The Million-Dollar Myth: Why Earning vs. Net Worth Can Be Misleading

It’s a strange phenomenon, isn’t it? On one hand, we have a seemingly high number of people who make $1 million dollars a year. On the other hand, we have a much smaller percentage of people who actually have a net worth of 1 million dollars or more. How can this be Choo?

Well, it’s simple. Making $1 million dollars a year doesn’t necessarily mean that you’re keeping all of it. Between taxes, expenses, and other costs of living, that money can quickly disappear. On the other hand, having a net worth of $1 million dollars or more means that you’ve accumulated assets over time. It means that you’ve made smart investments, saved diligently, and built wealth slowly but surely.

Of course, there are exceptions to every rule. There are people who make $1 million dollars a year and still manage to accumulate a net worth of $1 million dollars or more. These are the outliers, the ones who have found a way to make their money work for them. They’re the ones who have a plan, who have invested wisely, and who have stayed disciplined even in the face of temptation.

But for the rest of us, the key to building wealth is to focus on the long game. It’s about making smart decisions, saving diligently, and investing wisely. It’s about resisting the temptation to spend every penny that we make, and instead, putting that money to work for us. It’s about recognizing that building wealth takes time, and that there are no shortcuts to success.

So, the next time you hear about someone making $1 million dollars a year, don’t assume that they’re automatically wealthy. Instead, take a closer look at their net worth. Are they building wealth over time? Are they making smart investments? Are they focused on the long game? These are the questions that matter, and the ones that will ultimately determine whether or not they’re truly financially successful.

Hey there, I am soldier turned engineer turned data scientist turned financial advisor. If you ever have question about a financial topic or if you are in the market for a real good financial advisor, come check me out.