Not long ago I read a Wall Street Journal article, focused on proposed tax increases on those earning over $250,000 a year, which profiled a Colorado dentist who earned around $300,000 a year. The dentist was quoted as saying she didn’t consider herself rich, but upper middle class, because she worked for a living.
I was especially interested in readers’ comments. Some, of course, had harsh things to say about high earners, the wealthy, and even dentists. Others were more thoughtful. Several people made a distinction between being rich and earning a high salary. They defined “wealthy” as having enough money that you didn’t have to work for a living, while “affluent” meant earning a high income.
Another way to think of these terms might be to define “wealth” as having a high net worth, with assets substantial and secure enough that they aren’t likely to be lost, while “affluence” is high income that could disappear in the event of a job loss or serious illness.
Another question is what we perceive as a middle-class or upper middle-class lifestyle. If you believe magazines, TV shows, and the lifestyle the Joneses seem to enjoy, upper middle class is a lot richer than it used to be. What we think of as “normal” now includes having several cars, gym memberships or even personal trainers, expensive vacations, elaborate weddings, eating out regularly, and living in a large house with amenities like hot tubs, several bathrooms, and designated exercise or TV rooms. Yet many families who consider themselves middle class lead lifestyles much more modest than this.
The bottom line seems to be that both wealth and middle class are whatever a given society says they are. We may not be able to define them, but we all assume we can recognize them when we see them.
Not necessarily. Certainly there are people we can safely categorize as wealthy: Bill Gates, Warren Buffett, and Oprah Winfrey all come to mind. But earning a lot of money and living a lavish lifestyle don’t necessarily equate to being wealthy or financially secure.
In financial workshops, I have seen many high earners whose salaries certainly would have enabled them to accumulate wealth. Yet their dysfunctional money behaviors led them to overspend so severely that, in 
some cases, their net worth was in negative numbers. On the other hand, I work with many clients who aren’t high earners but whose modest lifestyles have allowed them to accumulate significant wealth.
Instead of trying to define wealth or affluence, it might be more useful to think in terms of “financial independence.”
Those who are financially independent have a solid enough financial base to be able to live as they wish. This includes being able to choose work they love or not to work at all, to live wherever they want to, and to fulfill dreams such as travel, public service, or spending time with family. Financial independence certainly requires a minimum level of financial security, but it isn’t necessarily the same as being wealthy.
One goal of integrated financial planning is to help clients achieve financial independence. Some keys to financial independence are living on less than you earn, being debt-free, and protecting your net worth and earning power with appropriate asset protection strategies. Even more crucial is defining what “living as you wish” means to you. Becoming financially independent requires knowing and actively choosing how you want to live instead of assuming you should live in the way other people do.
The real challenge is to figure out what you would do if you had the freedom—financial and otherwise—to live in any way you desired. Once that aspiration is clear, then you can work toward your own particular definition of financial independence.
