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Most people believe the key to wealth is a high-paying job. Yes, it's easier to amass assets if you have more money coming in each month, but one key to increasing your net worth is to spend less than you make. Ultimately, spending habits are the reason a professional athlete making $20 million a year can quickly go bankrupt while a bus driver can retire a multi-millionaire. It can be a cliche but it is a fundamental reality of money.

To escape the spending trap, you need to understand that income is not long-term wealth. What is wealth? Income is obviously a component of wealth, but wealth can have varying definitions. Many people see wealth as their total net worth at any given time. This can be paralleled to the assessment of an individuals balance sheet. Wealth can be referred to as the part of your balance sheet that is considered equity. Your assets minusliabilities. The wealth you have after liquidating.

Thinking Long-Term

Thinking long-term is an important characteristic of accumulating wealth and achieving financial independence. There can be several considerations for long-term wealth, and they will differ for everyone.

If you are a doctor or lawyer, you need to put in long hours after years of specialty training and higher education to get a paycheck. However, in any occupation, as discussed, your annual salary does not necessarily translate to wealth. With long-term thinking, helping to ensure your jobs security, taking initiative to achieve a promotion, or taking steps that will result in higher sales commissions can all be factors for wealth and ways to help ease your anxieties over financial independence.

Side gigs, private investments and a host of other variables can also be utilized for long-term thinking, wealth accumulation, and achieving financial independence. A few considerations here may include a portfolio of private businesses, car washes, parking garages, stocks, bonds, mutual funds, real estate, patents, trademarks. Some of these cash generators can be relied on for long-term income in addition to your job or just as cash generators that can pull in money while you take long vacations or sit by the pool.

Assessing Your Balance Sheet

When you take a look at your personal balance sheet, you may already have organic investments you can rely on in your quest for financial independence. Oftentimes, this is wealth that generatescapital gains, income, and dividends without labor. The more of these investments you can afford, the sooner you can fully achieve financial independence.

Reaching a Goal

Overall, the real value of your income is partially determined by the amount you can invest to achieve a financial independence goal. Setting this goal can be important for keeping your perspective on income in check. At your goal, you can successfully maintain the lifestyle you want without working.

Thus, your level of wealth can also be measured by your long-term thinking and potential sustainability. Working with a financial adviser can help you to set a goal for wealth accumulation that allows you to maintain your standard of living without an additional paycheck and achieve the financial independence of your dreams. This goal can be lofty,however, as most peoples annual spending includes a long list of budget items, such as mortgage payments, car payments, clothing, college tuitions, music lessons, entertainment expenses, and more.

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How to Become Financially Independent