Net Worth vs. Income: The Better Measure of Financial Success
Why net worth is the ultimate scoreboard for your money, and how to grow it.
Why Net Worth Tells the Real Story
A large salary doesn’t guarantee wealth. Income shows what comes in. Net worth shows what you actually keep and grow. That’s why it’s the better measure of financial health.
The Formula Is Simple
Net worth = Assets – Liabilities
Assets: savings, investments, real estate, business equity.
Liabilities: credit cards, student loans, mortgages, car payments.
If your assets outweigh your debts, you’re moving in the right direction. If not, the formula exposes exactly where to adjust.
Why Debt Drains Net Worth
Some debts drag your progress backward:
Auto loans on cars that lose value quickly.
Student loans that don’t translate into higher earning power.
Credit cards with compounding interest.
Mortgages stretched to the limit of affordability.
Cutting these liabilities creates an instant boost in net worth.
How to Build Net Worth That Lasts
The playbook is consistent:
Live below your means long enough to accumulate.
Invest in assets that hold or increase value.
Grow income skills that compound over time.
Minimize bad debt and leverage wisely.
Wealth grows slowly at first, then snowballs.
Beyond Income: The Asset Game
Earning more is helpful, but if your lifestyle inflates alongside it, net worth stalls. The key is converting income into assets. Saving alone doesn’t do much, but assets that compound do! I love the Robert Kiyosaki definition of an asset, “An asset is anything that puts money into your bank account.”
Further more entrepreneur MJ DeMarco explains the proper framework for an asset that has the real potential to increase your net worth through the CENTS framework:
Control: Own your business decisions.
Entry: Choose something with real barriers to competition.
Need: Solve a problem people care about.
Time: Don’t tie income solely to hours worked.
Scale: Build something that can reach thousands or millions.
You don’t need to have your product/ business figured out just start helping people for free at first…
Alex Hormozi emphasizes generosity: give 30 units of value for every 1 you ask back. That builds trust, goodwill, and long-term opportunity. With these new relationships, people will ask for your help, products and services if they are packed with value. If they don’t, then find something that sells and make it better. If you are helping people and obeying the CENTS framework you can’t help but make your net worth explode!
Protecting Your Time = Multiplying Wealth
As your opportunities grow, your time becomes your most valuable asset. Outsourcing repetitive tasks (cleaning, admin, errands) isn’t wasteful; it’s reinvesting hours into higher-value work this can really help you double down with the rocket starts leaving the ground.
The Bigger Purpose Behind Net Worth
Net worth isn’t about bragging rights. It’s about freedom, security, and options. Money amplifies your choices. When anchored to a clear purpose, it fuels a meaningful life.
Final Takeaway
Net worth is the better scoreboard of financial progress. Every decision: cutting debt, building assets, protecting time, nudges it forward. Perfect isn’t required. Action in the right direction is.
Start today: calculate your net worth. One clear number will highlight where to focus and give you a baseline to improve. Run your own race! I like using this calculator by Ramsey here.
I’ll leave you with this:
"Become a millionaire not for the million dollars, but for what it will make of you to achieve it.” - Jim Rohn
