Core Concept - The article emphasizes that financial success should be measured by net worth rather than just annual income, as income increases do not necessarily equate to improved financial health [1]. Income vs. Net Income - Net income, or take-home pay, is the amount available for spending after taxes and withholdings, which is crucial for understanding actual financial capacity [2]. - Gross income, the total earnings before deductions, can be misleading as it does not reflect the money available for spending [3]. - The difference between gross and net income can vary significantly among individuals, affecting their financial situations [4]. Understanding Net Worth - Net worth is defined as the total value of assets minus total liabilities, providing a comprehensive view of financial health [5][6]. - Unlike income, net worth accounts for all financial behaviors, including spending, saving, and borrowing [6]. Strategies to Increase Net Worth - Increasing net worth can be achieved by paying off debt or enhancing asset value without incurring new debt [7]. - A high net worth is generally more beneficial than a high income, as it indicates greater financial stability [7]. Lifestyle Inflation and Financial Stability - Lifestyle inflation can hinder financial progress, as increased income often leads to increased spending without a corresponding rise in savings [8]. - Accumulating debt faster than income growth can lead to negative net worth, where liabilities exceed assets [9]. Financial Independence - A high net worth can allow for financial independence, enabling individuals to live off savings or passive income sources [9]. - Strategies to enhance financial health include increasing income without raising spending, prioritizing debt repayment, and investing in high-yield savings or diverse asset portfolios [10].