It’s better to be wealthy than rich, even if you’re poor. – Author and NYT columnist, Paul Sullivan

That is the most accurate line I have come across in the context of being wealthy. And we are going to present you with three interesting stories that will help you understand.

A fortune squandered
At one stage in his life, Hollywood legend Johnny Depp was one of the highest grossing actors of all time. In 2018 Rolling Stones estimated that Depp made $650 million on films.

Depp’s weakness was his splurge fest. TMG – The management Group, run by his business manager, stated that Depp has a compulsory-spending disorder. His ultra-extravagant lifestyle was sometimes in excess of $2 million per month. A 45 acre chateau in the South of France, private islands in the Bahamas, houses in Hollywood, penthouse lofts in Los Angeles, house farm in Kentucky, a luxury yacht, 45 luxury vehicles, 70 collectible guitars, and $30,000 on wine flown in from across the world.

Then came the expensive divorce.

His net worth today falls in the comparatively impoverished range of $150 – $200 million.

The millionaire tramp
Curt Degerman spent his adult life cycling through a small coastal town in Sweden. He rummaged through the bins of restaurants for leftover scraps of food, earning him the moniker Tin-Can-Curt.

When he died of a heart attack in 2008, a cousin was the beneficiary of his estate. Which, to the surprise of the world at large, was estimated at around $ 1.4 million. This included a house, 124 gold bars, equity investments, money in the bank and cash at home.

How did he make his money? He ransacked bins for cans and bottles, which he sold to a recycling plant. Almost all the proceeds were invested since his expenses were minimum. He had no immediate family and no dependents. No debt.

He was a regular at the local library, reading up on the market and stocks and mutual funds. That effort, combined with a good dose of eccentricity, extreme frugality, and no interest in impressing others, is what made him wealthy.

Back home, Lalithamma, an aged lady tramp outside my house in Yelahanka New Town, Bengaluru, is a carbon copy of Curt. She has accumulated three houses which is earning her a rental income while she continues collecting cans and bottles, her lifetime profession.

A millionaire on a teacher’s salary
Andrew Hallam worked at a bus depot in British Columbia when he was 19 years old. He had graduated from high school but could not afford to go to college. His father was a mechanic, and his mother earned minimum wage. Besides shelter and food, they could not afford much. Andrew remembers being 14 years old and having to save up money on his own to buy a pair of shoes.

His tasks at the depot included washing the buses, checking their oil and mileage. A mechanic called Russ asked him what he would if he got $10,000, to which Andrew said he would put it away for his college education. Impressed, Russ showed Andrew all the properties he owned and his entire investment portfolio. Russ was a self-made millionaire on a mechanic’s salary. He egged on Andrew to start saving.

When Andrew said that he had nothing to save, Russ pointed to the vending machine and asked him if he could buy a muffin and a chocolate bar every single day. That meant around $3.33 daily which would be $100 saved every month. That money saved every month invested in equity would yield amazing results. Andrew began by investing $100 in a mutual fund and began to work towards becoming financially literate. Russ’ words, “You can save less than your friends but end up with much more” got him thinking about the value of compounding and starting early.

Andrew saved, invested, took up multiple part-time jobs, got a loan, and went to college. When he graduated, he had $12,000- in student debt. He worked as a middle school teacher teaching English; his first pay cheque was $2,884 after taxes. He cleared his debt within 9 months by living extremely frugally.

By the age of 36, he was a millionaire. He is now author, a personal finance speaker, and travels the world.

Johnny Depp. Outwardly, filthy rich. But his bank balance was hemorrhaging and he was doing nothing to stop the flow.

Curt Degerman and Lalithamma. Poor tramps. But the assets they accumulated made them wealthy.

Andrew Hallam. A teacher from a lower middle-class home. Started saving at a very early age to latch on to the power of compounding. Was a millionaire before turning 40.

This is what we can learn from them.

• The key to being wealthy is not making a lot of money. You could make obscene amounts of money and squander it away.
• Income is not a barometer of your financial position, wealth in the form of assets is. Aim to own assets that will grow and sustain your lifestyle even when your income no longer exists.
• Being fabulously rich does not mean you are wealthy. It is the choices you make with your income that will determine whether you get wealthy, or not.
• A rich lifestyle is visible – the clothes you wear, the accessories you flaunt, the holidays you take, and the car you drive. But that enviable lifestyle could be thriving on an extremely fragile financial situation. Are you heavily in debt? Are you dependent on just one source of income? Are you just two pay cheques away from being broke?
• Being rich may make you feel cool. Aim to be wealthy instead – have your money first channelized into assets before it goes into managing an extravagant lifestyle.
• Don’t mock small beginnings. You can start small, but if you start early, you can go very far.
• The power of compounding and patience does not differentiate; it works with everyone. Capitalise on it.
• Before you aim to impress, aim to accumulate. Save. With savings, buy assets. Let these assets make money for you. That is the key to wealth creation.