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  • Writer's pictureAtiqah Nadiah Zailani

Income Is What You Earn, Wealth is What You Keep

Why the amount you save matters more than the amount you earn.

piggy bank

At one of the many jobs I’ve held, I had a head of department who liked to talk about the good old days.

“When I was your age,” he would say, “I saw how much my boss was earning, and it seemed like a lot of money! I imagined all the things I would buy if I had that kind of paycheque! But now that I’m at the rank (of the boss) and earning what he earned, it’s somehow still not enough.”

No surprises there. He was already planning on how to spend the money years before he even moved up to the rank and to the bigger salary. Like most people, every time he got a salary increment, his spending would swell to the same size, if not bigger.

(Some people are even worse: their spending swells before they even move up the payscale.)

Often, like my afore-mentioned boss, people assume the answer to all their problems is to get more money. If they could just earn enough...

  • “I’ll start saving money once I'm promoted to manager.”

  • “I don’t have enough money to put away for a rainy day now, but maybe if I get a salary increment, I can finally do it.”

  • “I literally have no money to spare - after the bills, the food, the rent, the student loan, I’ve got zilch! Maybe when I get a higher-paying job…”

Then, when the money or the salary increment finally comes, they head out to purchase a new car, or take on a new loan with their new eligibility, or get some lifestyle upgrade, and in no time at all, they are back to the same place.

“I still have no money to spare! After the bills, the food, the rent, the student loan, this new car loan, and this new apartment downpayment, I’ve got zilch! Maybe when I get the next higher-paying job…”

It doesn’t matter what you earn

While you should always strive to earn as much as you deserve to, it is crucial to understand that the amount you’re earning (or lack thereof) isn’t the only issue here.

I’ve had numerous bosses and senior colleagues tell me wistfully that they wish they could do what I did and be a little more financially stable. But in the grand scheme of things, I’ve only been working for a short amount of time compared to them. They have had years of income generation ahead of me, and are likely earning 5x or 10x as much as I do at this very moment. Theoretically, shouldn’t they have way more money than I do? Shouldn’t they also be able to retire or take time off work even more than I do?

It depends. You see, it’s not about how much they earned, it’s about how much they managed to keep.


We all have this perverse inclination to confuse the size of someone's paycheque (or someone's house, or someone's car) as an accurate representation of how rich they are, but that is not necessarily the case.

I have known people earning tens of thousands a month, but whose net worth come out negative because they were spending (or borrowing) in the hundreds of thousands. They have no savings, but a lot of debt. While they do enjoy a great lifestyle, the truth is that the car, the clothes and the house don't actually belong to them, but to the Bank.

In contrast, I have also known people who earn in the low thousands, but whose net worth is positive and growing. What they have is completely theirs, and instead of increasing the amount of debt they are in, they increase the amount of dividends they receive, slowly but surely increasing their nest egg and diversifying their income (as opposed to diversifying their expenses).

So if you’re thinking that you can never be financially secure because you are not ‘earning enough’, I’m here to tell you that you’re looking at it all wrong.

It’s not about how much you make, it’s about how much you keep.

know the difference between income and wealth

Because there is a HUGE difference.

Let's make it more concrete with examples...

Example 1: You’re earning $50,000 each month. Sounds awesome, right? But you're also spending $49,000 a month. While you may think you're doing great, you’re actually no different from the guy earning $5,000 and spending $4,000 a month. The two of you are exactly the same, even if your paycheque says differently. You both truly only have $1,000.

stick figure illustration of wealth vs income

If the $5,000-guy managed to find a way to spend just $500 less, he’s already ahead of you.

stick figure illustration of wealth vs income

Example 2: You have a million-dollar house - it's the glitziest one in the neighbourhood. You got it with a mortgage of $900,000. Though you can technically (but inaccurately) call yourself a millionaire and have the fancy mansion to show for it, you are no different from the guy who fully owns a $100,000 boring terrace house. You two are worth exactly the same. In fact, he's better off because he has no loans to pay and is not at risk of repossession should he fail to meet his monthly instalments.

stick figure illustration of wealth vs income

High Income ≠ Wealth

Hopefully, the above has convinced you to not equate having a high income with having wealth, or to think that you need a lot of income to become wealthy. Those two don't always go together.

If you don’t know how to keep what comes into your pocket, then no amount of income is ever going to be enough. You could be earning a CEO's salary and still be broke.

(Also, nice clothes/cars/houses are not automatically signs of wealth. While wealthy people can be very fancy, the truth is not-so-wealthy people can also be very fancy, thanks to credit card debt. It's very easy to confuse the two. Try not to be deceived by people's incomes and outward show of wealth - they actually don't mean much, especially if supported by loans and liabilities)

skinny piggy bank

Low Income ≠ No Wealth

If high income doesn't necessarily make you wealthy, the opposite is also true: low income doesn't necessarily make you poor. And this is good news.

Even if you don't earn much, but you know how to keep most of what you earn in your pocket, you have more than enough. And if you go on to grow what you managed to keep, you're well on your way to wealth, which is more than what most people can say.


I can’t reiterate this enough: It’s not about how much you make, it’s about how much you keep.

So, for a start, take a look at what you’re managing to keep.


1. Take a look at your savings. Given your work history and level of compensation, is the amount acceptable?

(As a convenient-but-not-so-accurate yardstick, if you are in your late 20s or early 30s, you should have at minimum a year’s worth of salary in your savings. Obviously, the more you have in savings, the better.)

2. From the amount that comes into your bank account, how much goes back out, and how much stays?

3. While it is good to look for ways to increase your earning ability, can you also think of ways to increase your ‘keeping’ ability?

4. Increase your savings rate. If you're not saving money at all, shoot for 5% of your current income. Then increase it by 5% every couple of months. At minimum, aim to save 10% of all money you earn. If you're really up for the challenge, aim for 50%.

Next, I'll go into the concept of putting a price to your life. To be updated when the next one in the series appears, subscribe in the box below.

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