How much money do you need to earn to feel rich?
It's a subjective question.
Much depends on your lifestyle, where you live, how much you spend and save, your peer group, and your vulnerability to comparison.
Comparisons are more important than most people acknowledge. Wealth is relative.
Teddy Roosevelt once said, “Comparison is the thief of joy.”
It's easy to say, but in the age of Instagram, where everyone flaunts their wealth, world travel, and material possessions, this is much harder to adhere to.
We live in a world where wealthy people no longer feel wealthy.
The Wall Street Journal profiled people making $400,000, a level some politicians are using as a new dividing line to define wealthy households.
Only 2.6% of Americans earn more than $400,000. Here's the breakdown by state:
Wealth is about keeping, not making, but it's hard to imagine a world where being in the top 3% of income earners isn't considered wealthy.
Sometimes you have to call a spade a spade.
However, the Journal found that the top 3% of people do not feel wealthy.
“I don't consider myself wealthy. I think I've worked really hard,” said Littles, 41, an executive at a health care staffing firm in Tampa, Florida. His salary fluctuates around $400,000.
“I achieved the American dream, but now I will have to pay more taxes,” he said. “It doesn't feel very good to me. It's demotivating.”
Everyone has a different definition of wealth, but why do high-income people feel the way they do?
The following story helps explain this phenomenon.
Deyer said he can afford to raise taxes, but he doesn't consider himself wealthy. He and his wife make coffee to avoid Starbucks and buy fruit based on what's on sale.
“We're not luxury people with fancy country club memberships and private jets,” he says.
Sure, we earn a lot of money and are comfortable, but there are others who are richer than us. They have so much more!
As you earn more money and your assets increase, the goalposts start to move.
I would be happy if I could earn that much. transform immediately Sure I make a lot of money, but I don't have as much money as those guys.
The more money you earn, the more wealthy people you can meet. Joy thieves rob you of the feeling of wealth when you see someone who is more successful than you, earns more than you, has more toys or a bigger house.
It is also true that the number of people with high incomes is increasing compared to the past.
Pew Research shows how income classes have evolved over the past 50 years.
The middle class population is decreasing, but the upper class (and lower class) population is increasing.
The number of wealthy Americans is increasing these days, which means more competition for those who are more susceptible to rankings among their peers.
If you're in the top 10%, you want to be in the top 5%. If you're in the top 5%, you want to be in the top 1%. If you're in the top 1%, you want to be in the top 0.1%. And if you're in the top 0.1%, you'll buy professional sports franchises and emerging social media networks.
The hard thing these days is that you can't just keep up with the Joneses around town anymore. The Jones family is now scattered all over the world, constantly flaunting their wealth on the internet for all to see.
On the other hand, it's depressing that relative comparisons of money make it difficult for people to appreciate what they have.
Meanwhile, by relative comparison, the U.S. economic machine continues to operate smoothly.
Although a lack of satisfaction is harmful to individuals, it is good for the system as a whole as people strive to improve their standing in life.
Know that it's okay to admit you're rich when you really are.
Michael and I talked about things like why people make a lot of money but don't feel wealthy in this week's Animal Spirits video.
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References:
5 million dollars is nothing
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