10. Why Net Worth Beats Income (And How to Build It)
Ever felt like you’re earning more… but still not getting ahead?
It’s one of the most frustrating financial traps - your income increases, yet somehow your wealth doesn’t.
Here’s the hard truth: A high income doesn’t guarantee financial freedom.
According to research from Princeton University, many high earners still live paycheck to paycheck. Not because they lack discipline, but because they never shift focus from income to net worth (Kahneman & Deaton, 2010).
We’ve been taught to chase pay rises. But long-term financial stability?
That’s built through assets, ownership, and smart decisions - not just a bigger salary.
Let’s talk about how to build true wealth.
The Quiet Power of Net Worth
In personal finance, income is loud but net worth is what whispers the truth.
Income is how much you earn. Net worth is what you keep.
It’s the sum of your assets minus your liabilities which is the real measure of financial resilience.
And here’s the trap:
People with high incomes often increase their lifestyle in lockstep.
They lease the luxury car. Stretch to buy the bigger house.
But their net worth barely moves.
According to research from the US Federal Reserve, the median net worth of families in the top 10% income bracket varies wildly, depending on how much they own versus how much they owe (Federal Reserve, 2020).
The wealthy aren’t just earning. They’re accumulating.
Net worth reflects your ability to withstand emergencies, invest in opportunities, and eventually step away from work - not just upgrade your lifestyle.
The shift begins when you stop asking: “How much do I make?”
And start asking: “What am I actually worth?”
Proof That Ownership Outranks Income
Here’s why net worth is a better financial north star:
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It measures progress, not just productivity.
Your income may rise, but if debt and expenses rise too then you won't move forward. -
It accounts for ownership.
Owning assets (property, investments, equity in a business) is the foundation of wealth. -
It builds flexibility.
A healthy net worth gives you leverage, options, and peace of mind.
And yes, this shift requires intentional effort.
One of my clients* was earning six figures but felt constantly stressed. We tracked their spending, and worked with them to reduce their debt over time. Within 18 months, their net worth doubled with no increase in salary.
They didn’t work harder. They just worked smarter.
*Names redacted for privacy.
Five Moves to Build Real Wealth
Start building your net worth with these simple steps:
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Track your net worth monthly. Use a spreadsheet or app.
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Cut liabilities. Pay off high-interest debt first.
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Automate savings. Prioritise investing before spending.
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Buy assets, not status. Focus on what appreciates in value.
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Think long-term. Wealth isn't built in a year but direction matters more than speed.
Remember: income funds your life.
Net worth funds your future.
Net Worth is What Frees You
You don’t need a massive salary to build wealth.
You just need clarity, discipline, and a better question.
Keep focusing on what you own, not just what you earn.
And if you’d like help calculating or growing your net worth, reach out here.
That's all for this week.
See you next Friday.
- Jonathan M.
References
Deaton, A., & Kahneman, D. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493. https://www.pnas.org/doi/10.1073/pnas.1011492107
Federal Reserve Board. (2020). Report on the Economic Well-Being of U.S. Households in 2019 - May 2020. Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/publications/2020-economic-well-being-of-us-households-in-2019-preface.htm
