Many people assume a high annual income equates to financial prosperity, but in reality, numerous high earners still experience financial stress. Japanese financial expert Hiroto points out that the key to determining whether someone is truly wealthy isn't their annual income, but their 'net worth'—assets minus liabilities.
For instance, someone earning 20 million JPY annually (approximately 4 million NTD) might spend nearly all their income on mortgage payments, luxury car leases, and private school tuition, resulting in a negative net worth. In contrast, a salaried worker earning 6 million JPY (about 1.18 million NTD) who consciously limits lifestyle inflation and consistently invests through automated systems could accumulate a net worth of 50 million JPY (nearly 10 million NTD). Thus, financial health depends less on income and more on how one manages and grows their assets.
To reverse financial situations, Hiroto recommends three key practices. First, calculate your net worth by subtracting all liabilities from your total financial assets to understand your current financial starting point. Second, set up an automated system that allocates a fixed portion of your salary to investments immediately upon receipt—rather than waiting until the end of the month, when little may be left. Third, review your daily expenses by categorizing each one as 'waste,' 'consumption,' or 'investment' to identify financial leaks.
Experts also note that affluent families often have a cultural advantage: regular money-related conversations at home. Discussing market trends, investment logic, and whether a purchase is consumption, waste, or investment helps cultivate financial literacy and risk management skills in the next generation. Whether you'll be truly wealthy in 10 years depends not on your current income, but on whether you start focusing today on accumulating assets that grow over time, rather than just chasing higher earnings.
FACT BOX
- Source: PR Times
- Category: Survey