87: Income is Not Wealth

Do you feel like a total baller because you make a bunch of money each month? Are you living high on the hog because your business is making 6 or even 7 figures? That’s great! Hats off to you. But… we’re here to burst your bubble a little. 

While you may be making a really great monthly or yearly income, and you are totally killin’ it at what you do, income is not the same as wealth. Income is literally what is coming in each month from your work or revenue streams. But wealth is the “abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.” Basically, they’re what you already have that you can use to get by — and thrive.

So, this episode, we’re getting into why income is not wealth and how you can actually start building true wealth so you can feel really rich.

WHAT YOU’LL LEARN 

00:48 The perfect example of a business owner who relied on income, not wealth

03:20 What happens when people hit the 6- or 7-figure mark

03:45 What “wealth” really entails

04:05 4 scenarios where you’re not truly wealthy

04:56 The risk of assuming people are wealthy when they have a lot of money

06:33 How we define wealth

07:53 The importance of protecting your wealth with insurance

09:56 How to transition your business income from money to wealth

10:54 Why you should treat your income like a well 

12:24 Ways you can restructure your business to move beyond working IN it

13:04 Diversifying businesses, investments, and saving strategies for maximum wealth

 

You’re not as wealthy as you think

First and foremost, we want to talk about a few scenarios we see play out time and time again with clients. They are making a ton of money (yes, sometimes over a million a year!), saving a bit of it, and really rockin’ in their business. But we tell them they ain’t that wealthy. Why??

Because they usually fall into one of four categories:

 

They have a ton of debt. Now, we know we just talked about how you can leverage debt, but these people usually have high-interest debt — and a lot of it. If you have a lot of money in the bank, but you have debt coming out your eyeballs, you are not wealthy. They are spending like there’s no tomorrow. If you’re spending just as much as you’re making, and you’re not leaving anything to save, you’re not wealthy. They don’t have insurance. You may have a high net worth, money in the bank, money in savings, and still not be wealthy. How? By not having the full spectrum of insurance. We’re talking life, disability, health, business… the whole enchilada, you guys. Their only source of income is their biz. We’ve said it once and we’ll say it again: your business(es) aren’t going to build wealth. If your only source of income is from a paycheck or salary, that means you only have money coming in if you work. True wealth means diversifying your income streams so you can cover your behind if an illness or recession strikes, you want to retire, or you sell your biz. Business doesn’t count as diversification; saving and investing do.

 

So, if all of the scenarios above don’t make you wealthy, even though you’re making money, what does?

How we define wealth

 

In this episode, we get real clear on what we mean by wealth. Wealth is your net worth, straight up. It is your total assets minus your total liabilities, and the more assets you have than liabilities the better. Notice how we said assets, not income. Assets include things like stocks, bonds, property, businesses, art, etc. How do you get these assets? By having income, of course. But you need to be putting that income to use by saving and investing in assets that keep you wealthy well after you stop working for a paycheck. 

 

So… how do we build wealth?

If you’ve read this far, now would be a good time to pop over to the podcast and listen. Because we drop a few actionable steps you can implement to build (and protect) your wealth. Things like:

Turning your business from income to investment. While this is definitely a process, you can set your business up to be more of a passive income stream for you, than to just start a business that you have to work in all the time. Turning your business into something that you can walk away from, without everything falling apart. Turn your contract work into an agency, for example, and scale your team so someone else runs the show. Setting up umbrella insurance. We’re talking the full spectrum of life, health, business, disability, etc. so you’re not risking your chance at long-term wealth if something happens. Setting up a bucket strategy to make sure you’re setting aside enough money for short-term, medium-term, and long-term goals.

You should also be doing all of it if you want to truly diversify your income and build wealth. So if you want to dive into this topic and really figure out how to move from “money-rich” to “wealthy-rich,” tune into the episode. And then go build dat wealth!

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

RESOURCES & PEOPLE MENTIONED Sophia Amoruso  The Toujours Planning Quiz — Are we a good fit for your financial planning needs? The Bucket Strategy: Episode 57: Why Your Money Needs Direction  Our Net Worth Calculator in our FREE go-to financial and life planning resources

CONNECT WITH DANIELLE AND DUSTIN Ask Your Questions On Facebook On Twitter

Do you feel like a total baller because you make a bunch of money each month? Are you living high on the hog because your business is making 6 or even 7 figures? That’s great! Hats off to you. But… we’re here to burst your bubble a little. 

While you may be making a really great monthly or yearly income, and you are totally killin’ it at what you do, income is not the same as wealth. Income is literally what is coming in each month from your work or revenue streams. But wealth is the “abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.” Basically, they’re what you already have that you can use to get by — and thrive.

So, this episode, we’re getting into why income is not wealth and how you can actually start building true wealth so you can feel really rich.

WHAT YOU’LL LEARN 

00:48 The perfect example of a business owner who relied on income, not wealth

03:20 What happens when people hit the 6- or 7-figure mark

03:45 What “wealth” really entails

04:05 4 scenarios where you’re not truly wealthy

04:56 The risk of assuming people are wealthy when they have a lot of money

06:33 How we define wealth

07:53 The importance of protecting your wealth with insurance

09:56 How to transition your business income from money to wealth

10:54 Why you should treat your income like a well 

12:24 Ways you can restructure your business to move beyond working IN it

13:04 Diversifying businesses, investments, and saving strategies for maximum wealth

 

You’re not as wealthy as you think

First and foremost, we want to talk about a few scenarios we see play out time and time again with clients. They are making a ton of money (yes, sometimes over a million a year!), saving a bit of it, and really rockin’ in their business. But we tell them they ain’t that wealthy. Why??

Because they usually fall into one of four categories:

 

They have a ton of debt. Now, we know we just talked about how you can leverage debt, but these people usually have high-interest debt — and a lot of it. If you have a lot of money in the bank, but you have debt coming out your eyeballs, you are not wealthy. They are spending like there’s no tomorrow. If you’re spending just as much as you’re making, and you’re not leaving anything to save, you’re not wealthy. They don’t have insurance. You may have a high net worth, money in the bank, money in savings, and still not be wealthy. How? By not having the full spectrum of insurance. We’re talking life, disability, health, business… the whole enchilada, you guys. Their only source of income is their biz. We’ve said it once and we’ll say it again: your business(es) aren’t going to build wealth. If your only source of income is from a paycheck or salary, that means you only have money coming in if you work. True wealth means diversifying your income streams so you can cover your behind if an illness or recession strikes, you want to retire, or you sell your biz. Business doesn’t count as diversification; saving and investing do.

 

So, if all of the scenarios above don’t make you wealthy, even though you’re making money, what does?

How we define wealth

 

In this episode, we get real clear on what we mean by wealth. Wealth is your net worth, straight up. It is your total assets minus your total liabilities, and the more assets you have than liabilities the better. Notice how we said assets, not income. Assets include things like stocks, bonds, property, businesses, art, etc. How do you get these assets? By having income, of course. But you need to be putting that income to use by saving and investing in assets that keep you wealthy well after you stop working for a paycheck. 

 

So… how do we build wealth?

If you’ve read this far, now would be a good time to pop over to the podcast and listen. Because we drop a few actionable steps you can implement to build (and protect) your wealth. Things like:

Turning your business from income to investment. While this is definitely a process, you can set your business up to be more of a passive income stream for you, than to just start a business that you have to work in all the time. Turning your business into something that you can walk away from, without everything falling apart. Turn your contract work into an agency, for example, and scale your team so someone else runs the show. Setting up umbrella insurance. We’re talking the full spectrum of life, health, business, disability, etc. so you’re not risking your chance at long-term wealth if something happens. Setting up a bucket strategy to make sure you’re setting aside enough money for short-term, medium-term, and long-term goals.

You should also be doing all of it if you want to truly diversify your income and build wealth. So if you want to dive into this topic and really figure out how to move from “money-rich” to “wealthy-rich,” tune into the episode. And then go build dat wealth!

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

RESOURCES & PEOPLE MENTIONED Sophia Amoruso  The Toujours Planning Quiz — Are we a good fit for your financial planning needs? The Bucket Strategy: Episode 57: Why Your Money Needs Direction  Our Net Worth Calculator in our FREE go-to financial and life planning resources

CONNECT WITH DANIELLE AND DUSTIN Ask Your Questions On Facebook On Twitter