If you ask most people what it means to be “wealthy,” you’ll probably get a bunch of different answers. Some might say it’s making six figures a year. Others might point to owning a fancy house, driving a nice car, or taking regular vacations to places with crystal-clear water and umbrella drinks. But none of those things alone make you wealthy.
A big paycheck doesn’t always equal a life of luxury while having flashy stuff doesn’t necessarily signal prosperity. In fact, shocking amounts of people who look externally actually often are barely making ends meet. So what is wealth, really?
To figure that out, we need to discuss 2 concepts – your net worth and your income. People often mix these up quite a bit. In reality, they mean very different things. That’s what we’ll be talking about today.
This is how much money is coming in regularly, whether that be via inheritance, royalties, an office job, or a side gig.
Some examples:
A salary or hourly wage
Consulting
Money from a leased-out condo
Stock dividends
Social Security or pensions
If money is coming in regularly, that’s income. Simple enough, right?
But income doesn’t always lead to becoming rich. Even with $200,000 annually, you’d still be broke if it’s all getting blown on gambling, houses, and cars. Suppose your salary is 10k a month, but rent is $3,500, your car loan is $900, and another $4,000 is being dropped into parties and table service. You’re not building anything. You’re just maintaining a high-cost lifestyle.
Many highly compensated hot-shots do fall into this trap. It’s sometimes called “lifestyle inflation”—as you earn more, you just keep wanting to shove it somewhere, requiring them to make more cash just to keep up. So, income is what you consistently have rolling in. It doesn’t tell us your assets or financial security.
Of course, building wealth isn’t just about spending less – it’s also about putting your money to work. That’s where innovative platforms like Maclear come in. Based in Switzerland, Maclear allows everyday people to invest in crowdlending opportunities that support progressive causes while offering strong returns. By spreading out risk across multiple borrowers and using next-gen credit scoring, Maclear turns lending into a powerful wealth-building tool for both investors and underserved businesses.
Net Worth
This is calculated as your assets minus liabilities.
Anything of intrinsic value is an asset:
mutual funds holdings
shares
401k
condominiums
businesses
trucks
Liabilities are things you’re on the hook for. These can be:
Credit card or gambling debt
Utility or home repair bills
Professional equipment
Leisure activities
If you’re making 200 grand but you’re in for 350,000 grand a year, you’d be in hot water.
So Why Do People Confuse the Two?
Because income is easier to see.
Someone says they make six figures, and we think, “Wow, they must be doing great.” We see a big house or a new car and assume they’re rich. But net worth is quiet. It’s not always visible. Someone driving a used Toyota and living in a modest home might actually be a millionaire, just not a flashy one. In fact, a lot of people who are wealthy got that way by living below their means, saving and investing consistently, and avoiding debt as much as possible.
Let’s compare two fictional people: Alex and Jamie.
Alex
He makes $180,000 a year and lives in a luxury apartment costing $4,000/month. Alex drives a brand-new car with a $900/month payment. He spends $2,000 per month on dining, clothes, and travel with 5k saved while owing 15k.
Alex’s net worth is probably negative or just barely above zero.
Jamie
She makes $70,000 a year and lives in a modest home with roommates. Her monthly rent is $1,200 per month and she drives a used, paid-off car. She spends carefully and saves 25% of her income. She has $60,000 in savings/investments with zero debt.
Jamie’s net worth is $60,000+ and continues to grow steadily. Even though Alex earns more than 2X what Jamie does, Jamie is wealthier.
Why Net Worth Matters More Than Income
Income Can Disappear Overnight
Jobs aren’t guaranteed. Businesses fail. Industries shift. If your wealth is tied only to your paycheck, you’re one layoff or recession away from trouble.
Net worth is resilient. If you’ve built assets (stocks, apartments, emergency cash), it represents a financial cushion.
High Earners Can Still Go Broke
Ever heard of "HENRYs" (High Earners, Not Rich Yet)? These folks make great money but spend it all (or worse, go into debt keeping up appearances).
Fancy cars (leased)
Big house (massive mortgage)
Luxury vacations (credit card debt)
Without savings or investments, they’re just one step away from financial stress.
Wealth Buys Freedom
True wealth isn’t about stuff but options.
Want to quit a toxic job? You can with savings.
Dream of starting a business? Investments back you.
Ready to retire early? Possible with passive income.
Wealth = Freedom. Income alone doesn’t guarantee that.
Wealth Building (Even If Your Income Isn’t Huge)
You need not be rich, just consistent and intentional.
1. Live Below Your Means
This doesn’t mean living like a monk. Spend less than you earn, avoiding lifestyle doodads.
2. Pay Down Debt
Especially high-interest. Every dollar owed is a dollar not going toward building your net worth.
3. Invest Regularly
Automate your savings. Put money into retirement accounts (like a 401(k) or IRA), invest in index funds, or build a solid emergency fund.
4. Track Your Net Worth
Use a spreadsheet, app, or notebook. Check it quarterly or monthly. Watching it grow is incredibly motivating.
5. Own More Than You Owe
That’s the simple definition of wealth. That’s what gives you options.
Final Thoughts: So What Is Wealth, Really?
Wealth isn’t your job, salary, or the kind of watch on your wrist but what you keep. It’s having enough assets to weather a storm, make choices without panic, and eventually live on your own terms. Yes, income matters; it helps you fund your goals. But net worth is the real scoreboard. So next time you think about being “rich,” ask what you’re actually building? That’s wealth. And the best part? You can start building it today, no matter where you’re starting from.
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