The Salary Trap
Making six figures should mean you’re financially secure… right? Not necessarily. Across the U.S., there are high-income earners living paycheck to paycheck, stressed about money despite big salaries.
The problem? Confusing income with wealth.
Income is what you earn. Net worth is what you keep. And if your lifestyle inflates with your paycheck, you can easily end up broke—no matter how much you make.
Net Worth vs. Income: The Key Difference
Net worth = assets – liabilities
Income = money earned during a set time period
- Income: The money you earn from your job, business, or investments each year.
- Net Worth: The total value of everything you own (cash, investments, property) minus everything you owe (mortgages, loans, credit cards).
📚 Learn how to track your net worth weekly for better financial awareness.
Someone earning $250K but spending $260K each year has a negative net worth—and is technically poorer than someone earning $60K but saving $15K annually.
Why High Earners Go Broke
- Lifestyle Inflation
Bigger salaries often lead to bigger houses, luxury cars, and expensive vacations—none of which grow your wealth.
👉 More on avoiding lifestyle creep. - Debt Creep
High earners sometimes borrow more because they “can afford it,” but compound interest works against you just as fast as it works for you in investing. - Lack of Tracking
If you don’t track your assets and liabilities, you may not notice your net worth stalling—or shrinking—until it’s too late. - Overconfidence
A large paycheck can create a false sense of security, masking poor money habits.
Why Net Worth Is the Real Scoreboard
Net worth tells the whole story. It accounts for your savings rate, debt load, investments, and how well you’re building assets over time.
Tracking net worth helps you:
- See your true financial position
- Catch warning signs early (like rising debt)
- Stay motivated by visualizing progress
- Make better spending and investing decisions
📈 Discover the hidden power of tracking your savings rate.
How to Avoid the High-Income Broke Trap
- Track Your Net Worth Regularly
Use an app like NetTrack to see your assets, liabilities, and overall financial health in one place. - Control Lifestyle Inflation
As income grows, keep your spending growth slower than your salary growth. - Prioritize Savings Rate
Aim to save and invest at least 20–30% of your income—more if you want to reach financial independence faster. - Pay Down Debt Aggressively
Even small interest rates eat away at wealth over time.
FAQs: Net Worth vs. Income
Q: Which is more important—income or net worth?
A: Both matter, but net worth is the better measure of long-term financial stability because it shows what you actually keep after expenses and debt.
Q: Can you have a high income and still have a low net worth?
A: Yes. Without saving and investing, you can earn a lot but own very little.
Q: How often should I check my net worth?
A: At least monthly. Many NetTrack users track it weekly for faster course corrections.
The Bottom Line
Income is important—but net worth is what really determines financial freedom. Without tracking it, you could be earning more than ever and still slipping backward.
📱 Start tracking your net worth with NetTrack today—free on iOS, Android, and the web—and make sure your income is building lasting wealth.