Once, there was an ambitious young man.
He came from a middle income family and dreamt of being rich and successful.
In pursuit of his aspirations, the man started a business.
Initially, he had little to work with – little savings, few networks and no employees.
But, he persevered and successfully worked on key projects over time.
Income rose and he felt awesome.
The man moved into a larger office and hired employees. He reprinted his name card that carried the prestigious title of CEO. His mindset gradually shifted from a one-man operation to one who is a legitimate businessman.
Subsequently, the man landed himself some major projects.
The contract amounts were huge.
The completion of them would catapult him and his company to grandeur and recognition as one of the rising players in his industry.
But, there was a catch.
He needed to hire more talents and have more workspaces to complete these projects.
So, what did he do?
The man borrowed to finance them.
Over time, he and his staff completed these projects. Revenues tripled. His company has earned a reputation in his industry with multiple awards received.
With booming profits and confidence, the man wanted more.
Instead of paring down debt, he borrowed much more.
He used them to expand his office and hire more talents. Also, as CEO, he has increased his salary and bonus packages. With rising personal income, the man borrowed to purchase his luxurious car and home, enjoy expensive travels, gadgets, fashion wears, parties and frivolous collectibles.
The man met his spouse, hosted the wedding of the century and had kids.
Then, his industry began to experience a slowdown.
With slower demand, competition for business intensified.
Customers were bargaining hard for better rates and payment terms.
Revenues fell by 20-30%. Cash collection was delayed by months. But, his landlord, employees and all suppliers were demanding prompt payment from him.
All combined, they caused the cash reserve of the company to deplete and run dry.
With weaker financial standing, the man failed to secure meaningful financing. But, in order to stay in business, keep his office, employees and personal assets, he got himself deeper into credit card debts.
Every month became a struggle to pay bills and service debt.
On the outside, he definitely looked successful.
But in reality, he was financially unstable, probably a few months away from bankruptcy.
The worst part is – the man didn’t realise that he had turned success into deep financial insecurity.
The Repeatable Pattern
The above is a fictitious story that shows how financial instability occurs to high income earners. In many cases, this occurs resulting from a flawed belief on what financial success looks like.
It is easy to picture one who has luxurious homes, expensive cars, watches, collectibles, … etc to be financially successful because they are visible.
Sure enough, many who own the above are indeed financially rich and successful.
But, many do not realise this.
To a truly rich person, the total amount spent on the above (expensive homes, cars, watches, and collectibles … etc) is only a dent to his or her true financial wealth.
For instance, assuming that these homes, cars, watches, and collectibles cost RM10 million in total.
If a person who owns 100 million shares of a public listed company which could pay around 50 sen in dividends per share (DPS) annually, chooses to use a portion of his dividend income to purchase the above in cash, he is truly rich.
But, if a person earns RM1 million per year from his employment or business, chooses to pay for his RM10 million enjoyment with debts, he is not truly rich. He is a high-income achiever who wishes to push his financial boundaries to live the fast life.
How to Turn Income into Real Wealth?
The first step is to have the right mental model adopted by the truly financially rich.
That model consists of two key components.
The first is to be financially stable. The second is ownership of assets that produce income.
In terms of financial stability, it is measured based on “time”, not amount of money. For instance, in how many months you can survive (pay bills and service debt) if you stop earning active income?
Let’s assume that you have RM1 million in your bank account and you’ll incur RM100,000 per month on living expenses and debt repayments. In your case, the RM1 million may only last for 8+ months before you run dry.
But, if you have RM500,000 (half the money) and you incur RM10,000 a month in living expenses & debt repayments, the RM500,000 would last you 50 months (4+ years). Thus, despite owning less, you are financially more stable.
In terms of asset ownership, it is about having assets which churn out regular income without your active involvement in them. Stocks and real estate that earn income regularly would be examples of such assets.
When these assets earn income (without your active involvement), it buys back time.
You gain more flexibility and options on how you like to use your time.
Sure, you can continue to work hard (if that’s what you like to do).
But, I’m sure the time could be allocated towards other activities apart from work – family, health, sports, social, charity and any other pursuits that add meaning to your life.
This is what separates high-income achievers from the truly wealthy.
High-income achievers rely on continued performance.
The truly wealthy rely on accumulated ownership.
One builds lifestyle first and hopes income will keep up.
The other builds assets first and allows lifestyle to follow.
A Final Thought
Rising income is not dangerous by itself.
What makes it dangerous is allowing expenses, debt, and identity to rise faster than financial resilience.
Financial success is not measured by how impressive your lifestyle looks during good times.
It is measured by how well your finances hold up during bad times.
The goal is not to look rich.
The goal is to remain financially stable — even when income slows, markets weaken, or circumstances change.
That is what real wealth looks like.
