You are earning good money. Probably more than most people around you.
But when you actually stop and look at your net worth, something feels off. The number should be bigger. The assets should be further ahead. The financial pressure should feel lighter by now.
If that sounds familiar, you are not alone. And the problem almost certainly is not your income.
The Symptom Checklist
Before we get into the leaks, here is a quick gut check. See how many of these land:
Your income has grown significantly in the last three years but your savings rate has not.
You are not sure exactly what your net worth is right now.
You have money in a few different places but no clear picture of how it all fits together.
You feel like you should be further ahead but cannot pinpoint why you are not.
You are investing something, but you suspect it is not enough or not structured correctly.
If two or more of those hit, you are dealing with a structural problem, not an income problem. More money through the same broken system just produces a more expensive version of stuck.
Leak 1: Tax Inefficiency
This is the most expensive leak and the most overlooked one.
High-income earners in Australia can face a marginal tax rate of up to 47 percent. Every dollar of investment income, rental income, or capital gain earned in your personal name at that rate is giving away nearly half to the ATO before you can put it to work.
The issue is not the tax rate itself. The issue is holding assets in the wrong structure for your income level.
Depending on your situation, family trusts, company structures, and superannuation can all reduce the tax rate applied to your investment returns significantly. The ATO’s guidance on investment income is a useful reference point for understanding where your current exposure sits.
We covered this in depth in our post on tax-effective investment structures for entrepreneurs and professionals. If you have not read it, start there.
The fix is not earning less. It is restructuring what you already have.
Leak 2: Non-Deductible Debt
Not all debt is equal. This distinction matters enormously for high-income earners and most people are not making use of it.
Non-deductible debt is debt where the interest cannot be claimed as a tax deduction. Your home mortgage is the most common example. You are paying interest with after-tax dollars, which means the real cost of that debt at a 47 percent marginal rate is higher than the interest rate on the statement suggests.
The strategic response is to prioritise paying down non-deductible debt while shifting borrowing capacity toward deductible debt, which is debt used to acquire income-producing assets. This is not about taking on more risk. It is about making your debt structure work in your favour rather than against you.
Our post comparing whether to put extra money into super or pay off your mortgage works through exactly this kind of decision in practical terms.
Leak 3: Idle Cash and No Investment Policy
High-income earners tend to accumulate cash faster than they deploy it. This sounds like a good problem. It is not.
Cash sitting in an offset account or savings account beyond what you need for liquidity is losing ground to inflation in real terms. But more importantly, it signals that there is no clear investment policy in place. No defined threshold at which surplus cash moves into assets. No agreed allocation. No mechanism forcing the decision.
Without an investment policy, surplus cash just sits there. Weeks become months. Months become years. And the compounding returns you should have been earning do not exist.
The fix is straightforward: define your cash buffer, set a threshold, and automate what happens above it. Our post on the best way to invest money sitting in your offset account is a practical starting point for this conversation.
Leak 4: No Wealth Tracking Metrics
You cannot manage what you do not measure.
Most high-income earners have a vague sense of how much is in their bank account. Far fewer track their net worth on a regular basis, know their savings rate as a percentage of income, or have a target investment balance tied to a retirement or financial freedom date.
Without those metrics, you are flying blind. You might be on track. You might be significantly behind. You genuinely cannot tell.
The metrics worth tracking at minimum are your total net worth updated quarterly, your savings rate as a percentage of gross income, and your investment balance relative to a ten or twenty year target. Moneysmart’s net worth calculator is a useful starting tool if you have never put those numbers together formally.
When those numbers are in front of you, the structural leaks become visible. And visible problems are solvable ones.
Your 90-Day Fix Plan
If you want to start closing the gaps, here is where to focus in the next ninety days:
Get your net worth on paper. Total assets minus total liabilities, written down in one place.
Identify your current savings rate. Take what you invested last financial year and divide it by your gross income. If the answer surprises you, that is important information.
Review your debt structure. Separate deductible from non-deductible debt and understand the real after-tax cost of each.
Audit your investment structures. If everything is in your personal name, flag it with your adviser.
Set a cash threshold. Decide the maximum cash buffer you need and build a clear plan for what happens above that number.
None of these steps require dramatic change. They require clarity. And clarity is exactly what most high-income earners are missing, not income.
The Real Problem Is Structure, Not Salary
The people who build serious wealth on a high income are not the ones who earn the most. They are the ones who stop the leaks earliest and build the right structure around what they already have.
If your net worth is not growing in line with your income, that is a signal worth taking seriously. The four leaks above are fixable. But they do not fix themselves.
At Three Kings, our financial coaching sessions are built around exactly this kind of diagnostic. Getting the real numbers in front of you, identifying where the structural problems are, and building a clear path forward.
If you want a seat, the waitlist is open now. Head to threekings.com.au to join the waitlist.
This article contains general information only and does not constitute personal financial advice. Please consult a licensed financial adviser before making financial decisions.
FREQUENTLY ASKED QUESTIONS
How much should my net worth grow each year?
A useful benchmark for high-income earners is a net worth growth rate that outpaces your income growth rate over time. In practical terms, if you are earning $200,000 or more and your net worth is not growing by at least $30,000 to $50,000 per year net of lifestyle costs, there is likely a structural leak somewhere. The exact number depends on your age, debt position, and investment strategy.
What tools can I use to track my wealth?
At a basic level, a simple spreadsheet updated quarterly is enough to track net worth, savings rate, and investment balance. Moneysmart’s budget planner is a free starting point. For more sophisticated modelling, a financial adviser can use cashflow projection tools to show you exactly where your wealth is headed under your current structure versus an optimised one.
Can a financial adviser help reduce my tax leak?
Yes, and for high-income earners this is often where the most immediate value sits. A good adviser will look at what you own, how you own it, and what restructuring options are available for your situation. The tax savings from moving assets into a more appropriate structure can significantly outweigh the cost of advice, often within the first year.
INTERNAL LINKS
- Tax-Effective Investment Structures: https://www.threekings.com.au/understanding-tax-efficient-investment-options-for-australians — Leak 1 section
- Super vs Mortgage: https://www.threekings.com.au/should-i-put-extra-money-into-super-or-pay-off-my-mortgage-faster/ — Leak 2 section
- Best Way to Invest Money in Your Offset: https://www.threekings.com.au/the-best-way-to-invest-300k-in-your-offset-when-youre-earning-good-money-but-unsure-whats-next/ — Leak 3 section
- Invest in a Wealth Plan (post 1 in this series): https://www.threekings.com.au/invest-in-a-wealth-plan-not-just-assets-5-mistakes-smart-people-still-make/ — can be referenced in intro or closing
EXTERNAL LINKS
- ATO Investment Income Guide: https://www.ato.gov.au/individuals-and-families/investments-and-assets/investing-in-shares — Leak 1 section
- Moneysmart Budget Planner: https://moneysmart.gov.au/budgeting/budget-planner — Leak 4 section
No responses yet