This blog post begins by exploring why the income of salaried workers is called a ‘glass wallet’. It then examines the optical illusions created by averages and statistics, and discusses the right perspective for reading financial management articles.
The Story of Our ‘Glass Wallets’
From here on, we’ll focus on the story of those within households who sustain their livelihoods through monthly salaries—the salaried workers. Their income is often called a ‘glass wallet’. This nickname stems from the idea that their income is transparent and exposed, making it easy to levy taxes. Another term for salaried workers is wage earners. According to National Tax Service data, South Korea’s wage earners currently number around 20 million (based on those filing year-end tax settlements). Considering South Korea’s total population is approximately 51 million, this means roughly 40% of the population are wage earners. Many readers of this book are likely wage earners themselves or will soon become one.
However, not all wage earners are in the same situation. Diverse strata and conditions exist within this group. Let us now examine these strata one by one and consider how to use our ‘glass wallets’ more wisely. Furthermore, we will briefly touch upon changes in the financial environment closely tied to our daily lives.
Same Salary Workers, Different Reasons
“Average Salary for Office Workers in the 40 Million Won Range… Era of Millions Earning Over 100 Million Won Annually” (Yonhap News, 2022.12.07.)
Articles covering the average salary of office workers appear without fail every year. People often look only at the numbers: if their salary is above average, they feel relieved; if below, they experience a sense of relative deprivation. However, the word ‘average’ carries multiple layers of meaning, so there’s no need to attach excessive importance to it. First, the ‘last year’ mentioned in the article refers to the statistical base year, while the actual income was earned the year before. That period saw significant asset price increases, particularly in the stock and real estate markets, and many people profited from financial investments. Therefore, when interpreting average salary figures, it is essential to consider both the base period and the economic conditions at that time.
It is inappropriate to accept an average annual salary in the 40 million won range as the ‘median’ or ‘average level’. As the article itself mentions, workers earning over 100 million won already number in the millions. Considering that the total number of wage earners is around 20 million, those earning over 100 million won represent approximately 5-6% of the total. Although not explicitly stated in the headline, the article also presents the fact that a significant number of workers have incomes low enough that they pay almost no income tax. This demonstrates the very large income gap within the workforce.
Furthermore, this article also addresses the number of comprehensive income tax payers. Comprehensive income tax is levied when multiple types of income, such as labor income, interest income, dividend income, rental income, and pension income, are earned collectively. Among wage earners, those who also engage in rental businesses or receive substantial interest or dividends from financial assets pay comprehensive income tax. However, since these incomes are not classified as labor income, they are not reflected in average annual salary statistics. Notably, capital gains from stock trading were not subject to taxation for a long period, leading to a significant gap between actual income levels and the statistical annual salary figures.
An interesting point is the mention of regional income disparities. Based on registered residential addresses, average annual salaries were relatively high in Seoul, Sejong, and Ulsan, while Gangwon and Jeju showed lower levels. This demonstrates that differences in industrial structure, job density, and regional economic conditions directly impact income.
Thus, earned income varies greatly between individuals, differs by region, and is significantly affected by the presence or absence of income beyond the annual salary. Therefore, there is no need to fixate on a single figure like the average annual salary. Furthermore, among the reasons for salary gaps, ‘experience’ also acts as an important variable.
“Average household income in the 60 million won range… High proportion of heads of households in their 40s and 50s” (Yonhap News, 2022.12.01.)
At first glance, this headline might suggest that our household income should be around 60 million won to be average, and that a significant number of households headed by those in their 40s and 50s are earning over 100 million won. However, a careful reading of the article reveals the situation is not that simple. The first thing to check is the survey period. These statistics are based on income from the previous year, with the results surveyed and analyzed then released later. Since the survey itself is a large-scale national statistic, it naturally takes considerable time until publication. The problem is that the economic situation changed significantly between the survey period and when the article was written.
During the survey period, the asset market was booming, but afterward, asset prices underwent adjustments alongside an economic slowdown. Therefore, when encountering articles containing terms like ‘last year’ or ‘average,’ it is essential to develop the habit of verifying both the base year and the economic conditions prevailing at that time.
A particularly notable aspect of this article is the introduction of the concept of ‘median.’ While the average is the sum of all values divided by the number of values, the median is the value located at the exact center when the values are arranged in order of magnitude. For example, if nine out of ten people earn 1 won and one earns 11 won, the average is 2 won, but the median is 1 won. The greater the wealth gap, the more likely the average is to distort reality. In this article too, while the average household income was around 60 million won, the median was lower, clearly showing the difference between the two values.
The composition by income bracket also provides important clues. Households earning between 10 million won and less than 30 million won accounted for the largest share. Within this bracket, the overwhelming majority of heads of household were either 29 years old or younger, or 60 years old or older. Conversely, households earning over 100 million won constituted only a small portion of the total, and roughly half of these had heads of household concentrated in their 40s and 50s. This reveals a structure where households in the early stages of entering society or in the post-retirement phase have relatively lower incomes, while middle-aged individuals with accumulated career experience have higher incomes.
Not only the size of income but also the way it is earned is significant. In the low-income bracket, the proportion of temporary or day labor jobs was high, while in the high-income bracket, the proportion of regular employment was relatively higher. The statistics clearly show that the difference between what is commonly referred to as regular and non-regular employment leads to income disparities.
Upon calmly dissecting the article’s content, the conclusion is utterly commonsense. Households with heads who have maintained stable jobs over a long period have higher incomes, while those with non-regular workers or shorter economic activity periods have lower incomes. One cannot say the article’s title itself is wrong. However, I want to emphasize that a headline containing the word ‘average’ should never be taken lightly; one must carefully examine the body text to achieve accurate understanding and judgment.
Approach to Articles on Personal Finance
Most articles about salaried workers, as seen earlier, often provide only fragmented information or satisfy temporary curiosity. Therefore, there is no need to attach excessive significance to such articles. Behind figures like average annual salary or average wages lie numerous variables and underlying assumptions. What we should focus on is not the numbers themselves, but the information that provides clues about economic trends, structural changes, and sound financial judgment.
“Year-End Tax Settlement: A Complete Guide to Tax-Saving ‘Handy Tips’” (Newsis, December 18, 2022)
Can such financial management articles truly be of practical help?
Judging by the title alone, they seem helpful. While they might be somewhat underwhelming, such articles rarely dramatically improve an individual’s financial situation. This holds true even when the article title includes phrases like ‘honey tips,’ ‘secret methods,‘ or ‘you’ll lose out if you don’t know.’ So, is there really no need to read these articles? Not necessarily. There is a clear difference between reading the article and not reading it.
News and articles are like the preliminary sketches needed to complete the full picture. Drawing without any outline is difficult, but having a basic sketch makes it much easier to add your own perspective and judgment on top. Reading an article is the process of grasping the overall flow by referencing the outline someone else has drawn. When you have a basic structure in your mind, it becomes clearer what to emphasize and what to be wary of.
Therefore, it is efficient to read economic articles first, then supplement information about specific investment products or methods through communities or additional resources. If you only encounter detailed information from the start, you are likely to miss the overall flow. This is also why buying specific stocks based solely on others’ advice without any prior experience in stock investing increases the likelihood of failure. News reveals the overall flow, trends, and patterns of recurring mistakes. If you want to manage your finances well, reading articles is not optional—it’s essential.
The Emergence of New Finance: Know It to Use It
Technology advances relentlessly, and the financial market is rapidly restructuring alongside these technological shifts. There are concepts useful not only in economic articles but also in daily life.
The most representative concept is fintech. This term combines finance and technology, encompassing all forms of integrating information technology into financial services. Using paper passbooks has become rare, and most financial tasks can now be handled via smartphone without visiting a bank counter. While these changes are already part of daily life, they are all outcomes of fintech. As offline branch usage declines, internet banking and mobile-centric financial services continue to expand.
Technology offers convenience but also brings new risks. However, we cannot stem the tide of technological progress. Rather than fighting the current, it is wiser to understand its direction and adapt. Fintech is still in a process of change rather than a completed system, and trial and error will continue.
Contactless financial services have already become fundamental infrastructure in finance. While security concerns were significant in the early days, various methods like facial recognition and multi-factor authentication have been implemented to address them. Authentication procedures, once centered around digital certificates, have gradually been simplified, and mobile-based processes are becoming commonplace even for high-value asset transactions.
The boundaries between financial institutions are also gradually blurring. ‘My Data’ services allow users to manage information from multiple financial institutions within a single application. This serves as a means for financial institutions to enhance their understanding of customers and provides users with a tool for systematically managing their assets and expenditures. However, careful comparison is necessary when selecting which services to use.
New forms of financial products have also emerged, such as P2P finance, blockchain-based financial products, and fractional investing. These products complement the limitations of traditional finance while introducing new risks. It is crucial to remember that the more innovative the product, the more likely it is to have hidden issues alongside its advantages. The principle that all investments involve both returns and risks remains unchanged.
Discussions about virtual spaces and the metaverse also continue. We must remember that every shift in technology brings both new financial opportunities and risks.
How to Identify Future Growth Industries
People are curious about the future. While there is curiosity about the changing world itself, it is also because they want to anticipate future growth industries to seize economic opportunities. Expressions like ‘new technology’ and ‘growth engine’ appearing in the news reflect these expectations. However, just because something is featured in the news does not guarantee its success. What we should gain from the news is not a definitive outcome, but ‘potential’.
Reading potential requires several criteria. First is the government’s policy direction. Government policies and budget execution directly influence industry trends. Second is policy shifts in major nations. Strategic decisions by specific countries ripple through the entire global market. Third are global campaigns and international agreements. Trends surrounding the environment and ESG are already transforming industrial structures themselves. Finally, there is technology. The convergence of technologies creates new markets.
These four elements do not operate independently. They overlap, collide, and evolve. News may only show fragments of some of these, but those who can read the underlying currents will ultimately seize future opportunities. This process will repeat itself going forward, and within it, the consequences of each choice will remain the responsibility of the individual.
