Wealth Is Not Measured By Salary
By Robert Rapier
Last week I saw a story on CNBC titled This is the salary it takes to be considered rich in every state.
The article asked, "What does it take to be considered rich in America?" It then defined "rich" as being among the Top 5% of earners. In Connecticut, for example, that number was $656,000 a year. In many southern states, the number was below $400,000, but it wasn't below $300,00 anywhere.
I thought "What an odd premise. Wealth isn't defined by salary." I know many people who earn six or even seven figures, and they have a negative net worth. They spend more than they earn. Such people often go bankrupt, despite high salaries. According to most people's understanding of wealth, those people are not wealthy.
At the other end of the spectrum are those with five figure salaries who scrimp, save, and invest their way to millions of dollars. Who is wealthier? The frugal secretary who amassed a fortune of $9 million, or the NFL football player who earns millions, spends more than that, and goes bankrupt?
Do not be discouraged if you don't have a high salary. There are numerous millionaires in this country whose salary never approaches those CNBC values. True, it is easier to build wealth with a high salary — as long as you manage your spending.
It's all about making sure you have more cash coming in than going out. And that can be done by people across the salary spectrum. It may require more sacrifice and more time, but it is definitely doable.
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