Yeah, compared to Sandy’s cousin, you should start dumpster diving…
We have a similar household income. Our modest house is paid off - and by modest, my neighbors are systems analysts, insurance salesmen, teachers and airline mechanics. We save a lot towards our kids college knowing that we don’t stand a snowball’s chance in hell of qualifying for financial aid. There are two cars - my husbands is nicer, I drive an 8 year old Jetta. We do take nice vacations once a year, can afford dinner out on a whim. We do not have multiple homes, multiple cars, any toys in the boat/snowmobile/RV sort of vein, granite countertops and tile bathrooms. I did have a housekeeper when the kids were really little, but have been doing my own housekeeping and lawn care for years. I’m a frugal grocery shopper who keeps my grocery bills pretty low. We fly coach - but we do fly when we would have to drive more than eight hours. Our kids go to public schools. I’ve never spent more than $70 on a pair of shoes or a purse (and usually WAY less) and color my hair out of a box at home. And frankly, I don’t know where the money would come from to have a second home or send the kids to private schools. (I have thought about a third car - we have two sedans and something to haul a lot of stuff and kids - like a POS minivan - would come in handy from time to time - but the insurance and upkeep is something I don’t want). We don’t have cable TV - I won’t pay $70 a month for junk right now.
We do save quite a bit in addition to the kids college funds. I suppose people with our income who have a second home don’t do that.
Yup. When I see someone in our circumstances (that is, have kids, live in a house, earn in the $250k range) with a lot of fancy stuff like second houses and luxury vehicles, I strongly suspect one or more of the following things must be true:
They have a source of money other than their income. a surprising number of folks I know get cash from their parents, even when still alive and even though they make a good middle class salary … also many get substantial inheritances (I’m at an age where parents are starting to die off).
They are not saving money for retirement and education for the kids (and are possibly racking up debts).
They live where the cost of living is low. In Toronto, a modest 3 bedroom house in a good location costs $800,000 or more. In some places, that would buy a palatial mansion.
$250k/year is not enough to own a house in an expensive city, raise a kid, live with lots of substantial flashy luxuries and save any money.
Another one is stock options. My husband works for a company where people who joined ten years before he did are middle class millionaires off their options alone.
I think the goal is to live comfortibly within your means with a bit of a cushion for contingencies. You’re right, a huge pile of money that you never touch your entire life is useless.
I recall an amusing quote I read about New Yorkers a few years ago that said something like “we all pay $2000 a month in rent, wear $500 shoes, eat $150 steak dinners and all cry about being poor”. To a certain extent that is true. You feel poor because everything you do is so expensive, but OTOH, if you can afford to live in NYC and have a decent lifestyle, you are probably are not doing too bad for yourself.
Just FYI, one of the things that makes me feel. . .solvent. . .financially OK. . .is that I have some “mad money” cash on hand. As a rule, when I shop, I don’t spend coins or one-dollar bills. When I get home, my loose change, loose ones, whatever (occasionally a loose five-buck or so) goes into my coffee can.
Come what may, I have that money. At any given time, I have a couple of hundred dollars standing by.
That’s not a lot of money. But it’s enough to make me feel not broke, come what may.
Another thing I’ve done, more recently, is to make a book safe (that is, hollow out a hole inside a book I’m never going to read again) and put $1,000 in cash in there - just in case.
Personally I think of having 3 mil in interest earning assets as rich and 60 mil as wealthy. I figure if you can earn 100K after taxes without working you’re rich.
I don’t count assets that aren’t earning interest because they really don’t do you any good in terms of your day to day life. Sure I’ve got 50K in equity in my house but that only helps me if I sell my house and don’t buy a new one. I think those assets really only count into a family’s wealth since its only the next generation that is going to be able to sell the house and cash out the full amount.
Malthus would be in the top 2% of income earning for the entire US (he is in Canada, though - no idea what’s normal for that country)! If we don’t consider that ‘wealthy’, our perceptions are very messed up.
Whatever the proportion of spending to income is, if you make much more money than the average citizen (at last census the real median earnings of men who worked full time, year-round were $45,113. For women, $35,102) and can afford spending many thousands a year on non-essentials, that’s ‘rich’ to me.
Most people, no matter how much they make, up into the millions, don’t have a lot of extra money on hand. Most of them have to worry about keeping their job to keep up with monthly financial obligations, and wouldn’t keep afloat for long if they were out of work. That doesn’t mean they aren’t wealthy or even filthy rich.
I usually follow forbes, who upped their millionaire’s list to billionaires only.
But, as a personal definition, I would say “wealth” is when you have so much money that it never goes down (what you spend is less than what the money earns on dividends and interest.) Another way to put it is that wealth is impossible to spend, and last I checked, if you wanted to spend 100k a year after taxes, you need about 200 million earning 1% interest.
That’s true for a country as a whole, but not true for certain locations within a country. Where I live, what I make isn’t remarkable. It’s a reasonably typical upper middle class professional income - on the upper end of what one can make as a “salary”, but nonetheless a salary.
For real wealth, look to folks who mostly earn from various sorts of investments.
I make a bit less than Malthus, but we would be in the “upper middle class”, not the “wealthy” classes. Sure I earn a comfortable income. I can drop $200 on a steak dinner with my girlfriend and not give it a second thought. But 90% of my income is tied to my very stressful and demanding job. People who are “wealthy” IMHO do not have to subject themselves to the rat race of working 100 hours a week trying to make partner.
That is the paradox of wealth. Unless you are born with it or stumble into it at an early age, you spend your entire life chasing after it so you can become wealthy just in time for your kids to grow up as spoiled jerks.