• Eric Bowie

What You Save Is More Crucial Than What You Earn

62 percent of millionaires earn an annual household income of less than $100,000

The amount of money you keep, invest, and grow, is more important than your salary, or the amount of money you earn from a job. Your salary is not the primary driver of your ability to become wealthy. If it was, then the majority of people that have a million dollar net worth would also have the highest salaries, and that's not true.

In his book Everyday Millionaires, Chris Hogan documented the results of a survey he conducted with 10 million millionaires in the United States. A couple of interesting things he discovered, among many fascinating facts, was that 89 percent of millionaires have a net worth between $1 million to $5 million dollars (thats about 9 out of every 10), and 62 percent earned a household income of less than $100,000 annually. That means that the average millionaire is not worth tens of millions of dollars, and does not live in a household where their yearly earnings reach into the hundreds of thousands of dollars. This indicates that the overwhelming majority of millionaires are moderately wealthy, and well over half of them don't have large household annual earnings! So people aren't making, or earning, enormous salaries in order to become wealthy. On the contrary, the people that beome wealthy are saving their money, wisely investing their money, living below their means, and concerning themselves with not over-indulging in consumerism. They tend to focus diligently on what they save, keep, and invest.

Your real wealth is not driven by your salary, or the amount of money you bring in the home, but instead is driven by how well you learn to live below your means, your ability to refuse to engage in hyper consumerism, how well you're able to avoid debt like the plague, and your willingness to invest in things that have a high probability of going up in value over time (i.e. stocks, your real estate, etc.).


We tend to pay too close attention to the wrong side of the equation. There is an income side and an expense side. For most of us, the more we make, the more we spend, and this is what hurts a lot of us. We spend so much time and energy worrying about our salary and what take home, that we forget to control what we spend and save. If your salary is $100,000 per year and you spend $100,000 per year, you have less money then the person who has a salary of $75,000 and lives on $50,000. And after 10 years of doing this, the person who made $100,000 annually has $250,000 less than the person who earned $75,000 and lived on $50,000. Do this for 40 years (essentially all of your working life) and that high earning $100,000 per year person has $1,000,000 less. You get the point! You can't get wealthy by spending everything you make, so we need to be doing ourselves a favor, and paying closer attention to lowering our expenses and focusing on what we can save and invest.

Your salary is important and it's nice to have as much of it as you can get. So I'm not saying salary means nothing, because it does. However, a concerted shift of your concentration away from your annual salary, and a more pinpoint focus on what you are saving and investing, would go further towards your long term wealth building.

Your salary is for your daily living, but your savings and investments are for your future, your children's future, and your grandchildren's future. When you leave earth you can't pass down your salary, but you can pass down the money and resources that you've saved and invested.

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