Your salary will never make you wealthy.
With your salary, you may be considered rich but you’re not wealthy. There’s a difference. Most wealthy individuals started out making high salaries but it’s what they did with that salary that earned them financial independence.
High wage earners are not wealthy because they have no guarantees if they lose their jobs. If the well goes dry, the rich scramble to pay their bills.
If the wealthy lose their jobs (if they’re still choosing to work), they have nothing to worry about. They’re financially independent because of the way they treated the money earned from their jobs.
The rich view money like toys. It’s their plaything – existing to make them look good and feel good through big houses, nice cars, fancy clothes, expensive vacations, private schools for their kids, and so on.
The wealthy view money as a door to possibilities. They put their money to work.
Here is an illustration from the sports world:
After leading his Texas Longhorns over the USC Trojans in the 2006 College Football National Championship on a last-second touchdown run, Vince Young was on top of the world.
He was drafted third by the Tennessee Titans who signed him to a $25 million contract. Seven years later, he was broke and out of the NFL.
Did Vince Young have a high salary? Sure did. His annual pay matched that of many CEO’s. Vince Young had a high salary, but his salary didn’t make him wealthy.
That’s because he treated his money as a plaything, spending lavishly on toys, vacations, clothes, and food on himself, family, and hangers-on. He once spent $300,000 for his own birthday party. You would think someone making $5 million a year would be financially set. Vince Young put that notion to sleep.
Contrast Vince Young with Andre Iguodala.
As a member of the Golden State Warriors Iguodala won three championship rings. Now with the Miami Heat, Iguodala has amassed career earnings of over $166 million. This figure does not include endorsements.
As impressive as his earnings on the court are what he did with those earnings off the court is more impressive.
During his time with the Warriors in the heart of Silicon Valley, Iguodala didn’t use his offseason to party. He used it to learn about venture capital, connecting with seasoned venture capitalists in the area who were happy to mentor him. This culminated in Iguodala becoming a partner in the venture capital firm Catalyst Ventures and investments in more than 40 companies.
Iguodala was an early investor in web conferencing giant Zoom Communications, which he has called his best investment to date, which is now trading at more than five times its IPO price when it launched in May 2019.
Despite his high earnings, Iguodala didn’t rest on his laurels. He knew too well the money could dry up at any time – whether from injury, the IRS, or any of a host of other reasons he had seen from other players throughout his playing career – multimillionaires who squandered their earnings.
Your salary will NEVER make you wealthy!
Unless you take a page out of the Andre Iguodala playbook and create other streams of income, you will always need to rely on working to pay your bills and never achieve financial independence.
For an article, he wrote for Business Insider Thomas C. Corley, who studied the habits of self-made millionaires for five years, discovered the key distinction between the wealthy and everyone else: That distinction is that the wealthy put their money to work.
- They use their salaries to generate additional streams of income.
- They use their earnings to amass productive assets, not parasitic liabilities.
And don’t be fooled into believing your residence is an asset. You can’t monetize it and all it does is take money from you until you sell it.
Corley found that most self-made millionaires generated multiple streams of income.
Here are the stats:
- 65% had three streams of income.
- 45% had four streams of income.
- 29% had five or more streams of income.
Being wealthy and financially independent means never having to worry about working again, but to get there you have to shift your view of money.
Is money a plaything for you or is it a door to possibilities?
Multiple streams of income are the key to building wealth. If one stream falters, the other streams will pick up the slack. That is true diversification – the type of diversification that will help you weather any storm.
I bet Vince Young wished he’d had other streams of income when his NFL career flamed out.
Andre Iguodala never has to play another minute of basketball to maintain his lifestyle. He parlayed his NBA earnings into a lucrative stream of passive income through his investments in venture capital and private equity.
That’s the difference between the rich and the wealthy and that’s why your salary will never make you wealthy.
Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.
Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.