Income vs. Wealth

Often, we see a celebrity or influencer driving a fancy car, living it up in a mansion, and we say, "They must be rich." That depends because there are two types of "rich" that one can be.: income-rich or wealthy.

Income-rich individuals get large paychecks. They may not have significant savings or any sort of plan to grow their wealth. They can carry large amounts of secured and unsecured debt. There are plenty of income-rich folks who are also wealthy. The two are not mutually exclusive. But they are not the same.

Wealthy individuals have put their money to work for them. They have investments and properties that generate revenue for them all the time, whether working or not. They might have flashy cars and expensive houses, but they bought them with money earmarked for the expense. They put aside a percentage of their earnings into investments that grow over time while paying out dividends or royalties.

You are wealthy if you have more money coming in than you spend. If you spend more than you earn, you are not. You may be income-rich, but you aren't wealthy. Most people with low incomes spend more than they earn. Many high earners do the same thing, but they have choices.

To find out which camp you are in, you need to keep your personal books. Duncan MacLeod is the perfect person to diagnose whether you are truly wealthy or just income-rich. By examining your inflows and outflows, he can make a personal savings plan and a spending plan to ensure you have money now and in the future. You can buy fun things but also sleep at night knowing you don't owe anyone money, and your future is secure.