#83 - Income vs. Wealth
Biden made a campaign promise that anyone making under $400,000 wouldn’t see a tax increase. We are still a little uncertain about all the specifics surrounding that number but it has caused many to question what is wealthy vs. not wealthy.
An individual’s income level correlates with their asset level far less often than you would expect. In other words, you would expect someone making $400K a year to have several multiples the net assets of someone making $100K a year. From my experience, that isn’t always the case.
Income is obviously important to building wealth but two things that are also important are self-discipline and financial knowledge.
Right now, my son Wesley loves trash trucks. Few things capture his attention as quickly as the trash truck coming down the street. My guess is this is a young boy's fascination but let's say it's not and Wesley works as a trashman most of his life. He very well could as trashmen play a vital role in bringing order to our communities. I believe if he stewards what he makes well and has a good understanding of finance that he can live a life where finances are rarely a concern.
My goal is to teach Wesley about money so that he can choose any career he wants and still have more than he needs.
There are people who grow their net assets via other methods than just being smart with their income but I strongly believe in teaching financial literacy and self-discipline. Your income does not define your net assets but what you do with your income very well could.
Interesting Article(s) or Video(s)
A Wealth of Common Sense - How Much Money Do You Need to Make To Be Considered Wealthy
“There are plenty of people who earn $400k a year or more who don’t save nearly as much as they should because their lifestyle outpaces their income. There are others who earn $50k a year or less who save way more than they should because they keep their lifestyle in check and live below their income.”
Thank you for reading!