Final answer:
Wealth is the sum of the value of all assets a person owns, including savings and property, minus any debts. It is distinct from income, which is the flow of money received, such as wages or dividends. Wealth represents accumulated assets over time, not just lifetime earnings.
Step-by-step explanation:
Wealth does not refer to all earnings during a lifetime, but rather to the accumulation of assets. It is important to distinguish wealth from income. While income refers to the flow of money received on a regular basis, such as wages, salaries, or dividends, wealth is the sum of the value of all assets. These assets can include money in bank accounts, financial investments, a pension fund, and the value of real estate like a home.
In order to calculate wealth, it is crucial to subtract all debts, which may include mortgages, car loans, student loans, or credit card debt. The result is a net worth that represents the accumulated wealth at a specific point in time. This can substantially differ from the total income received throughout one's life. Hence, a person might have a low income but still possess considerable wealth if they have managed to save and invest over the years.