Income vs. Wealth

Income is the money you earn from working your job. In your case, it’s the income you earn from music. If you own a business, it’s the profit you derive from your business (Income - Expenses = Profit and presumably profit gets passed onto you the owner/partner).

Wealth is the total value of owned assets (net worth) minus debts, the total of your accumulated resources.

Financial Indepdendence (FI) thinkers will tell you that once you have investments/assets/wealth equal to 25x your annual budgeted expenses, then you could live off of your investments for the rest of your life assuming 4% draw down annually. And assuming that you are making more than 4% per year then you would never touch this principal.

As you earn more income (profit from your business) each year, your challenge is to keep your annual household budget somewhat steady so that the extra profits earned can be invested into assets. In this way you can grow your wealth. If you continue to expand your spending with the more money you earn, your income may go up but your wealth doesn’t. The window of time for maximum earning potential is likely around 10-20 years so you want to maximize those earnings while you’ve got them!