Monday, March 1, 2010

Moneyday - Wealth or Affluence?

I read again in the Tightwad Gazette today, and came across yet another great article. It compared being wealthy to being affluent. I had never really thought about the distinction before, but it makes total sense. It also makes me feel good about the direction the Story family is going right now. Update on that at the end of the post, but back to the two words...

What do they mean? Wealth is the actual ownership of things of actual value, things like a large bank balance, gold, real estate, etc.; and a very sound financial footing. Affluence is the appearance of having money/richness manifested in clothes, cars, houses, etc. without necessarily having a sound footing underneath it all. If you are on the edge of your budget but wear designer clothes, are paying a large mortgage on a large house, and have everything you want (except maybe enough retirement money or the means to send your kids to college), you are affluent. If you have a cottage owned outright, a 10-yr-old well maintained rig, and 100k in the bank, you would be more wealthy than the previous person, though you don't look like it. Now, some people both have money and look like money, in which case they would be both wealthy and affluent. But my big lightbulb moment from the article is that you can have the substance without they style, or the style without the substance. Even moderately poor people can put up a show of being well off, and even rich people can be frugal and blend in with the crowd though they don't have to.

How does this apply to me and make me feel good? Well, we are moving in March/April. A local move (no panicking!), but a housing downsize. I don't know just where or when yet, but we knew it was time. We realized that if we continued to rent here, a nice place, we'd always be renters, and never be able to afford to have more kids without relying on the economy swinging up. Since the economy is still a bit feeble, and healthcare may just get really expensive soon if pre-existing conditions are protected, and all that jazz, and I prefer homebirth and midwives over other options but most insurance companies don't get that it is cheaper to cover those births yet, AND we don't want to rent someone else's house for the rest of our lives, it makes sense to downsize and save up money. So for the next several years or so, we will be living simply and cheaply, saving to afford kids and land. My hope is that by the time Jonathan is 15, we will own land outright somewhere. I don't know how it all will work out, how long it will actually take, or what kind of home we will end up with down the road, but I am excited that we are making choices that lead us to a goal and show good stewardship of the blessings that come our way. :)


May your speech be always with grace, seasoned with salt. :)