You Don’t Need a Higher Salary To Build Wealth -- You Need This Instead
A higher salary may feel like the missing piece between current finances and the kind of financial life you want. But for many people, raises can just as easily be absorbed by lifestyle creep or lack of a savings plan.
Financial experts reveal that what people really need to build wealth is actually quite simple.
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Why Earning More Doesn’t Automatically Build Wealth
Even a high income can fail to create wealth if spending rises alongside it, according to Sonia Martinez-Trujillo, financial advisor at Fiduciary Financial Advisors.
“I’ve seen people earn a lot and still spend everything. As income grows, spending often grows with it,” she said.
For example, according to Joe Braier, CEO and president of Lake Country Advisors, a person with a $200,000 base salary with 40% lifestyle inflation and no tax optimization plan can end up with less of a net worth than someone with a base pay of $75,000 who saved 20% of their salary to appreciate assets.
“Making more money increases good or bad behavior,” he said.
The Real Difference: Financial Literacy in Action
What makes the difference, the experts agree, is financial literacy.
“[It’s] what helps you keep, grow and protect what you earn,” Martinez-Trujillo said.
Financial literacy doesn’t mean you know everything before you start building wealth, either.
“Financial literacy is understanding and making informed decisions about finance. It’s like having a financial playbook and blueprint about how to build wealth and make money work for you,” said Farrel Liger, a financial expert and CEO of Farrel Liger Inc.
Julia Bartak, a certified financial planner (CFP) with Edward Jones, listed a few pieces of important financial literacy, such as “knowing how to prioritize saving before spending, understanding how interest works both for you and against you [and] using credit intentionally.”
How Lower Earners Sometimes Build More Wealth
Income alone doesn’t determine wealth. In many cases, consistent saving and investing can outperform a higher salary hampered by poor habits.
Martinez-Trujillo said she works with engineers making six figures who are stuck in debt and living paycheck to paycheck but also “restaurant workers and janitors who obviously earn less than an engineer, yet their life is set up in a way that they will be able to retire comfortably and who are debt free.”
The earlier someone can begin investing, and the more consistent you can be with it, the better, Braier said.
Where Financial Literacy Breaks Down in Everyday Life
Many people know what they should do but struggle to apply it consistently, Martinez-Trujillo noted.
“There’s also overwhelm. When you’re exposed to too many strategies, it becomes hard to know what to do," she said.
This often shows up as spending without intention or not knowing how much is “safe” to spend.
The Habits That Actually Build Wealth Over Time
Wealth-building can happen with a few repeatable habits. Martinez-Trujillo advised living below your means.
"It sounds simple, but it creates the margin needed to save, invest and handle unexpected expenses," she said.
Liger recommended paying yourself first.
“[Treat] investing and savings like another bill or obligation that you have to pay,” he said.
How To Start Building Wealth Without Earning More
The first steps can be very simple.
“Write everything down. List your expenses, account balances and debts. Awareness is powerful. You can’t improve what you don’t clearly see," Martinez-Trujillo said.
All you really need to do is create momentum, Bartak explained.
“Build a small emergency cushion, automate one savings or investment habit and learn one concept at a time," she said.
If you also write down your goals and take small “actionable steps” toward those goals, you’ll get there quicker, Liger said.
Focus on doing a few key financial steps well and you can build wealth as effectively as someone with a higher salary.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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