She added: "And believing this myth gives the false perception that those who appear to be rich (neighbors driving luxury cars or friends in $200-plus jeans) are wealthy when in fact it only means they spent more than real millionaires on these purchases."
Point blank, income and wealth are not the same thing.
Wealth refers to the net worth of a household, i.e. all of its assets minus of all its liabilities, Stanley Fallaw explained. Household income is merely realized income to be reported on one's personal income tax return.
Even the Tax Foundation gets it wrong, referring to "millionaires" in terms of their income tax returns versus their net worth, Stanley Fallaw said. In reality, a millionaire's income is only 8.2% of their wealth, she found through her research.
This myth is problematic, Stanley Fallaw added, because it "distorts" the numbers people focus on when trying to achieve financial independence.
Wealth isnt about how much money you make or spend its about how much money you keep
"When people say they want to be rich, what they're saying is they want to spend like a rich person. They're focusing on earning a big paycheck," Chris Reining, a self-made millionaire who retired early at age 37, previously told Business Insider .
"But that's not the definition of being rich," Reining said. "The definition of being rich is having assets generating income that exceed your standard of living."
He continued: "Someone earning $50,000 a year while they sleep from dividends and investment gains and spending $40,000 a year they're rich. I have friends earning half a million, and with private schools, second homes, and expensive lifestyles, they have nothing in their bank account they're poor. That's why 'rich' has little to do with how big the paycheck is."
"Stuff doesn't equal wealth. Money does. And it's not the same thing," she wrote. "I've worked with teachers who have bigger savings accounts than doctors who earn five times as much per year. High salaries can lead to wealth, but not if you burn through every last penny buying luxury cars or filling the closet with designer clothes ."
As Stanley Fallaw says, while income and net worth are related factors, "each should be used in different ways to assess overall financial health and progress."
SEE ALSO: Most people believe 6 myths about millionaires, and it can keep them from building their own wealth
DON'T MISS: A woman who studied 600 millionaires found 5 major differences in how they spend their time and energy compared with the average American