That’s Gross

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3.18.26

Lately I’ve been thinking about how often we talk about money in gross terms.

Gross salary. Gross income. Gross revenue.

It sounds impressive.

“I make $150,000 gross.”
“Our company did $2 million in gross revenue.”
“That trade grossed me $10k”

But honestly?

Gross numbers don’t matter.

They can look and sound big, but they’re not helping us manage our financial reality.

Because that big gross income number gets dwindled down by

• FICA

• Federal income tax

• State income tax

• Local income tax

• Maybe healthcare benefits

• Sometimes debt payments

• Ideally retirement contributions

This is all before we see our net pay.

Then, of course, housing, insurance, and basic expenses claim their piece.

And suddenly relying on that gross number feels a little bit gross.

Instead of focusing on the big number, I always encourage my students to try to focus on their net numbers.

This is all before we see our net pay.

Then, of course, housing, insurance, and basic expenses claim their piece.

And suddenly relying on that gross number feels a little bit gross.

Instead of focusing on the big number, I always encourage my students to try to focus on their net numbers.

The Three Nets Framework

I like to think of your saving and spending plan like a fishing net.

If your net has big holes, everything you earn falls right through and you don’t hang onto any savings.

There are three specific net numbers to pay attention to.

1. Net Pay

This is the number that actually lands in your bank account.

Not your gross salary.
Not the number in the job offer.

What shows up after taxes and deductions.

2. Net Savings

Then, with this net pay, the actual money you end up with, you will pay for things like

• housing

• transportation

• food

• debt payments

• clothing

• fun

• everything else life throws at you

What’s left after that?

Your net savings.

And this is the money you really get to keep.

You don’t build wealth from income.

You build wealth from the gap between what you take home and what you spend – your net savings.

And, finally, the scorecard.

3. Net Worth

Net worth = assets – liabilities

It answers the most important question in personal finance:

Are you moving forward or backward financially?

Income tells you how fast the water is flowing.

Net worth tells you whether the bucket is filling up.

Stop Chasing Big Gross Numbers

Some of the most financially stressed people I know are high earners.

They have impressive gross incomes, but:

• high taxes

• big mortgages

• expensive lifestyles

• heavy debt

• lots of shoes

• club dues

• a daunting car payment

• a job they can’t afford to lose

The holes in the net are simply too big.

Meanwhile, other people I know, who earn half as much, but save and invest consistently, are quietly building real wealth and are able to watch the third and most important net, net worth, go up.

Net savings and net worth determine your freedom.

And when I hear people bragging about their big job/salary/income/trading revenues… I think….

Gross.

RESOURCES

My favorite personal finance book recommendations (UPDATED!)

The Roboadvisor I use.

Where I keep my other investments.