoy this journey together.

We're about to get started with this week's episode, but before we do that, I have a favor to ask you.

But this is only if you are not driving right now.

So if you're not driving, would you share this podcast?

Would you share an episode with a friend, with a family member, with a colleague or co worker?

Just text it to them and say, hey, I've been listening to this podcast and I get some value from it.

I'm trying to build this community.

And like I always say, I believe that how we handle our money should positively impact our lives and the lives of those around us.

And I hope that this podcast and I hope that our social media content can be a small piece of that puzzle in your life, as I am a certified financial planner and this podcast is one of my marketing tools to build my own private wealth management practice.

So I work with clients to help them to have better lives by how they handle their money.

And yeah, that's part of what the podcast is.

It's a way for me to get my word out and my message out.

All right, so we got that out of the way.

I hope that you'll help me out and I hope that you'll share the podcast with a friend or two.

But let's move on to today's topic and let's talk about being rich.

Let's talk about what rich might be, what rich might not be, and let's talk about some things that rich people do or don't do.

So the IRS and U.S. census data say that the top 10% in 2024 of annual incomes in the United States is a $200,000 combined income.

Top 5% is 290,000, and top 1% is 650,000 to $750,000.

Now, keep in mind, like in high cost areas, Like New York City, San Francisco, even $400,000 might feel like middle class because I think rents and real estate cost so much more money in certain areas of the country.

Now, the Federal Reserve Survey of Consumer Finances provides some benchmarks.

So the median U.S. household has a net worth of approximately $192,000.

And that's in.

Those are 2022 statistics.

Now, the top 10% has about 1.9 million, top 5%, 3.8 million, and top 1% has a net worth of $10 million.

So you can see there is a wide range there.

And yeah, there are a lot of households that may even have a negative net worth, meaning that their debt is greater than their asset amounts.

So where do you fall there?

Are you.

Do you have a positive net worth?

Are you happy with your net worth, or are you trying to build your net worth?

I, for one, I'm trying to build my net worth, and it's growing, and I'm incredibly blessed to be where I am, but am looking to make it bigger.

Now, according to a Charles Schwab Modern wealth survey, most Americans say you need 2.2 million in net worth to be considered, quote, wealthy.

Many feel financially comfortable.

Starts around $774,000 of net worth.

So those are some statistics.

Again, they vary based on what a lot of money would be in New York City.

Might be different than what a lot of money is.

Where I live in Oconee County, South Carolina.

A lot of different factors here, but where do you fall on the rich?

Where do you fall on the wealthy scale as far as the quantitative numbers.

Now, from a qualitative standpoint, so remember, quantitative, these are items that we can measure, but from a quantitative standpoint.

I don't know if you've listened to many of my episodes where I'm interviewing a guest, but I always have the last question of how do you define wealth?

What does wealth mean to you and the people in your life that you love and that you care about?

And everybody, I'm talking literally 100%.

They give some answer that involves freedom.

They give some answer that involves being able to make the world a better place.

They give some answer that involves happiness.

So not one has ever given an actual number that would make them wealthy.

So when I have a million dollars or $10 million or $100 million, or when my income is X or Y or Z, nobody that I've interviewed, and then there's probably 75 to 100 of them, has given an exact number or even a range of numbers of what wealth is so there's a component to wealth that simply means that you can have a good life and that you can do the things that you want to do and that you want to have freedom.

Now, as you can imagine, in my private wealth management practice, I have a range of clients.

Some of them have high income, some of them have maybe not the highest income, some of them have a large amount of assets.

But what I can tell you, and this is unequivocally true, that the people with the highest incomes do not necessarily have an incredible amount of freedom.

And I do have some lower earning clients that just because of where they've placed themselves in their lifestyle, they have low monthly expenses and so on, they have more freedom, they have more free time, they can do the things that they want to do.

So let's remember that rich and wealth, from a qualitative standpoint, sometimes that means maybe I need to decrease my monthly expenses so I can earn less, work less, and spend more time with the people that I love.

Maybe I need to get some things under control, maybe I need to get some debt paid off.

So just think about those things.

As far as wealth and being rich goes, it's not only about earning as much money as you possibly can because sometimes there's strings attached to earning money.

Think about, and I know there's probably somebody in your life or shoot, it might even be you.

You make a good living, but you work way more than you would want to work.

Maybe your business just owns you and you can't get or maybe you work in corporate and you're having to do more travel than you would like and that keeps you away from your family and all those kind of things that take away freedom.

So I think that freedom is a great thing and how we handle our money and a lot of our financial decisions should move us in the direction of having more freedom.

Really?

And in addition to freedom, don't we all, at the end of the day, don't we all want to lead a pretty good life and be decent people?

Now I'm not not talking like you have to give all of your money away.

I'm not talking sell your possessions and give them all to the poor, unless of course you are called to that.

But you don't want to be on your proverbial deathbed and think, man, I was a selfish a hole, do you?

So let's even look back at some fictional characters like Ebenezer Scrooge in Charles Dickens A Christmas Carol.

He was very wealthy from business, but he was cold hearted.

He was Greedy.

And he was obsessed with money.

So after a supernatural intervention, he became generous.

And that's probably where we all want to be.

We can look back at Gordon Gekko.

He was corporate rating, insider trading and greed is good was his mantra.

And he was a financial manipulator.

He became a symbol of the 1980s Wall street excess.

But Gordon Gekko's fictitious proverbial deathbed.

Is he going to look back and say, I lived a good life.

I made the world a better place by how I handled my money?

And then of course, there are some extremely wealthy people.

Look at Bernie Madoff.

By any estimate, he had wealth beyond what anybody could ever spend.

But he did it dishonestly, right?

So is that really, truly wealth?

Pablo Escobar.

At his peak, his net worth was estimated to be 30 billion with a B.

Now that's rich, right?

That's wealthy.

But he ran a drug cartel and he was responsible for thousands of death and a lot of bad happened because of him.

So again, it's not about earning as much, are accumulating as much money as humanly possible.

It's about going back to my mantra of I believe that how we handle our money should positively impact our lives and the lives of those around us.

So here is the self reflection question of the day, the way that you handle your money.

And that's everything from how much you spend to how much you give away to how much you need to how well you protect your money, to how wisely you act, your money, all of those things.

Are they giving you a better life?

Are they giving the people around you a better life?

Are they helping to make the world a better place?

Or are those decisions simply building up your accounts without any true positive consequences?

That's food for thought right there.

Let me know what you think.

Email me davidarallelfinancial.com or put an answer in our Facebook group.

Go to Facebook and put in weekly wealth podcast and let us know if.

You'Re successful on paper but still feel unsure about your financial future, you're not alone.

David chudic created the 10 minute wealth vision call for high earners and business owners who are busy but know they need a plan.

In just 10 minutes, we'll talk through one key issue and we will help you see the next smart move.

No pressure, no jargon, just clarity from someone who's helped people like you every day.

Head to weeklywealthpodcast.com vision and grab your spot.

So you might remember that earlier this year the stock market took a pretty major downturn and this was due to the tariffs.

And for the most part it's actually recovered above where it was before the downturn.

But it was a scary time.

And I want to give you an example of rich and I want to give you an example of freedom.

So I have a client, he's a wonderful guy.

He's done really well.

He has account balances that are very nice on paper, but he's put himself in a position to where he doesn't need that much money.

So he has a house that is reasonable for his amount of income and his net worth.

He has two paid off cars and their monthly living expenses can be very low.

Now, he retired right at the time of the market downturn.

And what he was able to do is he and his wife were able to say, you know what, what, our accounts have gone down, the stock markets have gone down due to this whole tariff mess.

And but what we're going to do is we're going to live off of our Social Security and another form of income, but we're not going to take anything out of our accounts for probably a year.

And we can do that because we've made good financial decisions along the way and that is going to help us to be able to weather this storm of the stock market going down.

So to me, that's rich, right?

That is to where this guy, and again, great guy, he did not have to worry about his accounts going down temporarily because he had enough financial margin and he kept his expenses in check.

So by this guy with again, a really good income up until he retired and he had saved enough money and keeping his expenses in check, he was able to say, you know what, my investments, yeah, they've taken a hit.

I don't need to touch them because I can live a reasonable lifestyle without touching my investments.

He and his wife, they made great financial decisions over years and years and decades.

And that gave them the freedom to not worry about a stock market downturn that literally happened at the worst possible time for them and their family.

So I think that's rich.

Now I have a couple other examples of a different kind of rich.

And these are guys that work at the plant, they worked at the mill, they did some blue collar type jobs in our small.

Maybe they never made an incredible amount of money, but what they did was they participated in their 401k plans.

At their jobs, they lived a little bit below their means.

And now these two guys that I'm thinking about, both of them, one has a net worth of over a million dollars and the other one has a net worth that'll be a million dollars when he retires in a few years.

And what they did is they just said, I'm not looking for a million dollar per year annual income.

I'm working in production, I'm working in a plant.

But what I can do is I can maximize my employee benefits, I can live below my means, Sure, I can still have some fun, but I can look to accumulate money between now and retirement.

And I can tell you that other people that work in that same plant, they all have nicer cars, they have maybe the newest cell phone every time it comes out, and maybe they have lifestyle creep, which means every time they get a little bit of a raise, they increase their spending.

And then, you know, sometimes in life you choose your hard, right?

It's hard not to buy the newest cell phone.

It's hard not to deal with the immediate wants, but it's also hard to be poor during retirement.

So which one of those hards is worse?

I would make the argument that foregoing some of the immediate gratifications is, yeah, that's hard.

But I think it's much less hard than being poor in retirement.

What do you think about that one?

So I wanted to give you some concrete items that you can add potentially into your financial decision making process, into your financial thought processes.

So let's, first of all, let's think about long term thinking, let's think about patience, let's think about discipline, and let's prioritize our spending now versus our accumulation for the benefit of good in the long term.

So just because we want to buy something now, doesn't mean that we should buy it.

Maybe if we think about the opportunity cost.

So if I spend money now, not only do I lose that resource, but I lose what that money could have grown to.

Now again, I'll never be the financial advisor that talks about cut and beans and rice and beans and rice.

But what I will be the financial advisor that will always ask my clients and I'll always ask the listeners, is that purchase or is your consistent spending, is it appropriate for your current financial situation?

And if it is, great, because I want to make more money, I want to have more stuff, I want to have more experiences.

But there are things that are not within my financial reality.

Right, there are things that are not within your financial reality.

So think about that.

Am I acting appropriately for my financial reality?

And if the answer is no, you have two options.

Spend less or figure out how to change your financial reality, which might mean figuring out A way to earn more money or it might mean getting some debt paid off so your monthly expenses are gone or things like that.

Now I think rich people, they live below their means.

We're not talking about the Bill Gates of the world, we're not talking about the billionaires, we're talking about the people that you probably know.

A lot of the people that have multimillion dollar net worth, they're past the point where they have to impress you with their car, they're past the point where they have to impress you with the biggest house possible.

And a lot of these people, they have couple year old cars that, that are paid off and that are reasonable.

A lot of them have nice houses, but it's not the biggest and most expensive house that the bank would le the money for.

And I always say that's one of the biggest mistakes you can make is asking the bank how much money they'll lend you for a house.

And buying a house that expensive, you should buy a house that's less expensive than the most possible money that the bank will lend you.

Strategic investing.

People who are rich or wealthy, depending on how, however you identify it, they are looking to build second and third and fourth and fifth streams of income.

So they're not only living off of their salary, they may have some dividend paying stocks, they may have some rental properties, they may have some other areas, maybe partial ownerships in local businesses, but they'll have some other sources of income.

And this is huge because there are two things in life that makes money.

People make money by working and then money makes money by working.

And it's really hard to get ahead if you are the only source of income in your family.

Now if you have some other assets that are producing income, that makes the equation work a lot better.

And I think a lot of times rich people or wealthy people, they do rely on professional advice.

So they'll work with financial advisors and tax planners and legal experts because they know they can't know everything.

I can tell you I have many of my bigger clients, they'll use some version of hey, just tell me what to do, that's why I'm paying you, I trust your judgment.

And then some of the lower end clients are very risk averse and they may have a small investment account and they'll be very concerned about losing their investment account.

But in reality, the bigger place in life that they're losing is just through poor financial habits.

Now let's talk a little bit about risk management.

Because rich people and wealthy people, they need to Protect what they have.

So ask yourself this and maybe ask your local insurance agent or maybe just talk about this with your financial advisor or just the people in your lives.

But ask yourself this question.

What are two or three things that if they happened or maybe if they didn't happen, could cripple our family or our organization or myself financially?

Let me give you some examples.

Let's say that you're 25 years old and you're a 25 year old married couple and you are relying on two incomes and you're of course not living an extravagant lifestyle on two incomes.

One thing that could happen is God forbid one of the spouses could not make it home tonight, right?

One of them could get killed.

Now if that happens, not only do you lose a spouse and a parent, but you also lose that spouse and parents income.

So in that case, some life insurance might be a solution.

So I'm not here to give you any, put anything in your mind of what your risks might be.

But I'm here to ask you to ask yourself what are some things that could cripple you financially?

Are there any financial partnerships that are not sound?

Do you have a business partner that's just on a handshake deal?

Do you not know how to handle your taxes?

Do you have some insurance type risks out there?

Do you understand your insurances?

Do you know what would happen if you caused a major car accident?

These are all things to think about.

And this is what the wealthy do.

They hedge their bets and they make sure that they are protected from major financial downturns.

So it's funny that we just talked that rich people and wealthy people, they have good risk management techniques and they manage their risks.

But what they also do is they take appropriate risks.

So what are some appropriate risks that could have some long term benefits for you and your family and maybe even your business?

If you are a business owner?

Sometimes business owners need to say, you know what, I can't really afford to hire this new person but I'm going to take the risk.

I'm going to pay myself less for a little while.

I'm going to invest in the business because I know that the payoff could be bigger.

Or maybe a business owner needs to buy some equipment that can lead to more income and revenue or maybe pay bump up their advertising.

Now again, you don't want to max out your credit cards, you don't want to clear out your entire net worth.

But you do have to take some risks.

That life is not totally safe.

Of course our stock market investments, they have ups and downs, right?

So we have to be willing to take some of those risks.

There are people who buy rental properties, and yes, there is the risk that with your rental property, there are some risks that your tenants may not pay their rent, your tenants might damage the house, you might buy a house or a property, and it might have some unforeseen expenses.

There are many things that can happen.

But if we live our lives in fear of what might happen, then we're never going to go to the promised land.

We're never going to make it to that area where we have more than one sources of income.

So think about the risks in your life that you might be a little afraid of and ask yourself a few things.

Say, what's the worst that could happen if I took this step?

What's the absolute worst that could happen?

Then ask yourself, okay, in addition to the what's the worst that could happen?

What's likely to happen?

Yes, you can buy a rental house, and yes, the whole thing can fall down tomorrow, but is that really likely to happen?

And then ask yourself, how much risk am I comfortable taking?

And look at risk and reward.

If I take some risk, maybe if I'm in my 30s or 40s or early 50s, if I make my investment portfolios a little bit riskier, maybe have a little bit more equity exposure, what's the potential gain for that?

Does that potentially mean that I'll have hundreds of thousands of dollars more or millions more when I retire?

So look to take the appropriate amount of risk for you, and risk is what gives you the reward over time.

Now, risk also will create some issues at times, and there's no doubt about that.

But you can't make it to at least a quantitatively rich state without taking some risk.

Take the right amount of risk, but make sure that you're understanding your risks and taking the appropriate amount of risk for you.

All right?

And two more things that I think that the rich people of the world do is I think the rich and wealthy people, they surround themselves with other people who they're of the same level, right?

You can't always be the smartest person in the room.

You have to surround yourself with people that can help build you up.

You have to surround yourself with people who have been where you are and can give you good, positive advice and people who want to see you grow.

So I always use the analogy.

If I want to have the tallest building in my city, I can do a couple things right.

I can work really hard.

I can take some risks, I can build A tall building and then I'll have the tallest building or I can build a medium building and I can knock your building down.

Now, now my building is taller than your building and I have the tallest building.

So obviously that second option is not ideal.

And we want to make sure that we're not around the people that are going to knock our building down to make their building appear bigger.

Now I have some people in my network that I can go to, I can ask advice and they'll say, look, dude, that's a horrible idea what you're thinking about doing, don't do that.

And I have some people that would point me in the right direction and I am that person to other people.

So I think that rich people, wealthy people, they surround their self with people that can bring them up.

And they do say that your net worth is in your network.

So make sure that you know people that you can help, but also can help you.

And also rich people.

And I know that it's a weird thing that rich and wealthy has almost become an insult in today's world, which I'll never understand.

Now, if you got rich by lying and stealing, yeah, that's not a good thing.

But many rich people, they just got rich because they provide a lot of value to the economy and they work hard and they've taken some risks.

So number one, I don't think that rich is an insult, but I do think that a lot of rich people, a lot of wealthy people, they do have philanthropical ideas and they're concerned with leaving a legacy.

So many rich people, they give back to foundations and they make large charitable contributions.

Now, I'm not saying if the only thing you can afford to do is give a $5 donation to a homeless shelter, yes, give that $5 donation to the homeless shelter.

But there are rich people, there are wealthy people that are given tens and hundreds of thousands of dollars or more to organization.

So sometimes that aligns with tax benefits.

But most of the time it's just their personal values and people want to see the world become a better place.

Maybe rich people ran into a few good breaks over the years and they want to pay it forward.

So think about how you, whether you define yourself as rich or not.

If you're listening to this podcast, you probably have at least some level of wealth.

How can you give back a little bit more?

Are you being as generous as you should with your money and even maybe with your time and with your expertise?

Alright, so those are some of my thoughts on being rich, being wealthy, some of the things that you can do some of the things you should be thinking about in order to build true wealth and in order to be rich.

So I would be really interested in your thoughts.

It's really funny.

There are times where as a business owner people assume I have a lot more money than I do and people will make comments about you must be rich.

And number one, they don't see the early hours.

They don't see that I was here before seven this morning.

Number two, they don't know what my bank statements say.

But I think there is sometimes some jealousy when there's either success or perceived success.

So don't be that person.

If there's somebody in your life that is winning and if there's somebody in your life that's building wealth or getting quote rich, encourage them.

Be happy for them.

Because you know what?

If they can do it, so can you.

So those are some thoughts.

If I can ever help you.

Make sure to take your 10 minute wealth vision call.

Go to www.whe weeklywealthpodcast.com vision.

I'd love to spend 10 minutes with you.

We can discuss one of your financial issues.

We can do the best to point you in the right direction.

So don't forget to like this podcast on the platform where you listen to it and share it with a friend.

And until next episode, I wish everybody a blessed week.

Thanks everybody.

The information contained herein included but not with limited to research, market valuations, calculations, estimates and other materials obtained from Parallel Financial and other sources are believed to be reliable.

However, Parallel Financial does not warrant its accuracy or completeness.

These materials are provided for informational purposes only and should not be used for or construed as an offer to sell or a solicitation of an offer to buy.

Any security.

Past performance is not indicative of any future results.

Okay, so before we really wrap this episode up, let me give you a bonus offer.

So this episode we talked about wealth and what better way to track wealth than to have a custom balance sheet made for you.

So if you'd like to have a balance sheet that made for you that will show your assets, your liabilities and tell you what your net worth is and hopefully it's positive, go to www.that's www.weeklywealthpodcast.com balance sheet.

It'll take you just a few minutes and then we can set up a short call and plug in any additional items that might be applicable.

Hi everybody.

Thanks.

Have a great week.