Income Vs Net Worth

June 26 Blog Image

In today’s world, two of the most important financial metrics are income and net worth. Understanding the distinction between the two, and how to manage them, is key to achieving financial success, and it’s a fundamental principal in Keyspire’s real estate investment courses.

 


 

What Is Income?

Income is the amount of money you earn on a regular basis. This includes wages, salaries, bonuses, and other forms of compensation, such as stock options and rental income. It is important to understand how much income you are bringing in each month, so you can budget accordingly and set aside money for savings and real estate investments.

What Is Net Worth?

Net worth is the difference between your assets and liabilities. This includes the value of your home, car, investments, and other financial assets, as well as any debt you may have such as credit card bills, student loans, and mortgages. Your net worth is a reflection of your financial health and can be used to measure your progress over time.

Short-Term Vs. Long-Term Financial Health

Income and net worth can both be used to measure financial success, but they should not be confused. Income is a measure of your current financial situation; it is the cash flow you have available to you in the here and now. Net worth, on the other hand, is a measure of your long-term financial health; it is a snapshot of your overall financial situation at a given point in time.

Why Understanding the Difference Matters

The key to financial success is to make sure you are managing both your income and net worth effectively. You need to create a budget that allows you to maximize your income and save for the future. You also need to make sure you are making smart real estate investments that will help you build your net worth over time.

 

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Kelly Mendonca

Kelly Mendonca is Keyspire's Communications Specialist and Community Manager and has been with Keyspire since 2015. She likes all things outdoors including patios, concerts, beaches, lakes, and pizza...all the pizza.

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