Income tells you what you earn. Net worth tells you where you stand. Two people can earn identical salaries and have completely different financial positions. One has £40,000 in savings and no debt. The other has £500 in savings and £35,000 in consumer debt. Same income, very different realities.
Add up everything you own that has financial value: current account balances, savings accounts, ISAs, pensions, investments, property value if you own. That's your total assets.
Then add up everything you owe: mortgage balance, credit cards, personal loans, car finance, student loan if you're tracking it. That's your total liabilities. Assets minus liabilities equals net worth. It can be negative. For most people in their twenties and early thirties, it is.
A high income with no savings and significant debt is fragile. A job loss or health problem can create a crisis within weeks. A moderate income with growing net worth is resilient. The same event is an inconvenience rather than a catastrophe.
Financial security comes from the gap between what you own and what you owe, not from the size of your salary.
Paying down a credit card at 24.9% APR grows your net worth by the same amount as earning 24.9% on an investment. The debt side of the equation is often the fastest lever available.
Track net worth quarterly rather than monthly. Month-to-month, investment values fluctuate and the number feels noisy. Over quarters and years, the trend becomes clear. Net worth increases in two ways: accumulate more assets, or reduce liabilities — usually both at once.