Overview of income vs net worth
Hey my dear wispros, hope you are doing well and spending a happy life. I am here again with another unique topic income vs net worth. I am sure you never think in that way about income. You might hear net income, gross income , net worth, and many more terms. But today you will come to know about the difference in all and also what you have to make.
So let’s take an overview of income vs net worth
Overview of Income vs net worth
What is income?
What is net worth?
How to calculate net worth?
On what thing you have to focus
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What is income?
Income is what you earn. It has two terms in it.
1. Gross income
– it is defined as the sum of total income you earn in a year without spending a penny of it. Suppose if your salary is 500 dollar per month then your gross income would be 60000 dollars/year.
2. Net income
-In the world of finance, “net” word stands for “after deducting expenses and debts”.If you deduct the expenses from gross income then you will get net income. Suppose your salary is 500 dollar per month and your expense is 400 dollar, which means your net income per month is 100 dollar and per year is 1200 dollars.
Two important term I have to add in income in terms of life lesson, on the basis of life lesson, income has two types
1. Active income
– This is the type of income in which your gross income is generated on the basis of your working hours. Means the much you work the much you will earn. In this category, you can take the example of any job or freelancing. This is the type of thing which rarely make you rich. Because you are not earning while resting. So here comes another type of income
2.Passive income(income vs net worth)
– This is the type of income which could make you rich. This is the type of income, in which you have made something which is making you rich even while you are sleeping. Take the example of any richest man either it is the founder of amazon.com Jeff Bezos of founder facebook Mark Zuckerberg. They are rich because they created passive income source and that source is increasing their bank balance.
And not only one source, multiple passive income sources they have made, and that is why their net worth is increasing.
Here another term came into the limelight, net worth. So let’s explore what net worth is and a look into income vs net worth
Meaning of net worth(Income vs net worth)
Here I am not going to say the same line that net worth is the value of all thing you have. I am here talking about, when someone google your name, then in Wikipedia section you get your name with net worth written on it.
You heard this word already in terms of some big billionaire like bill gates have net worth 92.7 billion dollars or Apple- tech company had a net worth in one trillion. But when you ask a normal person, you will hear in terms of income or salary. Normal people never say they have a net worth of this much. They generally say my income is 200 dollar or like this.
So, in a normal language if I define net worth then it is the word dedicated to those who become brand themselves or create something which is beyond the measurable category of normal income or salary. When your growth is being measured by some other organizations to calculate your value, then it is called net worth. You are not rich in terms of money until unless net worth is not added in the bio of your Wikipedia. So hope you got difference in income vs net worth)
How to calculate net worth
This is quite a funny thing to answer but in reality, if you can calculate then it’s not net worth, it’s your net income. Because the calculation of net worth is not one man work. A whole team or organization sit together for hours and days and analyze data from a different point of view just to calculate the net worth of an individual or a company. So, you have to work hard till you net income get transformed into net worth.
What needs to be your goal Income vs net worth
Does not matter what your country situation is, you always need to focus on creating net worth, rather than focusing on net income. It might be possible that right now you don’t even have any income or you might have some regular active income. Still always try hard enough to get into a net worth zone. This article is not for those who are sitting in their comfort zone and don’t have the guts to do hard work. This is for those who want to make themselves brand or create some brand.
There is no alternative to hard work. If you want to achieve something big then you have to put some great effort. Because there are thousands of example who made everything starting from nothing. And if you keep crying on your situation then no one is going to give a shit about you. That’s harsh but true too.
Conclusion – Income vs net worth(how to transform into net worth)
The only thing to create multiple sources of passive income to transform your income into net worth. It is very rare that you can achieve that net worth tag just by generating active income. You need to create multiples of sources. If you take the example of facebook then you will see, facebook own WhatsApp, messenger, Instagram. They also work as a developer for many companies. They are not sticking to one source.
Another example if you have to take then its google. Google own itself many companies and buy more than 50-60 companies in a year. What they are doing, they are just generating passive income sources.
I am not saying to buy your companies right now, but I am saying always create multiple sources, now and then you will start generating passive income and soon net worth too.Read how to be rich with no money
That is all for this article income vs net worth, hope you liked it. If you liked it then share with your friends and family on all social networking site. Thank you for giving your valuable time.