In this blog post, we’ll explore how salaried workers—often referred to as “glass wallet” workers—can overcome the pitfalls of average annual salaries, interpret economic news and financial trends, and identify where money is flowing within future growth industries.
The Story of Our “Glass Wallets”
From here on, we’ll focus on the stories of salaried workers within the context of household economics. The income of salaried workers is often referred to as a “glass wallet.” This nickname stems from the fact that their finances are completely transparent, making it easy to collect taxes. In other words, salaried workers are wage earners. According to the National Tax Service, there are approximately 20 million wage earners in South Korea (based on those who filed year-end tax settlements for 2021). Assuming South Korea’s population is approximately 52 million, this group accounts for about 40% of the total population. It’s likely that a significant number of readers of this book are either current wage earners or future wage earners.
However, not all wage earners are in the same situation. Their income levels vary, their occupations differ, and their asset sizes and spending habits are all unique. From here on, let’s examine the various segments of wage earners and explore ways to manage our “glass wallets” more wisely. We’ll also take a look at changes in the financial environment that are closely tied to our daily lives.
Same Salaried Workers, Different Reasons
Average Annual Salary for Office Workers Last Year Was 40.23 Million Won… Number of “100-Million-Won Salary” Earners Exceeds 1 Million (Yonhap News, Dec. 7, 2022)
Articles about the average annual salary of office workers appear frequently. Many people are happy if their salary is higher than the average and disappointed if it’s lower. However, since the term “average” carries more meaning than one might think, there is no need to attach excessive significance to the number itself.
First, we must verify the reference period mentioned in the article. Although the article was published in 2022, the “last year” it refers to is 2021. At that time, the economy was relatively strong, and asset markets—such as stocks and real estate—were booming. Many people earned substantial returns through investments. Therefore, when looking at economic statistics, one should not focus solely on the numbers but also consider the economic conditions of that specific period.
Just because the average annual salary is 40 million won does not necessarily mean it represents the “median level.” As the article also mentions, the number of people earning over 100 million won annually has surpassed 1 million. Considering that the total number of workers is approximately 20 million, about 6% fall into this category. On the other hand, the article also states that there are about 7 million people whose income is so low that they do not pay income tax. This accounts for about 35% of the total workforce.
Furthermore, this article discusses the number of people who pay comprehensive income tax. Comprehensive income tax is the tax paid by individuals who have various types of income, including earned income (wages), interest income, dividend income, rental income, and pension income. As of 2021, approximately 9.5 million people paid comprehensive income tax.
For example, wage earners who also engage in rental businesses or earn additional income from bank interest or stock dividends are required to pay comprehensive income tax. However, such income is not factored into the calculation of the average annual salary. In particular, capital gains from buying and selling stocks are not included in general wage income.
The article also mentions regional differences. The average annual salary for residents of Seoul, Sejong, and Ulsan was relatively high, while that for residents of Gangwon and Jeju was relatively low.
As such, there is a very wide variation in earned income from person to person. It varies by region and also depends on whether or not a person has income other than earned income. Therefore, we do not need to fixate on the figure of the average annual salary itself. Furthermore, one of the key reasons for salary disparities is differences in career experience.
Average Household Income Last Year Was 64 Million Won… One-Fourth of Households with Heads in Their 40s and 50s Earned Over 100 Million Won (Yonhap News, Dec. 1, 2022)
Based on this article alone, it’s easy to assume that our household income must be around 64 million won to be considered average. You might also mistakenly assume that one in four households headed by people in their 40s and 50s automatically earns an annual income of 100 million won or more.
However, if you examine the article’s content more closely, the story changes. The first thing to check is the timing of the survey. Although these statistics are based on 2021 data, they were actually released at the end of 2022. This is because the survey was so large in scale that it took a considerable amount of time to analyze and compile the results.
The problem is that the economic environments in 2021 and 2022 were vastly different. In 2021, real estate prices and stock prices rose sharply, but in 2022, market sentiment cooled rapidly as concerns about an economic downturn grew. Therefore, when reading articles that include terms like “last year” or “average,” it is essential to verify the reference period.
A particularly noteworthy aspect of this article is the “median.” The mean is the value obtained by adding all data points and dividing by the number of data points, while the median is the value located in the middle when the data is arranged in order of size.
For example, if 9 out of 10 people earn 1 won and the remaining 1 person earns 11 won, the mean is 2 won. However, the median is 1 won. As shown here, the greater the income disparity, the more the mean can distort reality. In fact, the article noted that while the average household income was 64 million won, the median was around 50 million won.
Looking at the income distribution, households with annual incomes of 10 million won or more but less than 30 million won accounted for the largest share at 23.2% of the total. Among these, 42% had a head of household aged 29 or younger, while 36% had a head of household aged 60 or older. In other words, the lower-income bracket was concentrated among young people just entering the workforce and retired seniors.
In contrast, households with an annual income of 100 million won or more accounted for 17.8% of the total. Among these, about half had heads of household in their 40s or 50s. This indicates that middle-aged individuals, who have extensive work experience and have risen to senior positions in their careers, tend to have relatively higher incomes.
Income levels are also closely related to employment status. Among heads of households in the 10 million to 30 million won annual income bracket, about 40% were temporary or day laborers. In contrast, households with an annual income of 100 million won or more had a higher proportion of permanent employees. Simply put, this means that the incomes of permanent employees tend to be relatively high, while those of non-permanent employees tend to be relatively low.
If you examine the article’s content step by step, these results are actually quite intuitive. People who have entered the workforce and worked steadily for a long time tend to have higher incomes, while those just starting out or working in non-regular positions are more likely to have lower incomes. The article’s headline itself isn’t incorrect. However, the more an article includes the word “average,” the more important it is not to jump to conclusions based solely on the headline. To understand the statistics accurately, we must carefully examine the criteria used to compile them and the meaning embedded within them.
How to Approach Articles on Personal Finance
The articles on salaried workers discussed above are helpful for obtaining fragmentary information or satisfying simple curiosity. However, there is no need to assign them any greater significance. This is because countless variables and complex factors lie hidden behind statistics such as average annual salary or average wages.
What we should focus on is information that provides practical help in understanding the economy, such as economic trends or industry growth patterns. In other words, we need to pay more attention to articles that offer clues for making economic judgments.
Beyond Credit Card Tax Deductions… 10 ‘Top Tips’ for Tax Savings on Year-End Tax Settlements (Newsis, Dec. 18, 2022)
So, are these kinds of personal finance articles actually helpful? At first glance, it might seem so. However—and this may be a bit of a letdown—such articles aren’t as helpful as one might think. This holds true even when article titles use sensational phrases like “top tips,” “secrets,” or “you’ll lose out if you don’t know this.”
Does that mean there’s no point in reading these articles? Not exactly. This is because reading an article allows you to gain far more information than not reading it.
News and articles are like the sketch that helps complete the big picture. It’s not easy to draw a picture from scratch. However, if someone has already drawn the sketch, it becomes much easier to add your own perspective and colors on top of it. Reading an article can be seen as a process of understanding the trends of the world by utilizing the sketch drawn by others.
If you have a rough outline in your mind, it becomes easier to judge what to emphasize, what to be wary of, and which direction to move in. Therefore, it’s most efficient to first read economic articles to grasp the overall trend, and then supplement that with detailed information on financial products or investment methods through online communities or specialized resources.
If you focus solely on the details from the start, you’re likely to make the common mistake of “seeing the trees but not the forest.” For example, if someone with absolutely no experience in stock investing buys a specific stock based solely on someone else’s recommendation, they are highly likely to fail. This is because such information does not reflect the overall market trends or context.
On the other hand, news articles reveal major market trends, emerging patterns, common mistakes people make, and the direction of change. If you want to succeed in personal finance, you must develop the ability to read these trends. In that sense, reading news articles is not an option but a necessity.
The Rise of New Finance: Know It to Use It
Technology is advancing by the day, and the financial markets are also rapidly evolving to keep pace with these changes. Let’s briefly review some financial concepts that are useful to know, not only when reading economic news or articles but also in everyday life.
The first concept you need to understand is FinTech. FinTech is a portmanteau of “finance” and “technology,” referring to the integration of information technology (IT) into financial services.
The simplest example is banking. In the past, you had to visit a bank in person to open an account or make a transfer. But now, few people use paper passbooks, and visits to bank teller windows for simple transfers have decreased significantly. This is because most financial transactions can be handled simply by installing a banking app on a smartphone.
Although we’ve become so accustomed to them that they no longer seem special, internet banking and mobile banking are also prime examples of FinTech services. As the number of customers visiting physical branches declines, banks are scaling back their branch networks, and internet-only banks such as KakaoBank, K Bank, and Toss Bank have already become mainstream.
While technology makes our lives more convenient, it can sometimes pose a threat by disrupting the existing order. However, we cannot stop technological progress. Just as water flows from high to low places, once technology sets a course, it creates an unstoppable current. Therefore, adapting to the trend rather than resisting change may be the wiser choice.
Of course, the fintech industry is still in the process of development. Since sufficient experience and data have not yet been accumulated, there is no shortage of trial and error, and this process is likely to continue in the future.
Nowadays, you can open an account using only a smartphone without visiting a bank or securities firm branch. This is known as “non-face-to-face” financial services. Although security concerns were consistently raised in the early stages of its introduction, financial institutions are addressing these issues by implementing various identity verification procedures, such as photographing ID cards and facial recognition.
Furthermore, the digital certificate system—once an essential component of online financial transactions—is rapidly shifting toward simplified authentication methods. We have entered an era where even contracts involving large sums of money, such as real estate transactions, are routinely processed via smartphone.
The boundaries between financial institutions are also gradually blurring. Recently, banks, securities firms, and credit card companies have been competing to promote “MyData” services in an effort to attract customers.
MyData is a service that allows users to manage account and asset information from multiple financial institutions through a single application. From the perspective of financial institutions, this enables them to more accurately track customers’ asset flows and spending patterns, and based on this data, recommend suitable financial products.
From the user’s perspective, they can analyze their spending habits or view their asset status at a glance, and receive services such as personalized credit card recommendations, investment product suggestions, and loan product comparisons. Recently, services combining health data have emerged, further expanding the scope of these offerings.
Meanwhile, P2P (Peer-to-Peer) financial services are also establishing themselves as a pillar of the mainstream financial system. Whereas financial institutions traditionally acted as intermediaries to facilitate and manage loans, P2P finance is characterized by directly connecting investors with borrowers.
Those lending money act as investors, while those borrowing money become borrowers. The market has grown thanks to the advantage of offering more favorable terms than traditional financial methods. Investors can expect higher returns than those from savings accounts, and borrowers can raise funds at relatively low interest rates.
However, the higher the potential for returns, the higher the risk. Therefore, it is essential to thoroughly review the risk factors before investing.
Financial products utilizing blockchain technology are also steadily emerging. The most widely known example is the NFT (Non-Fungible Token). While it once garnered tremendous attention, the initial hype has now largely subsided.
On the other hand, there are sectors that are experiencing steady growth. A prime example is fractional investing. Fractional investing refers to a method of investing by dividing the rights to high-value assets—such as real estate, artwork, and music copyrights—into multiple shares.
MusicCow, a fractional investment platform for music copyrights, is a prime example, and the scope is expanding to include artworks and various other tangible assets. These services are made possible by blockchain technology, which makes it difficult to forge or alter transaction records and allows all transaction histories to be stored transparently.
Fractional investing has lowered the barrier to entry for the high-value asset market, which was previously difficult for ordinary investors to access. Recently, it has expanded beyond real estate to include various sectors such as loan receivables and Hanwoo beef.
However, just because a new financial product appears innovative and attractive does not mean it is inherently safe. It is essential to remember that every investment product carries both opportunities and risks.
Interest in virtual spaces is also steadily growing. Many predict that virtual spaces—represented by the metaverse—will connect to the real economy in ways different from existing online spaces. And blockchain technology lies at the heart of that connection.
No one can know exactly which technologies and concepts will transform our lives in the future. However, one thing is certain: wherever new technologies emerge, new flows of money are always created.
How to Identify Future Growth Industries
What people are most curious about is the future. This is partly because they want to know how the world will change, but also because they want to identify industries and sectors that will grow in the future in order to maximize their investment returns. The so-called “future growth engines” frequently appear in economic news articles under keywords such as “new technologies,” “growth drivers,” and “new industries.”
Anyone who follows the news regularly or has extensive social experience knows full well that just because a field is featured in the news doesn’t necessarily mean it will succeed. No one can accurately predict the future. Therefore, what we should look for in the news isn’t a definitive answer, but rather “potential.” If you read the news carefully, you can get a good sense of the sectors likely to attract capital and attention over the next few years.
So, what should we look for in the news?
First is the government’s policy direction.
Most governments announce, through their campaign pledges and policies, which sectors they will focus their investments on in the future. For example, the Lee Myung-bak administration promoted “Green Growth,” the Park Geun-hye administration promoted “Creative Economy,” and the Moon Jae-in administration promoted the “Fourth Industrial Revolution” as their key policy pillars.
The reason money flows to different sectors depending on policy is that government budgets are allocated accordingly. Government budgets are funded by taxpayers’ money. Since the success of a policy is directly linked to political achievements, governments invest massive amounts of funds and administrative resources to implement key policies. Therefore, simply observing which sectors the government is trying to foster can give you a fairly good idea of the direction of future industries.
The second factor is policy changes in major countries.
Today’s economy is closely interconnected across national borders. If the U.S. government declares its intention to realign the semiconductor industry around the United States or announces plans to exclude China from its supply chains, the global semiconductor market reacts immediately.
China’s Belt and Road Initiative and its strategy for semiconductor rise are also national projects involving massive capital investments. Political decisions also have a significant impact on the economy. Changes in the international landscape, such as the war between Russia and Ukraine, send massive ripples through energy prices, commodity markets, and financial markets as a whole.
The third factor is global campaigns and international trends.
A prime example is environmental issues. As calls to address the climate crisis have grown louder, the concept of ESG (Environment, Social, Governance) has emerged, and specific goals such as carbon neutrality and RE100 have gained traction.
RE100 is a global campaign in which companies commit to sourcing 100% of their electricity from renewable energy. This trend presents opportunities for certain industries while posing threats to others. In fact, the electric vehicle, rechargeable battery, and renewable energy industries have benefited from this growth, whereas industries with high carbon emissions are facing increasingly stringent regulations.
The fourth factor is technological advancement.
Technology is the most powerful driving force behind the creation of new industries. As smartphones became widespread and internet networks advanced, markets that did not exist in the past were created.
Take YouTube, for example. It started as a simple video platform but has now spawned countless jobs and business models. Furthermore, with the emergence of new technologies such as big data, artificial intelligence, autonomous driving, and telemedicine, related industries are also growing rapidly.
In particular, the so-called “Big Tech” companies leading the U.S. Nasdaq market are creating new markets through technological innovation. Blockchain-based virtual assets and the metaverse, which we examined earlier, also fall into the realm of emerging industries whose ultimate outcomes remain uncertain.
One more point to keep in mind is that the four factors we’ve examined so far do not operate independently of one another.
Government policies influence technological development, and global campaigns, in turn, shape government policies. Technological innovation, in turn, reshapes the international order and industrial structure, creating new markets. In this way, all these factors are intricately intertwined, influencing one another.
News reports typically focus on specific events or issues, presenting only a fragmented view. However, the process leading up to those events and the subsequent developments are far more complex. Countless companies, industries, and nations compete and collaborate, constantly vying for dominance in future markets.
Ultimately, predicting the future of an industry is not about correctly identifying specific stocks or companies. It is about understanding the currents of change and consistently observing where those currents are heading. In this process, those who identify the future winners a little sooner seize opportunities, while those who fail to do so miss out. And this cycle will continue to repeat itself in the future.
