Wealth versus income

The authors surveyed affluent neighbourhoods and found many high earners with little net worth, while the people who had actually built wealth lived in ordinary houses, often drove used cars and ran unglamorous businesses. Their test is arithmetic. Multiply your age by your annual pre-tax household income and divide by ten: that is the net worth you would be expected to have. A net worth at least twice that figure marks a prodigious accumulator; half or less, an under-accumulator. The difference between the groups lay mostly in lifestyle rather than earnings. Housel restates the finding as a rule: wealth is what you don't see. The car and the trip are evidence of money spent, which is money no longer possessed; real wealth is the account nobody is shown and the option not taken. The social machinery rewards the visible kind, which is why building the invisible kind feels lonely and why the wealthy in the survey looked so ordinary. The practical measure is net worth, computed once and tracked yearly, as the score that salary is not.