Since the OP said “what is rich (in terms of wealth)”, wealth is commonly defined as a person’s net worth, not your earnings. So add up the fair value of all of your assets and deduct the amount of all of your debts, and that’s your net worth.
The author’s of the “Millionaire Next Door” series, have a formula to determine what your accumulated wealth (AW) should be
AW = Your age X your total annual income (excluding inheritance income) / 10
Compare this to your net worth. If the amount is less than your net worth, you are doing a poor job of accumulating wealth. If the amount is greater than your net worth, you are doing a good job of accumulating wealth.
Example:
Tom’s net worth is as follows:
House - $150,000
Car - $7,500
Household goods - $10,000
401k plan - $40,000
Cash savings - $5000
Mortgage - ($115,000)
Credit card debt - ($3,000)
NET WORTH - $94,500
Tom is 35 years old and has an annual income of $50,000.
AW - 35 X $50,000 / 10 = $175,000
AW - $175,000
Net worth - $94,500
According to this Tom has been a poor wealth accumulator.
But what if I like neither? Cost wasn’t the reason I had poached eggs on toast this morning. Nor is it the reason I don’t eat more caviar.
It’s kind of funny the way people form these concepts in their heads. I had a lot of caviar as part of my work in catering. If I were to become rich, I’d end up eating less of it than I do now.
I had a pretty interesting conversation with a bunch of reasonably well paid, late 20s, engineers. At the time, my wife and I were starved for vacation time, having spent 6 weeks in India just a few months after she started her current job.
The question posed was if given the option, would you choose an extra week of vacation a year (they all had 2) or a small raise. My wife was the only one that wanted more vacation time. The rest of them just wanted more stuff.