There is a world of difference between being rich and being wealthy, according to Paul Sullivan, the “Wealth Matters” columnist for The New York Times.
In his new book, “The Thin Green Line: The Money Secrets of the Super Wealthy,” Mr. Sullivan visualizes the thin green line as a classic S&P 500 stock chart over the last 50 years, starting low and rising higher over the decades.
“Above the green line, no matter where on the chart’s progression, were people who were wealthy, from pensioners to billionaires,” he wrote. “They were living in financial comfort regardless of the balance in their brokerage accounts. Below the line were people, rich or not, who did not have the security of true wealth. They may have had a lot of money in the bank, but their lifestyles were so extravagant that their finances were fragile, at best.”
Mr. Sullivan, 42, has written the “Wealth Matters” column for The New York Times for six years, a weekly journal on the mindset and strategies of the jet set class. He drew much of the book’s material from seeing many Porsche-driving executives and others that anyone would consider rich, but who are actually struggling to make ends meet.
The first person he ever knew who lived above the thin green line, he said, was his grandfather, a postman.
“Rich is a number on a brokerage statement, a bank account or the value of your house,” he said. “That number has nothing to do with the security wealth brings someone. We saw in 2008 and 2009 people had very large numbers attached to their salary and portfolios. But they were in a lot of debt and made risky investments, and that number got quickly reduced. They realized they were no longer rich and never wealthy.
“You can be at the very top of the chart. But if you’re on the wrong side of the line, you are hanging onto it by your fingertips. Like the athlete buying fancy cars and big houses, in that moment he’s rich. But he doesn’t have the security that true wealth brings. You sleep well at night as long as you are on the correct side of the line.”
Mr. Sullivan encourages readers to change their behavior around spending and saving by changing the way they think about money.
“One thing I learned that applies to everyone is it’s very risky to think the future will resemble the present. That’s a very American thing. We believe next year’s salary will be higher, investments will be worth more and houses will go up in value. But if it doesn’t happen that way, we are in trouble.
“A better way is not to deprive yourself, but be a bit more cautious and ask yourself, ‘What do I want? And what do I need?’ ”
Tim Grant: email@example.com or 412-263-1591.