A High Income Won’t Make You Rich
Just because you make more money doesn’t mean you save more.
Ever wonder why some high-income families still struggle to build lasting wealth? It’s all about how they manage the money that comes in. Most people? They increase their spending right alongside their income—and end up with little to show for it.
Here’s how to flip the script and build wealth that lasts:
Consider a family making $1,000,000 per year. One spouse works a high-paying job, while the other manages the home and kids. After accounting for benefits, taxes, and maxing out one 401(k) (at $23k/year), they bring home around $38,000 each month.
With this high income, they could save a fortune. But instead, they’re living large:
- $2.5 million home with a $15,000/month mortgage
- Private schools, family vacations, a full-time nanny
- Luxury shopping, dining out, and more
At the end of the month, after all expenses, they’re left with about $1,000 to invest. That’s it.
Sure, they’re investing that $1,000/month along with the 401(k) contributions, but their retirement projection? They’re looking at just under $4 million—enough for about $160,000 annually in retirement income. Not bad, but not enough to support the lifestyle they’re accustomed to now.
So, what’s the solution? Here’s how they (and you) can start saving smarter, building wealth, and working toward true financial freedom:
- Set Clear Savings Targets:
Don’t wait until the end of the month to see what’s left for saving. Decide upfront what percentage of each paycheck, bonus, or raise goes directly into investments. Aim to save at least 20% of gross income and increase that with every pay increase.
- Avoid Lifestyle Inflation:
Just because you can afford a luxury doesn’t mean it adds value. Each lifestyle upgrade today cuts into your financial freedom tomorrow. Resist the pressure to "keep up" and redirect those funds toward investments that grow your wealth.
- Automate Your Savings and Investments:
Make wealth-building automatic. Set up direct transfers to your brokerage or retirement accounts as soon as your paycheck hits. Automation removes the need for willpower and ensures you consistently build your nest egg, no matter what.
- Track Your Spending—Yes, Even as a High Earner:
Knowing exactly where your money is going each month can reveal surprising opportunities to save. Many high-income families find they’re wasting thousands on recurring expenses they don’t need or rarely use. Treat your budget like a business—you’re the CFO of your future.
When you prioritize saving and investing with discipline, it’s not about depriving yourself today. It’s about giving yourself the financial security to enjoy tomorrow fully. That’s how you retire with true wealth, not just a high income.
